To my mind, at least, Joe Schmitt would’ve made one hell of a cowboy.

A lean, rangy owner-operator from Wisconsin, Schmitt is about to notch his 20th year on the road, running long haul refrigerated routes across the U.S. His weathered hands bespeak his devotion not only to his profession behind the wheel, but also to his pride and joy, a 2003 Kenworth he’s turned into a working show truck on his own, with the help of friends and family.

Like Union cavalry general John Buford, Schmitt follows a simple maxim when it comes to his craft: taking care of “horse, saddle, then the man,” in that order. Dubbed “Wreckers & Checkers,” Schmitt’s rig features hand-laid wooden floors and a matching tractor and trailer paint scheme, with his reefer unit’s engine painted to match.

The unusual name for Schmitt’s operation stems from the commitment he made upon becoming an independent two decades ago: like a stock car racer, he was either going to wreck or take the checkered flag, both in terms of succeeding at the business of trucking and winning a few show truck trophies in the bargain.

Though Schmitt indeed built a successful career as trucker and won a passel of trophies (though just falling short of winning the top prize at the National Association of Show Trucks [NAST] contest at Mid America for the second year in a row) he’s now ready to hang up his keys.

Though the trials of the road are hard and getting harder (this winter proved particularly bad), and though fuel prices are out of sight ($800 one way between Utah and Wisconsin now; a price that would’ve covered him round trip with some left over not long ago), the reasons he’s leaving the long-haul business and selling his truck boil down to one thing: family.

“I’ve got two little ones still at home yet, so I want to be with them more,” he told me. Once he sells his truck (which is almost paid for – he’s got a year of payments left), he plans to take a local trucking job so he can be home every night. “It is just time to do this,” he said.

I am more than sure this is a common sentiment today among long-haul independent drivers – a sentiment that’s getting a lot of help, no doubt, from $4 per gallon diesel, out of sight insurance rates, higher sticker prices due to new pollution control technology, and ever-stricter idling rules. No doubt Schmitt, like a lot of drivers, found that the hassles now far outweigh any of the benefits life as a truck driver used to offer.

Ah, but what memories of the road Schmitt has – ones he shares with an easy laugh. Back in 1996, for example, he found himself stuck in a horrible blizzard, pushing a bank of snow into the back end of a completely jammed truck stop parking lot. “I jumped out of the cab and immediately sank up to my hips in snow,” Schmitt told me. “I called my customer back in Wisconsin and told him, ‘I have some good news and bad news. The good news is your lettuce is safe and sound. The bad news is we’re all sitting in snow so you won’t see if for a few more days.’” As a result, a two-day run turned into five days, with the National Guard helping dig everyone out of the truck stop.

This past winter of 2007-2008 proved just as tough, he said. Every trip seemed to be fraught with blizzards, Schmitt told me. One proved so bad most of the paint off the front end of his vehicle wore off, forcing him to spend two days of nearly non-stop sandblasting and re-painting to get his truck for the shows.

Though he relishes those memories – especially all the hard work that went into building his one-of-a-kind “Wreckers & Checkers” creation – the call of home is now stronger than ever and has won out over the long-haul life.

Good luck to you, Joe, and many happy trails. We’ll see you on the flip side.

Well, it’s been raining here in Louisville — and that doesn’t do wonders for the photo-taking opportunities, let me tell you. But the “liquid sunshine” pouring from the sky didn’t damper the festive spirit of the show, I can tell you. Here’s a few moments captured (so far) from the truck show — including the winners of the 2007 “Fleet of the Year” awards, who receive their awards at a special (and very tasty) dinner here in Louisville.

FleetOwner’s 2007 Fleet of the Year awards dinner in Louisville, KY, is always a special treat for everyone.

The ‘Megasaurus’ car-killing ‘transformer’ truck — a favorite guest at tractor-pulls — gets hauled around by it’s very own tractor-trailer — which sports an appropriate logo.

I think this motto — courtesy of G-2000 Inc. out of Toledo, OH — says it all.

Sharp trucks abound at Mid America — and ‘The Gambler’ is one of the sharpest of them all.

And it goes without saying that it’s not just the trucks that are beautiful at Mid America …

It’s one of the perks of my job to meet a lot of good people in the business of trucking, especially at the Mid America Trucking Show going on this week in Louisville, KY – folks that own some pretty slick iron, too. That’s the case of Rick Hitchcock out of Webberville, MI, who drives for his family’s company, MBH Trucking, hauling molasses and liquid fertilizer, to grain elevators across the Upper Midwest and into Canada.

I met Rick and his lovely wife Jennifer in 2007 – barely married one year back then – as a judge for the National Association of Show Trucks (NAST) contest. Rick didn’t win the top slot, but he’s back for another try this year.

Rick’s dad, Matthew Brian Hitchcock, is the owner of MBH Trucking (Just in case you missed it … ‘MBH’ are his initials) and he runs about 11 trucks hauling just about everything — he even has a hazmat division, too. But this isn’t a cushy job for Rick, let me tell you: it’s his hard earned dollars and sweat (and not a little from his brothers) that have made his 2005 Peterbilt 379 – dubbed ‘The Slammed Pete” – and instant modern-day classic.

Sporting a sharp white and red two-tone paint design, the 292-inch wheelbase of Rick’s rig hugs the ground, with the big wheel covers on the rear tires making his piece of rolling stock look more like hot rod straight out of a ZZ Top music video. Rick’s truck sports a 625-hp Caterpillar engine – painted white and red just like his truck’s exterior – and an 18-speed Eaton Fuller manual. He’s living proof that youngsters (he’s only in his mid-20s) can still learn to the work the gears as well as any veteran.

It took Rick six months of work to bring the Slammed Pete to life, but only six seconds for a distracted driver to put it back in the shop. Late last year a motorist hit his truck head on, in broad daylight, smashing the hood and front axle of Rick’s Pete all to hell. Fortunately, no one got hurt and as the other driver was at fault, Rick got an $18,000 check to help restore his rig back to greatness.

Rick used the money to put a new hood and front grill on his Pete – which, along with the axle and fender repairs, took two months to complete. All the road salt from this year’s harsh winter also turned his engine’s paint job to a murky brown, so he pulled the motor to giving it fresh colors – work he had to do himself, with what little downtime he could squeeze into the day.

What’s cool about Rick’s ride, though is that it’s an honest working truck, with hydraulic cylinders installed on the chassis to give it more ground clearance where needed – even one to swing up the front bumper so it doesn’t get dinged when making deliveries. “I showed up at a farm this year and the guy told me, ‘You can’t drive that truck in here – it’s a show truck – it’ll get dirty,’” Rick told me. “But my truck is used to the work.”

He even enlisted his wife Jennifer’s help polishing up the Slammed Pete for the show this year – including putting a new coat of wax on its wooden floors. “I told him I thought they looked just fine,” Jennifer told me. “But he wanted it to be perfect, so wax them we did.”

As I said in a story about Rick and his family last year, the Hitchcocks demonstrate — to me, anyway — that pride is still alive and doing very well in trucking, thank you very much. That’s going to be very important, I think, in the years ahead as the younger generation decides whether to stay in this business or not. And why not take a little pride in choosing trucking as a career? The eye-catching low-riding design of Rick’s Slammed Pete may not be to everyone’s liking, but it tells everyone he likes what he does for a living. And you can’t ask for more than that.

“Repetition builds continuity – continuity builds history – and history builds identity.” –Roshan Samtani

So, I’m down here in Louisville, Kentucky, getting ready for the mammoth Mid America Trucking Show. All the suppliers to the trucking industry – from manufacturers of big rigs, trailers, and engines, down to the smallest of components and pieces of chrome – are going to be lined up to show of their wares. It’s one of the biggest and boldest marketing performances these companies – large and small – put on every year, so it’s worth thinking about how to get the most bang for the marketing buck spent on such efforts.

For some insight on this topic, I am going to turn (yet again!) to Professor Jerry Osteryoung with the college of Business at Florida State University. He’s got some pretty interesting thoughts about how “repetition” is the key to building band identity in the marketplace – something suppliers and trucking firms themselves could put to good use. Professor Osteryoung, the floor is yours:

“We were working with an entrepreneur who owned a professional service business. He was trying to increase his revenues, which had been flat for the last three years, and his profits were falling as well. He had tried numerous ways of bringing in new customers, from targeted direct mail with post cards to TV advertising.

However, none of these methods had any effect. His sales remained flat and even began to decrease as he was harvesting very few new customers. When I asked him about his marketing plan, he said that he was trying to spend around 3% of his revenues. He said he did not have a marketing or advertising plan. Rather, he was looking for that one advertising medium that would produce the results he was looking for and turn his revenues and profits around. However, when it came to waiting for these results, he was very impatient. He was constantly switching from one form of advertising to another, looking for one that would bring in many new customers or the magic bullet.

It is very reasonable to expect results from advertising dollars; however, it takes repetition of a marketing message to get a potential customer to act based on the advertisement. In our busy, multi-tasking life, we are bombarded with information daily. Information overload is so common, and it is showing no sign of slowing down. Customers just will not act on any advertisement unless it is both unique and repetitive.

I know that when I get regular mail every day, I look for bills and personal notes and just trash most of the rest. I just do not have the time or the inclination to look at anything else, unless it grabs me at first sight.

Okay, so what does all this mean in relation to spending money on advertising? In order for advertising to produce results, a customer must see the ad five to seven times. Potential customers need to be frequently reminded about your firm and products. Just look at Nike and how they put their “swoosh” symbol everywhere, especially at athletic venues.

Repetition and unique advertising generates what I call “top of mind awareness.” It is this “top of mind awareness” that brings in new customers. If I am a plumber, I want my company’s name to be the first one a potential new customer thinks of. That way, they will call me when they need service. The only way to accomplish this “top of mind awareness” is through repetition of ads.

It always surprises me how many relatively small companies spend so much to advertise for thirty seconds during the Super Bowl, but are never seen advertising again. It would make so much more marketing sense for these firms to advertise more frequently with their unique message.

That’s the key: making sure that your advertising is both repetitive and unique, and that in turn, you are getting the maximum out of every advertising dollar.”

As always, you can reach Professor Osteryoung by e-mail at jostery@comcast.net or by phone at 850-644-3372. All of Dr. Osteryoung’s articles, by the way, can be found in a searchable form at www.cob.fsu.edu/jmi.

“Our fourth quarter earnings outlook has been impacted by higher than anticipated fuel prices and a weak U.S. economy. Looking ahead to our fiscal 2009, we are expecting … limited earnings growth. We are scrutinizing all expenses and investments to realign them with the current environment.” –Alan B. Graf, Jr., executive VP and CFO, FedEx Corp.

It’s not a pleasant time to be in the trucking business, to say the least. With fuel prices way, way out of sight and freight still sluggish due to the U.S.’s rocky economy, it’s been a tough road to travel for independent truckers and fleets, plus truck manufacturers and related suppliers alike.

Just look at the escalating cost of fuel. In 17 states now, diesel costs over $4 a gallon. The industry trade group American Trucking Association (ATA) is projecting that if diesel fuel costs stay that high, the trucking industry will spend $135 billion on fuel this year – a $22 billion increase over the $112.6 billion spent by trucking in 2007 and an $85 BILLION increase over the industry’s fuel tab of $52 billion back in 2003. That means, according to ATA’s data, the cost to fill the fuel tanks on a typical tractor-trailer has increased 116%, or $615, in just five years.

“Fuel represents the second-highest operating expense for motor carriers, accounting for as much as 25% of total operating costs,” said Bill Graves, ATA’s president and CEO. “For some motor carriers, however, fuel is beginning to surpass labor as their largest expense. An affordable supply of diesel fuel is imperative to keep our trucks moving, [yet] there is little to suggest that fuel prices will decline any time soon.”

The high price of diesel is also sparking talk of a nationwide trucker strike on April 1, this time being organized online by Dan Little, an owner/operator of a livestock hauling company in Carrollton, MO. According to an interview Little gave to The Quad-City Times, he estimates at least 1,000 other truckers from across the U.S. have committed so far to joining him in a strike on April 1.

“Call it a strike, a shutdown or just flat-ass going broke,” he told the Iowa newspaper. “What I would personally like to see is our federal and state governments, until our economy recovers, suspend federal and state fuel taxes. The second thing I’d like to see is an oversight committee for truck insurance, which is part of what’s taking us down.”

Little told the paper that the average owner/operator is paying $600 to $800 a month for truck insurance – an amount based on personal credit, which means the monthly cost is going up for a lot of truckers because their credit is going down, he stressed.

Truck makers are having a hard go of things, too, not in the least because of the “EPA recession” in trucks sales this year – a termed coined by Jim Meil, Eaton Corp.’s chief economist – that’s been aggravated further by the slump in freight due to the weakening U.S. economy.

“The commercial truck market is beginning to improve slowly but clearly it is still tough going,” said Daniel Ustian, chairman, president and CEO of Navistar, the holding company for International Truck & Engine Corp.

“To help offset cyclical downturns, our strategy has been to build successful and sustainable businesses in military and export markets,” he noted. “That strategy is paying off in the success of these expansionary businesses. And we are well positioned in our truck and engine businesses with strong products to respond to demand when the market does recover.”

(Sales of Navistar’s new MRAP vehicles to the U.S. military are helping it weather the downturn.)

Ustian said “expansionary shipments” of 40,000 to 45,000 vehicles this year will account for a third of Navistar’s total worldwide vehicle shipments and help to mitigate the current weakness in its core markets, with defense business is expected to consistently generate $1.5 billion to $2 billion in annual revenue going forward, Ustian said.

Still, he noted Navistar’s worldwide shipments of school buses, Class 6-7 medium trucks and Class 8 heavy trucks remain soft, with sales for the three months ending January 31 totaling 18,720 units, down 37% from 29,680 units shipped in the same period a year earlier when totals benefited from what he termed a “historic pre-buy” in advance of 2007 emissions standards.

(Sales of Navistar’s new ProStar tractors have suffered due to the new emission rules combined with the falloff in freight.)

Yet Ustian said the next pre-buy cycle – expected to begin in 2009 in advance of 2010 diesel emission requirements – should provide the necessary support for Navistar’s operating and capital needs going forward. Funny, isn’t it – the same cycle that’s hurting the OEMs bottom lines right now is what’s going to pull them out of the pits next year. But the key thing is surviving the ongoing downturn today to profit from the upswing predicted for tomorrow. That’s a challenge owner-operators, fleets, and truck manufactures are all going to share in the months ahead.

So, what should be the over-arching goal of our transportation efforts in this country? Reducing vehicle crashes? Reducing traffic congestion? In terms of dollars, which effort offers the best return on investment (ROI) calculation?

From a new report out by AAA (a group formerly known as the American Automobile Association … now its name is just an acronym) from a monetary perspective, we should be focus on crash reduction efforts – period.

AAA found in its research that cost to society from vehicle crashes is a staggering $164.2 billion per YEAR in the U.S. – nearly two and a half times greater than the $67.6 billion price tag for congestion. In its report – “Crashes vs. Congestion: What’s the Cost to Society?” – the group said the dollar figures demonstrate that traffic safety issues warrant increased attention from the public and policymakers, particularly as Congress prepares to reauthorize federal transportation programs in 2009.

“Great work has been done by the Texas Transportation Institute (TTI) to quantify the costs of congestion, raise awareness for the problem and offer solutions,” said AAA President and CEO Robert Darbelnet, in terms of why his group went forward with is crashes vs. congestion report. “We feel safety deserves a similar focus.”

According to the study conducted by Cambridge Systematics for AAA, the $164.2 billion cost for crashes equates to an annual per person cost of $1,051, compared to $430 per person annually for congestion. These safety costs include medical, emergency and police services, property damage, lost productivity, and quality of life, among other things.

The report calculates the costs of crashes for the same metropolitan areas covered by the annual Urban Mobility Report conducted by TTI. In every metropolitan area studied, from very large to small, the results showed crash costs exceeded congestion, said AAA. For very large urban areas (more than 3 million), crash costs are nearly double those of congestion. Those costs rise to more than seven times congestion costs in small urban areas (less than 500,000) where congestion is less of a challenge.

“Nearly 43,000 people die on the nation’s roadways each year,” said Darbelnet. “Yet, the annual tally of motor vehicle-related fatalities barely registers as a blip in most people’s minds. It’s time for motor vehicle crashes to be viewed as the public health threat they are. If there were two jumbo jets crashing every week, the government would ground all planes until we fixed the problem. Yet, we’ve come to accept this sort of death toll with car crashes.”

Darbelnet’s comments I think strike a particularly important note here – heck, I’ve harped on the same theme myself. It just seems the general public in this country is totally blasé about the consequences of vehicle crashes – it seems to be a routine part of the landscape, just background noise. Truck drivers I talk to constantly tell me of their near misses caused by simply sloppy driving on the part of motorists – lane changes without proper signals or distance between vehicles, distracted driving as people talk on the phone, read, and otherwise reduce the attention paid to the road they hurdle down at 60, 70, even 80 miles an hour.

“This report states what we in the highway safety field have known all along - traffic crashes are not only a leading cause of death and life-changing injuries, they’re also a serious drain on the economy nationwide,” said Cathy Gillen, managing director of the Roadway Safety Foundation (RSF).

Maybe the dollar amounts quoted in AAA’s study will finally get the publics’ – and Congress’ – attention. Then again, maybe not – this is a problem, after all, that’s lagged in attention for decades now. One thing is for certain: we must address the cost of vehicle crashes sooner, not later. It’s an unnecessary human tragedy and fiscal burden we can’t afford to keep ignoring.

Everyone is looking for ways to cut fuel costs these days, and no wonder: with oil now steadily priced over $100 per barrel, diesel costing $4 a gallon, and gasoline predicted to cross the $4 threshold later this spring, fuel is much on the minds of heavy, medium, and light-duty truck users alike.

Light-duty truck makers haven’t been standing still during all of this: they’ve increasingly focused on ways to boost fuel economy for commercial users and consumers alike, from offering more “flexible fuel” options and gasoline-electric hybrids, while improving base fuel economy through new technology and design efforts.

For example, the Chevrolet Silverado and GMC Sierra pickup trucks produced by General Motors can come equipped with 5.3L V-8 engines able to run on gasoline or E85, a blended fuel comprised of 85% ethanol and 15% gasoline.

“It’s increasingly clear that, of anything that we can do over the next decade, ethanol has by far the greatest potential to actually reduce U.S. oil consumption, reduce oil imports, and reduce carbon gas emissions,” said Rick Wagoner, GM’s chairman & CEO, recently.

“GM now has more than two million E-85 vehicles on the road, with plans to expand production significantly going forward,” he said. “In fact, if all of the E-85 vehicles that GM, Ford, and Chrysler have already built, plus those that we have committed to produce over the next 10 years, were to run on E-85, we could displace 22 billion gallons of gasoline annually.”

Waggoner also notes that E85 ethanol fuel produces fewer greenhouse gases during the combustion process and can enhance engine performance. And while ethanol today is mostly made with U.S.-grown biomaterial, such as corn, GM is helping promote research to turn non-food plant materials such as lumber mill waste, switchgrass, lawn clippings and even garbage into what’s called cellulosic ethanol. Unlike corn-based ethanol, the cellulose in the products used to make cellulosic ethanol must be pre-treated and then broken down into sugars before they can be fermented, a step called cellulosis. However, the technology required to do this is still under development, he stressed.

Chevrolet also plans to launch a two-mode hybrid version of its pickups in 2009, based on a system introduced with the 2008 Tahoe sport utility vehicle (SUV). The Tahoe Hybrid full-size SUV uses an all-new electrically variable transmission (EVT), combined with active fuel management, specific aerodynamic aids, lighter components, and electric motor to obtain fuel economy of 21 miles per gallon

Ford Motor Co. is grouping its alternative efforts under a broad “sustainability” strategy that aims to lessen the overall impact of its motor vehicles on the environment. Intended to guide the company through 2020, the strategy serves as a road map of both near- and long-term technological changes for its products to improve fuel economy, reduce pollution, address climate change and bolster energy security, Alan Mulally, Ford’s president & CEO, noted recently.

The cornerstones of the strategy include a new generation of fuel-saving, turbo-charged, gasoline engines for lighter vehicles, weight reductions of 250 to 750 pounds, fuel-saving transmissions, advanced electric power steering, aerodynamic improvements, plus more hybrid offerings and diesel engines for light-duty vehicles, added Derrick Kuzak, Ford’s group VP for global product development.

A new generation of smaller-displacement turbo-charged gasoline engines with advanced fuel-saving direct injection technologies is a near-term part of Ford’s plan, engines that can provide a fuel savings of 10% to 20% without compromising performance, he notes. “With direct injection, fuel is injected directly into the combustion chamber in small, precise amounts. When this is combined with turbo charging, customers will enjoy better performance and fewer trips to the gas pump,” Kuzak noted.

Light truck makers are also trying to encourage wider use of biofuels by putting their warranties behind them. For example, Chrysler approved the use of B20 in its diesel-power Dodge Ram pickups two years ago: a blended fuel comprised of 80% regular diesel and 20% biodiesel, which is made from soybeans. A B2 biodiesel blend, comprised of 2% biodiesel, is approved for diesel-powered Dodge Sprinter vans.

“Biofuels represent a huge opportunity to reduce fuel consumption and our dependence on foreign oil,” noted Tom LaSorda, vice chairman and president of manufacturing at Chrysler. “While diesel technology alone can make big strides toward helping us meet our national energy, environment and security objectives, when you add biodiesel and other biofuels, it gets really interesting. They are proof that at least part of the solution to our energy, environment and national security issues can be homegrown.”

So now at least it’s a race of sorts to find ways to counteract the skyrocketing price of petroleum – and the hope is continued high prices at the pump will get commercial users and consumers alike to buy into more of these alternatives very soon.

I spent some time with Dan Arcy from Shell Lubricants a few weeks back at the Technology & Maintenance Council’s annual meeting, talking about how the concept of “lubricant management” is getting some legs within trucking circles. In essence, lubricant management is about looking at all the engine oils, greases, coolants, and other fluids a trucking fleet uses not so much as individual products but in terms of goals: reduced wear and longer life for engines and components, longer drain intervals to lower overall maintenance costs, etc.

“It’s more than just looking at products individually – it’s also about dialing in the services behind them as well, such as oil analysis, benchmarking results against our collective database, etc.,” Arcy told me. “It’s about getting the whole package.”

Now, obviously, Shell is biased towards this concept, because they see it as a way to secure more of their customer’s business: for the end result of “lubricant management” should be a fleet going with one supplier for all of their greases, engine oil blends, etc.

Yet if you look beyond that bias for a second, the concept of “lubricant management” does make a lot of sense. Lubricant suppliers are compiling tons of detailed data from individual customers on the performance of various oils, greases, and fluids, adding them to a massive internal database. I can see a lot of benefit for fleets to benchmark their results against those of operations similar to their own. For example, that could help them better determine drain intervals and other details that can help save money over time.

(Dan Arcy, at left, and Jonathan Ubil conduct a demonstration of Shells’ Video Check service for engines … more on that farther down in this entry.)

“We can look at everything in great detail: the impact of engine idle time, stop and go operation versus over-the-road, and other variables,” Arcy said. “We can roll the engine oil, transmission fluid, and other lubricants all into one model and look at performance metrics. We can analyze the whole maintenance impact from this kind of data.”

“Lube Match” is one of Shell’s newest services in this arena: comparing the lubes used by a particular customer against data gleaned from hundreds of fleets worldwide in similar operations, using a variety of engines. “It takes a lot of the guesswork out when a fleet is looking to change lubricants and engines,” Arcy explained. “And they can also look at a variety of blends, too, from ‘premium’ down to low-cost products, so they can factor in price as well as lubricant performance in their decision-making process.”

Shell also offers its own unique twist when it comes to engine oil analysis, through its “Video Check” service. Introduced two years ago, Video Check uses a miniature digital camera to inspect the interior components of an engine to spot problems, reducing the need for a costly and time-consuming physical breakdown.

(Shell’s Video Check service in action).

The camera is fed into the diesel engine through the cylinder fuel injector port using a fiber optic cable, illuminating the inside of the engine and transmitting the images to a monitor. The service can inspect the piston crown, combustion chamber, cylinder wall, valve seats and head, Jonathan Ubil, one of Shell’s skilled Video Check operators, told me.

“During routine maintenance, it is virtually impossible to inspect the internal components of an engine to identify damage and prevent failures that can lead to greater expenses,” he said, noting it takes about 20 to 30 minutes too look at an engine this way, versus the many hours needed for a physical inspection. “This is a valuable tool to help identify engine problems and cut down the cost of diesel engine maintenance.”

And it’s not just about getting a “snapshot” of the fleet’s engine health, added Arcy. This system can also be used to look at used trucks pre-sale or verify the impact of extended oil drains on pilot test trucks. There’s many different ways to use this technology to save fleets money when it comes to maintenance, he stressed – again, a service that’s part of Shell’s lubricant management package.

“If we can maximize lubricant life across the fleet, then we save them money.” Arcy told me. “And we use all the other tools we have – our laboratories for lubricant analysis, our database, and Video Check, among others – to verify the results they are getting. That’s what getting the whole package is all about.”

“There is an old joke among economists that states: A recession is when your neighbor loses his job. A depression is when you lose your job.” –Anonymous

OK, OK – I’ve already been taken to task for using the “R-word” in this space when, technically at least, the U.S. isn’t in a recession (defined as a decline the U.S. gross national product or “GNP” for two consecutive quarters). And I’ve also been told rather bluntly that continuing to use the “R-word” can become a self-fulfilling prophecy of sorts.

All that aside, it’s pretty hard to ignore the economic troubles bombarding the U.S. right now — from paying $100-plus for a barrel of oil, a meltdown in the housing market coupled to a total collapse in the value of mortgage-back securities. Just look at the fate of the venerable 85-year old investment bank Bear Sterns: worth $20 billion in January this year (a scant 10 weeks ago), J.P. Morgan bought it lock, stock, and barrel for a mere $236 million this week, with the Federal Reserve guaranteeing the value of Bear Stern’s mortgage-back ed securities holdings in the bargain.

Yet the fate of Bear Sterns also shows the flip side of a downward economic slurge – those that have husbanded their capital can reap some big rewards. Call it “vulture capitalism” if you like, but J.P, Morgan just got one heck of a deal – and many other businesses, even in trucking, may be in a position to make some similar gains if they play their cards carefully.

As usual, Professor Jerry Osteryoung of the college of business at Florida State University has some thoughts on this subject. So I am going to lay off digging my own hole on this sensitive topic to let him fill it back in for me. Professor Osteryoung, the floor is yours:

“With the economy slowing down and probably moving into a recession, you must take caution as sales for most firms are going to be reduced. However, a number of positive opportunities that were not available before will be coming out of this recession as well.

The number one positive by-product of this recession is that loan rates are falling dramatically. Now is the time to look into refinancing all of your assets. Whether you have short-term or long-term debt, now is the time to secure a much lower rate. Look at all your assets, from car financing to building mortgages, and consider refinancing them. Just a 2% decline in rates on a 15-year loan of $100,000 will save you about $100 a month or $18,000 over the entire loan period.

Another thing to consider in this economy is buying a building for your business. With both property values and interest rates falling, the real estate market for commercial property is getting softer. It is almost as if this is the perfect storm (in a good way) to buy commercial property. We just may not see this type of buying opportunity again for many decades. Additionally, you may be able to afford a much larger building now that these two elements are being driven down.

Many firms are too heavily leveraged with debt to survive the falling sales of a recession. This is another perfect opportunity to step up and acquire some of these firms to gain market share at a very reasonable price. There will also be more business bankruptcies, which presents yet another chance to acquire some very inexpensive assets. Normally at a business liquidation auction, the average price is ten cents for every dollar of cost.

Another function of a slowing economy is that firms often let good employees go, as they can no longer afford the overhead. Consequently, if you can afford it, this is a perfect time to bring on some great new employees that would otherwise be unavailable. This labor surplus will last mainly during this year, however. Once the economy starts to improve around the middle of 2009, you can expect the labor supply to be very tight for the next five years.

Finally, the last thing that you can do is look at every vendor contract to see if you can negotiate better prices. Like you, most of your vendors are seeing their sales slow and will want to maintain their customers at almost any cost. If they have to choose between a price reduction and losing you as a customer, they are going to give you the price reduction – so long as it is within reason.

While sales and profits will be negatively affected, recessions present a number of business opportunities, from property acquisitions to price reductions. The key is to go out and find these opportunities, then take advantage of them.”

Good advice, as always, from someone who’s been there and done that over the course of his career listening to and teaching a wide variety of business entrepreneurs.

You can reach Professor Jerry Osteryoung by e-mail at jostery@comcast.net or by phone at 850-644-3372. All of Dr. Osteryoung’s articles, by the way, can be found in a searchable form at www.cob.fsu.edu/jmi.

The port of Long Beach in California, as everyone knows by now, is pushing hard to get drayage truckers to turn in their old equipment and upgrade to trucks powered by either 2007-model clean diesel engines or ones using liquefied natural gas (LNG). The question is, however, which of those fuels is the most cost-effective option.

(Photo of a new LNG-powered Kenworth T-800)

Right now, despite the higher premium for 2007 engines (which adds up to $10,000 to the sticker price on a new Class 8 tractor) and the extra cost per gallon for ultra low sulfur diesel (ULSD) fuel (between five and 10 cents per gallon more), diesel still seems to be the less costly of the two options. Not only is the price tag for an LNG-powered truck far and away more pricey than even a 2007-engine equipped tractor, there’s the cost of the LNG refueling infrastructure to consider, too.

The Diesel Technology Forum (DTF) – a research group headquartered out near my neck of the woods in Frederick, MD – recently published an “LNG vs. Clean Diesel” analysis, looking at the costs the port itself would shoulder to get truckers to switch to one fuel or the other. And yes, while the DTF is indeed completely biased in favor of diesel (I mean, please, the group has ‘diesel’ in its name!) their research is usually spot on.

And Allen Schaeffer, the DTF’s executive director, stresses that in this particular case, it’s not which fuel is better: it’s a matter of which fuel will cost the public taxpayer less to achieve clean air goals. “With cleaner [engine] technology and ULSD fuel, on average new diesel vehicles now have near equivalent or lower emissions compared to LNG vehicles – and LNG vehicles cost nearly twice as much to purchase and require new multi-million dollar fueling station infrastructure,” he said in a recent statement.

(One of five new LNG-powered tractors bought by California power company PG&E)

And as the port of Long Beach harbor commissioners want to replace at least half of current port drayage diesel trucks with ones powered by LNG, the “expenditure of public funds” as Schaeffer noted becomes a big issue.

According to the Port of Los Angeles presentation at the 2008 Faster Freight, Cleaner Air conference February 25 this year, new clean diesel drayage trucks cost approximately $110,000 each, which is significantly less than comparable LNG vehicles at $210,000. And both Ralph Appy, director of environmental management at the port of Los Angeles and Robert Kanter, director of planning and environmental affairs at the port of Long Beach, feel that emissions levels of the two types of trucks are “very, very close.”

Compare 2007 engine emissions data with LNG for example. On average, clean diesel is lower than natural gas in four of five emissions categories – particulate matter, carbon monoxide, methane, and non-methane hydrocarbons, according to DTF’s research. Diesels are just 2.4% percent higher in emissions of nitrogen oxides (NOx) but in terms of particulate matter, on average, 2007 natural gas vehicles emit levels 233% higher than clean diesels.

The other major hidden cost of natural gas technology is the need for infrastructure, said Schaeffer. Clean diesel vehicles are able to use the current refueling infrastructure while new LNG vehicles require new fueling stations, costing over $5 million each (an estimate worked out by California’s South Coast Air Quality Management District). “It is reasonable to suspect that the economics … will substantially delay cleaner air for the surrounding communities, since for every LNG truck ordered, nearly two clean diesel trucks could be on the road today,” said Schaeffer.

(Refueling an LNG-powered truck requires caution, as LNG must be stored at super-cold temperatures in order to turn natural gas into a liquid. Photo courtesy of PG&E.)

“The Port’s decision is further at odds with the California Air Resources Board (CARB) that has maintained a fuel-neutral and competitive playing field approach,” he added. “Clean diesel equipment exists today in the form of CARB [California Air Resources Board] certified new engines and trucks and proven emissions control technology to help clean up older diesel trucks. By focusing on the most cost-effective, quickest route to cleaner air, California will be able to maximize its investment in cleaning up the air faster while keeping vital freight moving.”

For example, last year CARB presented data that showed Level 3 emissions retrofit equipment costs about $30,000 and should reduce pollution in older trucks by 85%. CARB proposed that $25 million in early grant projects for goods movement air quality improvements should be allocated primarily to truck retrofits and replacement due to its low-cost nature. Now, under the Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act of 2006, CARB is authorized to spend a total of $1 billion on air quality improvement projects in California’s major trade corridors – which includes the Los Angeles/Inland Empire Region, the Central Valley, the Bay Area and the San Diego/Border Region. That means a lot more trucks could be retrofitted versus how many LNG-fueled rigs for that money.

Then look at the port grant structure vehicle costs alone: according to the port of Long Beach, grants for LNG trucks will range from $90,000 to $120,000 while clean diesel truck grants could be from $60,000 to $75,000. In addition, cargo owners will further subsidize natural gas vehicle users through exempting LNG vehicles from the ongoing cargo fee, while selectively imposing a $35.00 per loaded 20 foot equivalent container (TEU) unit on clean diesel trucks. The LNG truck approach, the DTF said, has public implications since the ports indicate they plan to use taxpayer funds through the South Coast Air Quality Management District and the state Proposition 1B transportation bond funds to fund technology choices. In effect, said the DTF, California taxpayers will be subsidizing a pre-selected and favored technology – LNG – rather than allowing competitive free market forces to determine the most cost effective technology.

This isn’t to slam LNG, by the way. It’s a fuel whose time is coming for heavy trucks. I mean, with the cost of oil up over $105 per barrel these days, and with diesel costs in excess of $4 at the pump in many spots across the U.S., we need to look at every alternative to petroleum to fuel the trucking industry. The question we need to answer is, should it come courtesy of direct payment of public tax dollars as we grapple with a slowdown in the economy? Is it the best use of tax dollars?

This is also where two big issues collide: cleaner air vs. energy security. The question can also be asked whether clean diesel trucks at the port should be fueled exclusively with B100, a 100% biodiesel fuel blend. I mean, California’s warm weather creates an ideal operating environment for this fuel, made from soybeans and other organic materials, plus there’s no need to build expensive refueling infrastructure. So if we’re going to mandate something that cleans up the air and makes us less reliant on imported oil, shouldn’t biodiesel be the most cost-effective option?

I am not sure where to go on this one. What I do know is that this is a huge effort to radically change the equipment base serving California’s major ports. It’ll be interesting to see how this plays out in the days ahead.