For 30 years, Roemer Insurance has published and distributed the “Kiplinger Letter of the Trucking Industry,” which is distributed free to people in our industry. The Roemer Report is a monthly digest of news for those in the trucking business. It is a must-read for fleet operators, owner-operators, and allied personnel.

Roemer Report – June 2009

HOT FUEL MAY COOL DOWN: In a pro-consumer move, Costco Warehouse Inc. has agreed to install temperature-sensing pumps so that motorists won’t be overcharged for warm fuel. Gasoline and diesel expand in warmer temperatures, meaning that consumers get less energy than they pay for at the pump. The agreement would be in full effect within five years in the nation’s warmest states. In 2006, several truckers filed a class-action lawsuit against Costco and other retailers, including Travel Centers of America, Petro, Pilot, Flying J, Hess, Speedway SuperAmerica, ExxonMobil, and Chevron. Costco is the only retailer to pledge a solution. If other retailers follow Costco’s example, U.S. consumers could save more than $2 billion a year. Bob Horn, one of the lead attorneys in the hot-fuel lawsuits, said, “We finally have someone stepping up and saying (temperature-adjusted fuel) is right and fair to U.S. consumers.” Horn expected to hold discussions with other defendants within a week of Costco’s announcement. Oil companies and fuel retailers have opposed selling temperature-adjusted fuel. They say that fixing the problem would be expensive, and the cost would be passed on to consumers, erasing any savings in money at the pump.

RETHINKING FUEL SURCHARGES: Truckers and shippers, still feeling the pain from last summer’s fuel costs, are hoping to close the gap between fuel surcharges and actual fuel costs. Last year, when diesel prices jumped from $3.35 per gallon in January to $4.76 per gallon in July, fuel surcharges couldn’t keep up. This was devastating for many carriers, and the high fuel costs often meant bitter negotiations with shippers who believed the surcharges were over the top. To defuse some tension, carriers and shippers are looking at equitable ways to establish fuel surcharges—and some believe technology is the answer. Schneider National, for example, is promoting a software program to its shippers, which can calculate actual fuel costs on a per-lane basis for a given day, according to The Journal of Commerce. The program tabulates the carrier’s cost of fuel for every load, making the actual costs transparent for both shippers and carriers. The program is lane-specific, calculates fuel prices at more than 5,500 truck stops, and is updated daily. If the volatility of fuel prices continues, such software programs may very well become the norm. The method of calculating fuel surcharges has not changed much since the 1970s, when the Energy Department created the National Retail Average. One transportation consultant said that any process that helps manage fuel costs is good for carriers and shippers. Duff Swain of Trincon Group acknowledged that “sometimes you find shippers using their buying power to negotiate rates and surcharges to their advantage, and a more accurate surcharge program could help eliminate that,” especially for small- and medium-size carriers.

AN INCENTIVE TO REDUCE IDLING: This year Maine and Virginia have joined other states in offering an incentive to trucks equipped with auxiliary power units (APUs) or generators. Trucks with APUs or similar devices that reduce fuel use and emissions may be allowed an additional 400 pounds of weight. To get the federal 400-pound allowance, truckers must be able to provide: (1) a certified document of the weight of the APU (if the APU weighs 350 pounds, then the truck is allowed an additional 350 pounds), and (2) certified proof that the APU is in working condition. In 2005, states were granted federal authority to allow heavy trucks to surpass the 80,000-pound weight limit by 400 pounds to encourage the use of idle-reduction equipment. The problem is, however, that some 20 states still do not allow the 400-pound allowance, but it seems more states—most recently Alabama, Florida, and Indiana—are considering adopting the provision. Supporters say that the allowance removes the disincentive that keeps some truckers from using heavy APUs. But some states, including North Carolina, South Dakota, and Wyoming, that do not allow the federal allowance do allow an additional 500 pounds or so at weigh stations before they start ticketing.

STEER CLEAR OF AGGRESSIVE DRIVERS: It turns out aggressive driving—speeding, running red lights, racing through yellows, tailgating, failing to yield, and more—is responsible for 56 percent of all fatal crashes nationwide. The AAA Foundation for Traffic Safety analyzed federal data to come to that conclusion; the group also found that speeding is the most common type of aggressive driving and is responsible for one-third of all fatal accidents. Although almost 80 percent of U.S. drivers surveyed said aggressive driving is a major problem, most admit to driving aggressively themselves. Aggressive drivers do not fit any mold—they can be old, young, male, female, rich, poor, white, black, Asian, or Hispanic. Drivers should never assume anything about the stranger in the vehicle next to them. The AAA Foundation notes that there are thousands of mentally and emotionally disturbed individuals on the highway, others impaired by drugs or alcohol, and millions more armed with firearms and other weapons. Next time you encounter a driver doing something stupid, AAA recommends keeping your cool and being patient and courteous—you never know what might set someone off. If an aggressive driver tries to pick a fight, do not make eye contact, warns AAA, which notes, “This can be seen as a challenging gesture and incite the other driver to violence. Instead, get out of the way but do not acknowledge the other driver.”

CARGO THEFT RISES: Cargo theft continues to be a growing problem and poses a major hazard for truckers, according to a new study by LoJack Supply Chain Integrity (LoJack SCI). Truckers are frequent targets because of the “low risk/high reward” payoff for thieves. “It’s relatively easy now for individual loads to contain $1 million worth of cargo,” said a security director at Schneider National. “And if the thieves get caught, we’d be lucky if they’d get six months of jail time.” According to the study, truck stops and parking lots are where theft most frequently occurs, and Saturdays and Sundays are the most popular days for cargo theft. The study also found that the most frequently stolen types of cargoes are food (13 percent), pharmaceutical/medical products (12 percent), and building supplies (12 percent). In a depressed economy, thieves seem to target essentials like food and drugs. Building supplies may be a popular target because of the rise in copper prices. Robert Furtado, CEO of LoJack SCI, said, “To prevent theft from happening, our advice is to be as well informed as possible about theft trends, most ‘popular’ theft locations, most stolen products, etc.” Truckers should also use technology intended to protect cargo and recover freight should it be stolen. Finally, truckers should develop a supply-chain security program, consulting with insurance carriers and other supply-chain partners to learn whether they are doing everything possible for cargo security. Schneider noted that this is an area where truckers can’t afford to compete; they need to actively help each other and share information so the industry as a whole can beat the thieves.

HEALTH CARE FACTS: Last month President Obama met with health care and business professionals in an effort to explore innovative ways to contain health care costs. While companies are scrambling to contain costs, often with an emphasis on wellness and prevention, there are disagreements on how to do so. Despite these differences, Time magazine notes five indisputable facts about health care: (1) The United States spends more on health care than any other country. Total spending on health care amounts to 16 percent of the GDP, or $7,026 per person, compared to 10 percent of Canada’s GDP ($3,912 per capita) and 7.9 percent of Japan’s ($2,690 per capita). (2) For all the money spent, Americans are not healthier. The U.S. life expectancy is just 77.9 years, versus 83 years in Japan and 81 years in Canada. The U.S. infant mortality rate ranks 29th in the world, tied with Slovakia and Poland. (3) Smoking is on the decline. Only 19.8 percent of U.S. adults light up, but tobacco still kills about 443,000 Americans each year. (4) Better treatments curb top killers. In 1980, about seven out of 10 adults died from heart disease, cancer, or stroke. Today that number is closer to five out of 10. (5) Millions don’t have health insurance. A recent study found that thousands of Americans die each year due to lack of timely and effective health care. Fifteen percent of the population remains uninsured.

RECOGNIZE EXCELLENCE: A 2008 Gallup poll found that 65 percent of U.S. workers felt they hadn’t received recognition in the past year. The number one reason why people leave organizations is because they don’t feel appreciated. There are countless ways that leaders can recognize excellent performance: (1) Make recognition a policy, not a perk. Develop a system of rewards that includes everyone. Educate the entire staff about the program, promote it frequently, and post it for all to see. (2) Little things mean a lot. Looking an employee in the eye, saying thanks, and shaking his hand is one of the most effective ways to recognize a job well done. (3) Do it up right. When the occasion calls for more than a handshake, do it with gusto. That might mean inviting family members to a celebration, having an awards dinner, or holding a recognition ceremony during work hours. (4) Remember the “little guy.” When boarding Marine One for the first time, President Obama surprised a Marine near the door when he saluted him and then shook his hand. By acknowledging underappreciated workers, the message is clear: everyone is important and everyone’s contribution counts.

Cynicism is not realistic and tough. It’s unrealistic and kind of cowardly because it means you don’t have to try.—Peggy Noonan, author and commentator