Roemer Report – March 2006

TIME FOR A TAX BREAK? A new bill proposed by a Texas congresswoman would give a tax credit to commercial fleets that buy idle-reduction equipment. The American Trucking Associations and the Owner-Operator Independent Drivers Association (OOIDA) support the bill, which would give motor carriers up to $1,000 in tax credits for each device purchased. OOIDA executive vice president Todd Spencer said, “It is integral for the health and well-being of truckers and the driving public that the Congress address anti-idling laws in a manner that encourages and promotes the use of anti-idling technologies.” Spencer added that the legislation would be especially helpful to small motor carrriers, which find it difficult to afford equipment in excess of their operating budgets. Anti-idling equipment would save fuel and reduce pollution. The Department of Energy estimates that the average long-haul trucker idles his or her truck 1,830 hours per year, burning about 1,464 gallons of diesel fuel. The equipment would also reduce greenhouse gas and particulate matter emissions by as much as 90 percent.

TRUCK DRIVING RANKS HIGH: Heavy-duty truck driving ranked as one of the top 25 jobs for 2006, according to a survey by Careerbuilder.com, a leading national job bank. In a survey of 8 million new jobs, heavy-duty truck driving ranked number 18 on the list. The industry currently is experiencing a national shortage of 20,000 drivers, according to an American Trucking Associations (ATA) analysis. ATA predicts that the shortage of long-haul drivers will increase to 111,000 by 2014 if current demographic and labor trends continue. Trucking is the single most-used mode of freight transportation, totaling 70 percent by value, 60 percent by weight, and 34 percent by ton miles. The U.S. Department of Transportation reports that trucking dominates shipments of distances less than 500 miles, while rail dominates shipments of longer distances. ATA is mounting a campaign to highlight the value of working in the trucking industry and hopes to offset current demographic trends, which limit the industry’s workforce.

GRIDLOCK ALL AROUND: Highway bottlenecks in 2004 idled trucks for more than 243 million hours and cost trucking companies $7.8 billion, according to a study prepared for the Federal Highway Administration. Increased congestion comes at a time when trucks are hauling more goods than ever. But where will the money come to fix the nation’s crumbling infrastructure? In a January speech in Washington, D.C., FedEx Freight President and CEO Douglas G. Duncan called for higher fuel taxes. And as Traffic World put it, “When a trucking CEO calls for higher fuel taxes, you know it’s bad.” Duncan as well as other business leaders and government officials are very concerned about how to raise enough money for transportation projects. In addition to higher fuel taxes, lobbyists and legislators are also considering increasing tolls and user fees, and implementing a “road tax” that charges highway users by the mile. Duncan sees fuel taxes as the “lesser evil.” “We already have a mechanism to collect fuel taxes,” he explains. “Every time we build a new toll, we have to build a new bureaucracy to collect those tolls.” In exchange for supporting higher fuel taxes, Duncan says he would want guarantees about how the money is spent. Critics of last year’s federal budget say important infrastructure projects were slighted in favor of pork barrel spending (like Alaska’s “bridge to nowhere”). In short, the nation is spending more than it’s bringing in, and there’s no easy solution to the problem. Los Angeles Chamber of Commerce President said, “Everyone’s going to have to pay more.” He believes states will turn to user fees and tolls. “We have to recognize that nothing is going to be free here,” he said.

DRIVING ON 10 WHEELS: Some motor carriers are switching to extra-wide tires to save 4 to 10 percent on fuel costs, say experts, and that can be a significant savings for companies that are still reeling from last fall’s high diesel prices. A truck that burns 25,000 to 30,000 gallons of fuel each year can save about $4,000 in fuel with the wider tires. The savings is a matter of truck-tire physics. Getting a truck from a stopping position to a moving position generates more friction and burns more fuel than keeping a truck moving once it’s already going. One fatter tire takes the place of two conventional radial tires on the drive and trailer axles, reducing the number of tires by eight. This lowers the amount of “rolling tire resistance,” or friction a truck creates when it starts moving. The wide tires accounted for less than 1 percent of the 17 million tires sold in the United Sates last year, but tire manufacturers are bullish on the potential for sales. At around $1,250 each, the tires are about double the cost of a conventional tire and rim. There are also other considerations. When a wider tire goes flat, it must be fixed on roadside. “You can’t limp it in if you’re close to somewhere,” notes one trucker. That alone is enough to turn off some companies. “No matter what, we’re going to have blowouts,” said an executive at a Virginia motor carrier. “It’s hard enough sometimes getting the right size tire for what we run.” Tire manufacturers say availability shouldn’t be a problem though, and they are pleased that the new tires have “overcome a lot of apprehension” in the industry.

TARGETING DISTRACTED DRIVERS: From their bird’s-eye view, truck drivers know all too well the “extracurricular” activities that car drivers engage in while they are supposed to be concentrating on driving. Now lawmakers in Nebraska and New Jersey have introduced bills that would punish distracted drivers in those states with a fine of $100 or more. Nebraska’s bill would prohibit all cell phone use while driving and also bar any behavior that results in unsafe driving, including “reading, writing, performing personal grooming, interacting with pet animals, adjusting cargo or other actions that distract the person’s attention from operating the vehicle.” The bill would not apply to using GPS systems, vehicle information displays, or emergency telephone calls. New Jersey’s bill would make it illegal for a driver to engage in “any activity not related to the operation of the vehicle in a manner than interferes with the safe operation of the vehicle.” Although the New Jersey bill does not specify unlawful behavior, it does require the police officer to record on the summons what the distraction was.

ASSESSING HEALTH SAVINGS ACCOUNTS: In his recent State of the Union speech, President Bush said he wants to expand health savings accounts (HSAs) to “help people afford the insurance coverage they need.” Created in 2003, HSAs let people set aside money tax free to be used for eligible medical expenses. The accounts are paired with health-insurance policies that carry at least a $1,050 deductible for individuals and a $2,100 deductible for families. Money that is not used during the year carries over to the next year and continues to accrue interest. The plans are portable, meaning people can change jobs or retire and keep their insurance. HSAs would cost the Treasury $59 billion over five years and $156 billion over 10 years. Supporters of the plan say the accounts will slow health-care inflation by getting Americans to shop around for more affordable and better quality health care. Critics, however, say the accounts benefit mainly the healthy and wealthy and could drive up costs for other consumers. Critics also contend that the president’s proposal would do little to slow overall spending on health care, which is around $1.9 trillion per year. President Bush hopes to make the accounts more attractive by increasing the amount of money that one could deposit into an HSA each year. Current limits are set at $2,700 for an individual and $5,450 for a family.

YOUR LEADERSHIP VOICE: The vast majority of leaders (90 percent) believe they communicate effectively. However, only 30 percent of their employees agree. What’s happening here? Sixty percent of leaders are getting it wrong by making four faulty assumptions. They assume that their employees (a) understand what they say, (b) agree with what they say, (c) care about what they say, and (d) will take appropriate action. Too often, there is only an illusion that communication takes place. What’s the remedy? Boyd Clarke and Ron Crossland, authors of The Leader’s Voice, say that the best communicators use three channels to convey their meaning. Poor communicators tend to focus on just one channel. Here’s a look at all three: (1) Facts. The secret to this channel is not the facts themselves, but reporting them in a logical and organized way. Leaders need to create a compelling, memorable representation of what the facts mean, so their listeners will understand. (2) Emotions. Leaders must reveal their own emotions while also understanding and articulating their listeners’ emotions. The best leaders foster passionate alignment around these shared feelings and aspirations. (3) Symbols. Telling stories to communicate important messages about brand, vision, values, and strategy is crucial for getting your message across.

Never sacrifice a principle for a temporary gain.