The Roemer Report On-Line, November 2003

ECONOMY TAKES THE HIGH ROAD: Blue skies are forecasted for the trucking industry in the coming year. Analysts predict substantial growth for the industry beginning this fall. More freight is making its way to roads—a welcome relief to trucking, which has struggled for three years with high diesel prices, rising insurance costs, and an overall economic slump. Overall, truck, rail, and air freight volume, long considered the most accurate predictors of economic growth, point to an economic recovery. Economists say freight forwarding activity will grow by 4 percent by the end of the year and by 5 percent in 2004. Growth in the freight forwarding industry, which accounts for more than 650,000 trucks, will boost Class 8 truck sales. Truck renting and leasing industries are also expected to grow. In addition, the Dow Jones trucking index, which tracks companies in the sector like Roadway, CNF, and Alaska Freightways, has increased 30 percent. According to the American Trucking Associations, freight tonnage rose by 2 percent in July and should continue to increase due to the slow, but steady growth in the U.S. manufacturing industry.

WANTED: OWNER-OPERATORS: Fleets are stepping up efforts to recruit owner-operators, mainly because of the new hours-of-service rules. ‘The industry needs to increase the driver pool at least 10 percent because of the new rules,” said one expert. But recruiting owner-operators is tough because the pool has been shrinking. One fleet estimates that the number of owner-operators has dropped from 360,000 in 1998 to about 175,000 today. They have left the industry for a number of reasons: high fuel costs, growing insurance premiums, shrinking freight volumes, and falling rates. In fact, a major factor hurting independent drivers’ profitability is the issue of loading and unloading trailers without being compensated. “Though most drivers are paid a flat fee for each shipment they haul, their pay has absolutely no correlation to the time and effort spent on each load,” maintains Todd Spencer of the Owner-Operator Independent Drivers Association. Spencer says that studies have found that drivers must wait between 33 and 44 hours each week for shippers and receivers to let them load and unload. With those issues in mind, many fleets are boosting pay and benefits packages, offering sign-on bonuses, and offering memberships in fleet discount programs to lure owner-operators. Schneider National said it plans to make a “bold statement” later this year regarding owner-operator pay and bonus packages because it believes independent truckers are some of the industry’s best drivers.

SATELLITE RADIO POPULAR WITH TRUCKERS: When satellite radio came on the scene two years ago, no one knew how it would be received. The verdict is in: truckers love it, and other drivers like it too. But it’s truckers who are signing up for it in droves. Installation and a monthly fee give them access to 100 stations that offer a nearly commercial-free stream of music, talk shows, sports, news, and trucking information. Drivers like “the luxury of listening to the same station for eight hours,” said a TravelCenters of America manager, who says he sells four to six satellite radios per month, twice as many as he did six months ago. One trucker says satellite radio helps him zone out less and prevents him from succumbing to “white line fever.” “I actually get through 150 more miles a day,” he said. Still, many truckers balk at the price. One South Carolina truck driver spent $500 to outfit his truck with a receiver and antenna and pays an additional $10 per month service fee. Some motor carriers, however, are subsidizing satellite radios for drivers to make it easier and cheaper for drivers—and to reduce turnover. But price may become less of an issue as more fleets have satellite radio systems installed at the factory. In addition, XM, one of two satellite radio providers in the country, offers special deals to fleets who place large orders. XM and its competitor, Sirius, are working on portable radio systems, geared toward truckers who switch trucks frequently. Although XM and Sirius are still unprofitable, they are counting on America’s truckers and the 94 million people who spend about 35 minutes driving to work to put them in the black.

CITY TRAFFIC WORSENING: The news from the annual Urban Mobility Report is no surprise to truckers: Urban congestion is getting worse. The only good news from the report is that remedies already in place—bus and carpool lanes, traffic signal coordination, freeway incident management, and freeway entrance ramp meters—are helping prevent congestion from worsening further. Still, the costs of congestion continue to mount, climbing to $69.5 billion in 2001, the most recent year data is available. That cost is $4.5 billion more than the previous year and includes 5.7 billion gallons of wasted fuel and 3.5 billion hours of lost productivity. “The profession is only at the start of understanding the precise mechanisms by which these sources contribute to congestion problems,” stated the report. For some problems, like drivers slowing down to check out an accident, solutions may be hard to come by.

OOIDA QUESTIONS DRIVER BACKGROUND CHECKS: When seeking a new job, drivers often complain that the background information provided by past employers is inaccurate. The Owner-Operator Independent Drivers Association (OOIDA) is now pushing to make carriers liable when they provide misleading or inaccurate information in background checks. In response to a proposed rule called “Safety Performance History of New Drivers,” OOIDA stated that the rule emphasizes carriers’ fear of their exposure to legal liability for following the rules. “OOIDA finds this fear suspect and vastly overstated,” it stated in response to the proposed rule. “We don’t understand why any carrier would express any fear of liability unless they know or believe the information they are using is false, or that they are engaged in improper use of such information.” OOIDA asked the Federal Motor Carrier Safety Administration to revise its description of employee background information by (1) limiting the investigation to information directly related to a driver’s qualification under federal or state law, and (2) requiring that the background information be provided with enough detail so that safety assessments of drivers can be made accurately.

NUMBER OF UNINSURED ON THE RISE: The number of Americans without health insurance is at an all-time high, according to figures recently released by the Census Bureau. In 2002, 15.2 percent of the population lacked health insurance, up from 14.6 percent the previous year and 14.2 percent in 2000. The drop in coverage is due to the decrease in the number of people covered by employer-sponsored plans. Last year about 62.6 percent of Americans were enrolled in plans through their employers. Health insurance coverage varies significantly by state. Iowa, Minnesota, Rhode Island, and Wisconsin all reported an uninsured rate of 9 percent, far less than the national average. Texas, on the other hand, had the highest rate, with nearly one-fourth of its population lacking health benefits. Congress and state governments are looking for ways to lower the uninsured rate. Maine, for example, passed a law this summer to provide state subsidies to offset the cost of health insurance for lower-income residents. In Congress, legislators are working to expand a law that subsidizes the cost of health insurance premiums for retirees whose pension plans were terminated by the Pension Benefit Guaranty Corp. and those who lost their jobs due to foreign competition.

ON THEIR OWN: While the value of teamwork cannot be diminished, individualism is equally important in today’s work environment. If an organization squelches individualism for the sake of the team, the company risks seriously inhibiting creativity and breakthrough results. Individualism is not about a “me environment.” Instead, it is an effort to foster truth, discovery, and independent thinking. Today’s leaders need to create environments in which teams include self-directed and self-starting individuals. Here are a few ways leaders can support individualism: (1) Create a sense of belonging. Organizations must make sure that ownership is truly a company-wide initiative. They should create financial strategies that support loyalty and long-term employment. (2) Foster independent thinking. Companies that encourage everyone to share in its vision and to critique processes freely will create more inquiring, creative workers. (3) Support courage. Individuals are more likely to offer ideas, doubts, and concerns when an organization limits “political correctness.” (4) Offer free reign. Encourage self-reliance by giving individuals the freedom to take risks. (5) Bolster self-esteem. Give employees a feeling of satisfaction and meaning by allowing them to pursue visions that lead to breakthroughs.

The best decision makers are those who are willing to suffer the most over their decisions but still retain their ability to be decisive.—M. Scott Peck, author