Trucks at Work Blog

“We need to raise the profile of our business in the minds of people who may not know they can find well-paying careers as service professionals in our dealerships.” -Gary Gibson, president of Tri-State Sterling Trucks in Cincinnati, Ohio.

Ryan DeLaRoi cut his teeth working on diesel engines under rather hazardous conditions: on deployment in Iraq. During his second tour in the war zone, DeLaRoi - a Corporal in the U.S. Marine Corp - repaired Humvees and other diesel-powered vehicles: sometimes in the face of sandstorms and far-deadlier bullets.

But after nearly 10 years, the Marines discharged DeLaRoi due to knee and back injuries sustained during his military service. He decided to attend the diesel mechanics program at Western Iowa Technical Institute (WIT) to enhance his technician skills gained on the battlefield, participating in a veterans-civilian workforce transition program, which helped pay for his tuition and the tools he needed for his trade.

(Once a Marine, always a Marine is how the saying goes … but Ryan now works on civilian trucks to make a living.)

When he heard the local Peterbilt dealership in Sioux City, Iowa, was always looking for a few good technicians, DeLaRoi stopped by for a visit with its service manager, Harland Gylfe, and the 32-year-old quickly found himself - despite his minor disabilities - maintaining and repairing heavy-duty trucks for a living after graduating from WIT in December 2007.

“The working conditions are great, especially compared to working on Humvees in Iraq,” he said. “Most of my military equipment repairs were done outdoors and it was hard to keep the parts clean. Sometimes, a vehicle would break down on patrol and there was a chance I would get shot at while fixing it. This happened several times.”

Another disadvantage for war zone mechanics is the lack of power tools, which is why DeLaRoi appreciates the equipment he gets to use at the Sioux City Peterbilt dealership. “It‘s a lot better working conditions and less strain on my knee brace and back,” he said.

One reason DeLaRoi works as a heavy-duty truck technician today is that Sioux City‘s Gylfe is active on WIT‘s diesel mechanics advisory committee and hired DeLaRoi to work part-time on the evening shift while attending school.

“I find veterans make good workers; they‘re experienced, dedicated, dependable and have a strong work ethic. Ryan is another good example of a vet‘s transition to a skilled civilian worker,” Gylfe said. “He is doing a good job servicing diesel trucks and learning to do more types of maintenance and repair tasks.”

(Finding enough technicians to handle the maintenance and repair needs of the trucking industry is going to be a challenge for dealerships and fleets alike.)

Gylfe has hired many military veterans for Peterbilt‘s service department over the years as he continues to seek new pools of recruits to fill out the technician ranks at his facility. And it‘s this struggle - finding an adequate supply of techs - that he shares with much of the heavy-duty truck dealership community in the U.S. these days.

“We need to recruit qualified dealership employees, especially truck technicians, to protect the industry’s long-term viability,” said Gary Gibson, president of Tri-State Sterling Trucks and the new chairman of the American Truck Dealers (ATD) division of the National Automobile Dealers Association (NADA) during the 45th annual ATD Convention & Expo in Dallas, Texas, earlier this year. “Dealers will have their hands full as they attempt to operate profitably during these difficult times.”

George Grask, the outgoing chairman of ATD, called on dealers to take steps to protect the viability of dealerships during challenging times. “Whether it‘s the service we provide, the parts we sell, the hours we keep - we need to continue to evolve to meet the needs of our customers … to offer the very best customer service and support,” he said.

In addition to first-rate customer service, Grask - owner of Cedar Rapids Truck Center, Cedar Rapids, Iowa - emphasized the need for dealers to keep pace with the newest technology, including proprietary engines, hybrid technology and telematics. He also called on truck dealers to continue to educate themselves on the management and leadership qualities required to run increasingly complex businesses.

(Technicians are essential — which is why a sufficient populations is critical to the trucking industry’s future.)

“The fact is our business is essential,” he stressed. “Nothing happens until a truck delivers it. In the U.S., trucks and truck dealers will continue to be a necessary and vital part of the economy.”

This is oh so true. But finding the technicians necessary to keep those trucks rolling is going to become and bigger and bigger challenge for dealerships in the months and years ahead.

“Continuous improvement is the name of the game.” -Gary Petty, president and CEO, National Private Truck Council

We all know it‘s a challenging time for the trucking industry, whether you operate 10 or 1,000 trucks, whether you are a for-hire or private carrier. That reality got serious acknowledgement at the National Private Truck Council (NPTC) annual conference in Cincinnati, OH, this week.

(The show floor at NPTC’s annual convention, held in Cincinnati this year.)

The 900 or so attendees all worried about the impact of sky-high diesel fuel prices on their businesses - then expressed further concern about finding and keeping drivers, getting more productivity out of their existing assets, managing equipment costs better, and on and on.

“Many of you are also going through fleet justifications - a ‘re-evaluation‘ of the private fleet within your company‘s business,” noted Gary Petty, NPTC‘s president and CEO, during his keynote speech. “That‘s why events like these, where you can share ideas and network with your peers, is so critical. For you never know when an idea may be found to help solve a problem your company faces.”

(Gary Petty, NPTC’s president and CEO, is on the right. That’s Dan Baker on the left, trucking consultant and motivational speaker.)

A lot of ideas and information-gathering projects are getting up a head of steam at NPTC, ones geared to help the industry as a whole improve across a range of areas. First, the group is looking to add a dozen or so carriers to the 125 fleets already participating in its benchmarking study, so private fleets can compare themselves against the industry leaders to see where they can make improvements.

Petty mentioned that NPTC is also going to take a fresh look at the size and weight issue ahead of the next highway funding reauthorization bill, funding a study with the University of Michigan‘s Transportation Research Institute (UMTRI) to see if larger trucks carrying 97,000 lbs. versus today‘s 80,000-lb. limit can reduce the number of trucks on the road and thus reduce energy consumption. NPTC is looking for six carriers to participate in this study, Petty added.

“We‘re going to try and scientifically establish gains in productivity plus more effective use of highways and bridges via this study, which should start this may and end in September,” he said. “We believe it will be an important contribution to public policy.”

NPTC is also going to redouble its focus on the truck driver community as it looks to expand current driver recognition efforts. That includes the creation of an “All-Stars” program in Sept. 2009 (based on safety data compiled this year) where drivers will be nominated based on customer service, personal appearance, cleanliness of equipment, on-time delivery rates, as well as safety. “These non-driving functions are so critical to the private fleet‘s function today and deserve recognition,” Petty said.

(Robert Boyich of CPC Logistics took home an award from FleetOwner for being the top gradutate in NPTC’s Certified Transportation Professional program for 2008.)

Finally, NPTC is forging a new relationship with third-party logistics provider C.H. Robinson, to provide NPTC member fleets with access to pools of backhaul freight nationwide. Called “Fleet Optimizer,” Petty said the program seeks to reduce the average 28% of deadhead miles private carriers log every year by giving them access to consistent freight volume in lanes they already cover.

(Many suppliers at NPTC’s convention used tricked out trucks as part of their exhibit displays.)

“We already work with private fleets - this program formalizes and expands that effort,” Eric Jax, branch manager for C.H. Robinson‘s national carrier group, told me at the show. “Private carriers not only have consistent capacity on dedicated routes, they have the kinds of drivers and focus on safety and professionalism we look for. We are always looking to build more consistent capacity and we plan to begin ramping up this program over the next several months.”

So despite the challenges now engulfing the trucking industry as a whole, private fleets and the association that represents them, aren‘t standing still - their mapping new courses to help improve their business models.

“We need to let the world know our value,” said Petty. “They need to know how we help our nation keep rolling.”

“Leaders learn by leading, and they learn best by leading in the face of obstacles. As weather shapes mountains, problems shape leaders.” -Warren Bennis

You‘re going to hear a lot about benchmarking in the days ahead - how to benchmark the price you pay for fuel against others fleets, truck stops, etc.; how to benchmark your overall fleets costs against industry averages; how to benchmark your customer service levels; and so on and so forth.

Bernchmarking is a tool that goes in and out of vogue in American business, but it‘s also one that is becoming more critical for fleets today as they seek to gain much tighter control of costs. As Jim Angel, director of business development for T-Chek Systems, said here at the National Private Truck Council meeting here in Cincinnati this week, it‘s all about the pennies: what can two cents saved per gallon or per mile per truck add up to over a year‘s time. The answer is a LOT; so fleets need to look for every penny of savings they can.

As usual, Professor Jerry Osteryoung at the college of business at Florida State University has some thoughts on this topic, so I am going to turn the stage over to him today. Professor Osteryoung, the floor is yours:

“One thing every firm needs to have in place is a system to measure their performance against an industry average or some other criteria. Benchmarking is one such way to compare your firm‘s performance against others to get an idea of how you are doing. In addition to sales growth rates, you may benchmark against advertising expenses as a percent of sales, debt to total asset ratios, gross profit margins and net profit margins, as well as a number of other operating and financial figures.

When it comes to measuring how well your firm is doing, you just cannot compare past performance with the current year‘s performance in isolation of what other firms are doing. One of the firms we were helping thought that their 6% growth in sales from last year was evidence of how well they were doing. However, as the industry average for the same period was 12%, it was clear that they were not doing nearly as well as they thought there were.

A restaurant that we are working with had a cost of food percentage (food costs divided by sales) of 56%. The owner thought he was doing ok, but the typical benchmark for restaurant food costs is right around 30%. The owner did not really understand how far off his food costs were, as he had no basis of comparison.

After working with him and showing him these numbers, this restaurant owner was able to reduce his food costs to 35% with more reductions to go - all within a period of one year. Additionally, his net profit margin went from almost zero to 10%, and his dollars of profit skyrocketed. For this entrepreneur, the reduction in food costs was easy once he had a goal in mind, and that is exactly what benchmarking can do for you.

It is important to bear in mind, however, that with most numbers, you cannot take an industry average or benchmark as a perfect goal or standard. Rather, benchmarks should be used as a guide, and you must use judgment to interpret what the results are really saying. For instance, in many cases, firms‘ net incomes are much larger than the benchmark. However, this is frequently caused by the owners‘ desire to take out distributions of profits rather than salaries.

There are a number of neat places that provide information about benchmarks. One such source is www.bizstats.com, which offers some of this information free of charge.

The source I consulted is Financial Research & Associates (FRA) who, for the last 23 years, have issued an annual book reporting firm benchmarks. Most of their data comes from accountants who produce financial statements for companies, and the figures are broken down enough to provide a good industry comparison and benchmarks. The cost for this book is around $140.

Another source I used is the RMA Annual Statement Studies. This database is much larger than the FRA, and the data comes from financial statements provided to commercial banks by accountants. It shows 16 “classic” financial ratios, each grouped by industry: current ratio, quick ratio, sales/receivables, cost of sales/inventory, cost of sales/payables, officers compensation and sales, gross and net profit margins, and more. This is a great data source providing a wealth of information, but the cost per year will run you about $500.

The bottom line is that there are many sources of financial information that can be used to benchmark your company‘s performance. Every firm should utilize benchmarks in order to ensure that they are properly measuring how well they are doing.”

For more insight, you can always reach the good professor by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.

“It‘s all too common for middlemen in the trucking industry to push shippers to pay fuel surcharges, but only pass along a portion of those surcharges, or none at all, to the truckers who are actually transporting the goods and paying the fuel bill.” –Todd Spencer, Executive Vice President, Owner-Operator Independent Drivers Association.

It‘s no secret that fuel surcharges are an absolutely critical piece of the trucker‘s survival kit these days. Without some quick, turn-key financial mechanism for offsetting skyrocketing fuel prices, carriers and owner-operators would find themselves broke in a hurry.

Yet most shippers don‘t like fuel surcharges, largely because they feel - and there is some truth to this - that they are getting “double billed” for freight service. That‘s not to say shippers reject the whole concept of fuel surcharges, mind you - indeed, forward thinking companies like Wal Mart use them as incentives. For example, carriers that become certified under the Environmental Protection Agency‘s SmartWay program actually get a bigger fuel surcharge from the colossal retailer (talk about an incentive for going green!)

(Fuel costs are putting a huge dent in the wallets of big carriers and independents alike.)

On the whole, however, there is a kernel of truth in the shipper complaint about fuel surcharges. Look at some recent earnings reports and you‘ll see. For example, Werner Enterprises reported that revenues increased 2% to $512.8 million in first quarter of 2008 compared to the same period in 2007 … but if you take out money gained from fuel surcharges, its revenues actually DECLINED 6% to $417 million in first quarter this year compared to the same period last year. That‘s almost a $100 million swing in revenues, based solely on fuel surcharges.

One complaint from small carriers and owner-operators - and this is very true - is that many brokers charge shippers a full fuel surcharge for moving freight … yet then only pass through a small part of that to the truckers themselves. That‘s a nice way to make a tidy piece of change, but it sure leaves a hole in the trucker‘s wallet.

The Owner-Operator Independent Drivers Association (OOIDA) has fought this kind of business tactic for years and has also lobbied hard (but unsuccessfully) for a mandatory fuel surcharge for trucking. That effort got torpedoed several years ago, but now OOIDA is taking a roundabout stab at it again by supporting legislation to pass through the entire surcharge to whomever pays the fuel bill. This makes some sense, but it‘s bound to encounter some heavy resistance, I think.

Called the “Truthful Reliable Understanding of Consumer Costs” or TRUCC Act, introduced into Congress by Senators Olympia Snowe (R-Maine) and Sherrod Brown (D-Ohio), it requires that 100 % of fuel surcharges levied on shipping customers be passed through to whoever actually pays for the fuel to haul the shipper‘s goods - in most cases, that‘s truckers, says Todd Spencer, OOIDA‘s executive VP.

(Freight’s gotta move — and that requires trucks to burn fuel, no matter how you look at it.)

“This bill will go a long way toward helping truckers survive the brutal cost of fuel,” he notes. “And it will provide needed assurance to shippers and ultimately consumers that higher shipping costs are actually because of higher fuel prices and not gouging by greedy middlemen.”

He stresses that fuel surcharges have long been the primary mechanism for trucking companies to respond to increased fuel costs. With diesel prices consistently rising, shippers are paying more now in fuel surcharges to get their freight moved than they ever have before. “It‘s all too common for middlemen in the trucking industry to push shippers to pay fuel surcharges, but only pass along a portion of those surcharges, or none at all, to the truckers who are actually transporting the goods and paying the fuel bill,” Spencer says.

The crux of the problem is that independent, small business truckers seldom deal directly with shipping customers as most of the freight they haul is acquired through third-party logistics companies or through larger trucking companies they are leased to as independent contractors. Mid-size trucking firms often have contracts with shippers for “front hauls,” but depend entirely on brokers for “back hauls” and it‘s these small and mid-sized trucking firms that are being hit hard by diesel prices that now average $4.21 a gallon.

Now, the last time such legislation came up - OOIDA looked for not only a mandatory pass through but also a mandatory fuel surcharge for the entire trucking industry starting back in 2001 - it got heavy resistance from shippers and carriers, too. The American Trucking association resisted it, because the trade group said at the time that it had not been demonstrated that failure to pass through fuel surcharges to owner-operators truly exists, thus deserving Congressional intervention.

“To the extent that motor carriers are able and willing to negotiate with shippers for fuel surcharges and collect such surcharges, those surcharges are generally passed on to those responsible for paying for fuel - if such party is not the carrier itself,” the ATA said back in 2005 right before the legislation got quashed. “Responsibility for payment of fuel costs is an item to be negotiated as part of the owner-operator lease between an owner-operator and a motor carrier. Due to the driver shortage, owner-operators are in a position where they have considerable bargaining leverage.”

The ATA also said it didn‘t know of any statute or regulation that prohibits the ability of owner-operators to negotiate either a rate that covers the owner-operator‘s fuel expense or a fuel surcharge. “They are in the same position and have the same ability to ask,” the group said.

Some 40 groups opposed the last fuel surcharge legislative effort, including the U.S. Chamber of Commerce, the National Industrial Transportation League (NITL), the Transportation Intermediaries Association (TIA), the National Association of Manufacturers (NAM), and I‘d expect at least some of them to oppose this one.

One thing is for certain, though: fuel costs are turning this industry on its head. In 2003, the trucking industry paid $52 billion for fuel. This year, it‘s going to be north of $135 billion, according to projections from the ATA. Just 10 years ago, diesel hovered around 90 CENTS per gallon. Today it‘s over $4.21 and may go higher still. Fuel is now the number one cost - surpassing employee wages and benefits - at many carriers now and it looks like things may only get worse where fuel is concerned in the near future.

“West Virginia spends more than $1 million annually to remove litter from state highways.” -West Virginia Department of Transportation annual report

So another Earth Day has come and gone, with lots of opinion pieces in newspapers about the threat of Global Warming, increasing vehicle fuel economy standards, and the inevitable plethora of rock and roll concerts designed to “raise the consciousness” about the many environmental issues facing our little planet.

Pardon me if I sound so very cynical about all this. We go on, and on, AND ON about how to solve any number of issues - reducing energy consumption, decreasing pollution, etc. - that usually involve billions of dollars and decades to realize. But here‘s a simple one we can do right now — in fact, this instant:

PICK UP THE $#&*! TRASH THAT‘S ALL OVER THE PLACE!

I mean, come on people! We spend about $115 million a YEAR in this country just picking up all the litter dumped on the side of our highways! According to the good folks at the West Virginia Department of Transportation, an average two-mile stretch of highway contains 32,000 pieces of trash! And all this stuff ends of choking creeks, streams and rivers, plus killing all sorts of wildlife, from fish to birds.

(Courtesy of the Sierra Club)

Here‘s another factoid: During a one-time sweep of Interstate 35W in Minneapolis, Adopt-a-Highway volunteers picked up 192 tons of trash in one day. The quantity filled 16 Minnesota Department of Transportation tandem trucks, representing approximately 6,000 filled trash bags.

I mean, you‘d think that all those “green-niks” in Hollywood could get off their high horse about buying “carbon offsets” and actually DO something PRODUCTIVE, like maybe pick up and recycle the trash from all the swag they get at award shows every year.

Look, municipalities in the U.S. generate some 251 million tons of trash (before recycling) per year, according to the Environmental Protection Agency (EPA) or about 4.6 pounds per person per day. Compare that to the 88.1 million ton generated in the U.S. back in 1960 - roughly 2.7 pounds per person per day - and you can quickly see why trash is a big issue.

(I am also still waiting for a legislature or governor somewhere to step up and claim the cigarette butt as its state flower. There‘s just so many of the freaking things all over the place - and here I thought smoking was on the way out!)

One reason we still have so much trash around is that we aren‘t recycling a whole lot of it. In 2006, the recycling rate was 32.5%, with 81.8 million tons of materials recycled, according to the EPA‘s numbers. That‘s better than the 6.4% rate back in 1960, but still not great. Chief among materials recycled today are automotive batteries (99%), steel cans (62.9%), yard trimmings (62%) paper and paperboard (51.6%), plus aluminum beer and aoft drink cans (45.1%). At the bottom are tires (34.9%), plastic soft drink bottles (30.9%), HDPE milk and water bottles (31%), and glass containers (25.3%).

(Local volunteers conducting highway clean up in Missouri.)

Reducing trash production is also not only an easy thing to do - requiring very little beaurecratic mumbo jumbo (one hopes and prays) - it also generates an immediate environmental return. For example, each ton of recycled paper can save 17 trees, three cubic yards of landfill space and 4,000 kilowatts of energy.

(By the way, more on how trucking companies are reducing their use of paper in all sorts of creative ways - saving big bucks while being green - in a future blog post.)

(Where the trash SHOULD go. Kudos to companies like American Waste for the job they do every day.)

So how about we put the carbon offset boondoggle, free rock concerts, and op-eds on the shelf for a while and get down to just cleaning up our neck of the woods in the good old U.S.A. Just cleaning up the trash would really improve the environment quickly without all that much effort on our part.

“Our goal is to save fuel, not endanger jobs.” -Mary Peters, U.S. Transportation Secretary

So, the Department of Transportation (DOT) officially gave the green light (pun intended) yesterday to new fuel efficiency standards for cars and light trucks. The question we need to figure out is, will these new standards actually help reduce the consumption of oil by our nation? And frankly, with oil now costing $117 per barrel, is it already too late?

The DOT‘s new rules call for fuel efficiency standards for both passenger vehicles and light trucks to increase by 4.5% per year over the five-year period ending in 2015 - a 25% percent total improvement that exceeds the 3.3% baseline proposed by Congress last year.

(Chevy Suburbans like this one are covered by the new rules … when they go into effect that is. Photo courtesy of GM).

“This proposal is historically ambitious, yet achievable,” Mary Peters, U.S. Transportation Secretary, said in a speech yesterday. “It will help us all breathe a little easier by reducing tailpipe emissions, cutting fuel consumption and making driving a little more affordable.”

For passenger cars, the proposal would increase fuel economy from the current 27.5 miles per gallon to 35.7 miles per gallon by 2015. For light trucks, the proposal calls for increases from 23.5 miles per gallon in 2010 to 28.6 miles per gallon in 2015.

All told, the DOT said its proposal should save nearly 55 billion gallons of fuel and a reduction in carbon dioxide emissions estimated at 521 million metric tons. The plan should also save American drivers over $100 billion in fuel costs over the lifetime of the vehicles covered by the rule, Secretary Peters said.

(Will these new fuel efficiency rules reduce trips to the filling station? That remains to be seen.)

Is it enough? Many don‘t think so - though it should be noted that the voices giving the thumbs down to these new standards, such as Ralph Nader‘s advocacy group Public Citizen, opposed them from their very inception.

“The problem is that the nation is addicted to foreign oil, and transportation is one of the biggest reasons why,” commented Public Citizen last year as these new rules were in development. “This problem is simply much too big to be left up to the individual purchasing decisions of consumers, many of whom live in parts of the country in which they have no choice but to drive every day to go to work or the supermarket.”

The group noted that the federal government established the Corporate Average Fuel Economy (CAFE) program precisely because the market without any fuel economy requirement left the nation dangerously dependent on foreign oil. In fact, as CAFE standards have been allowed to stagnate for the past 20 years, that problem has duplicated itself: Manufacturers have chewed up fuel efficiency gains with larger engines, increased vehicle weight and many extras instead of applying them to increase fuel economy, said Public Citizen.

“Instead of taking advantage of technologies that could make vehicles more fuel-efficient, automakers have allowed those technologies to gather dust on the shelf and have produced gas-guzzling sport utility vehicles (SUVs),” the group stressed. “Automakers aggressively marketed SUVs to the American public … and U.S. auto manufacturers have focused a greater proportion of their production on the light-truck sector than the Japanese and European manufacturers and have recently extended a long-standing practice of giving consumers discounts, rebates and preferential loan rates in exchange for buying vehicles whose utility exceeds their needs.”

Now, there is some truth in all of this - in fact, much as I disagree with many of Public Citizen‘s stances on a variety of issues, they hit this one close to the bone. Back in the 1990s, Toyota and Honda were feverishly working on hybrid cars in their labs, while the “Big Three” (General Motors, Ford, and Chrysler) sat back and watched the money roll in from their highly profitable truck products - making as much as 50% profit on each vehicle sold.

Hey, gas hovered around 90 cents a gallon back in 1999, and everyone projected that fuel would stay at that bargain-basement price for years to come. Just the way housing prices would keep going up 20% a year, Internet companies were a sure-fire investment, and Enron‘s accounting practices conformed to accepted standards.

Yeah, right.

So here we are - finally!! - addressing fuel economy standards for cars and light trucks. Yet this is still just a proposal, now - it must go through the rulemaking process, which takes years. Meanwhile, gasoline costs an average of $3.60 a gallon across the country, with diesel spiking to $4.21 per gallon. These new standards are like over a decade too late, if you ask me.

Then again, it‘s better than nothing. DOT noted that, as required by Congress, the proposed rule allows for automakers to earn credits for exceeding CAFÉ standards - serving as an incentive to exceed these goals while giving manufacturers flexibility to meet the standards without compromising their economic vitality. “The goal is to save fuel, not endanger jobs,” Secretary Peters said.

(Alternative fuels such as hydrogen — as demonstrated here by President Bush — can’t come to market soon enough with gasoline and diesel pump prices as high as they are.)

“Looking at the fuel-efficient technologies already available, it‘s easy to see a not-too-distant future when cars fueled by something other than gasoline will be readily available and affordable,” she added. “Until that time, however, we will continue to do what we can, safely and efficiently, to improve gas mileage and help consumers spend less time and less money at the pump.”

Don‘t know about you, but I think that empty feeling in my wallet is going to be around for a long, long time to come.

“Don‘t give up the ship. Fight her till she sinks.” - Capt. James Lawrence, U.S.S. Chesapeake

I‘ve seen the same grim, steely determination that no doubt infused Capt. Lawrence and his crew as they faced the HMS Shannon in battle on the high seas in 1813 reflected in the eyes and words of many owner-operators I talk to nowadays. With the U.S. national average for diesel fuel at $4.21 a gallon, fuel surcharges hard to come by, and lackluster freight demand, many are fighting hard just to survive, much less eke out a profit at the end of each week.

(The indomitable Capt. James Lawrence)

Many may also face the fate of the Chesapeake, which ultimately lost its battle with the Shannon, followed by Lawrence‘s death from wounds sustained from small arms fire during that historic clash. Yet many others won‘t - not only surviving the current rough patch but also perhaps profiting as trucking capacity begins to again get scarce - much the way the United States escaped from several catastrophic losses during the War of 1812 (the burning of Washington D.C. the biggest of them) to eventually win that conflict against England.

I got the chance to talk with Robert Zuckerman, a veteran owner-operator operating from (of all places!!!) Rhode Island about the challenges facing independent truckers like himself these days. “There‘s two ways to look at the business these days: either you tough it out or get out of it,” he told me over the phone as he wrapped up a haul. “The question you need to ask yourself is, will I make the same amount of money I do now if I get out of this business? Because most likely, in whatever other career you choose, you are going to start at the bottom. So I am just going to tough it out. But here‘s the thing: I love this job and I don‘t want to do something else.”

(Robert Zuckerman, posed in front of his rig.)

Zuckerman is also of the “old school” when it comes to driving trucks, as he acquired and honed his skills in the late 1970s over the course of several years, maneuvering an ever-larger vehicle for his family‘s scrap metal business. “I learned on one piece of equipment at a time: from forklifts to a series of straight trucks, then a tractor, a tractor and 20-foot trailer, followed by a tractor and 40-foot trailer, and so on,” he related.

These were old 1950s and 60s Mack trucks, along with a 1966 Autocar, Zuckerman added, so shifting was like learning an ancient, intricate form of tai chi, with every movement requiring precision or disaster would strike. These trucks didn‘t have power steering either, much less air conditioning or air ride seats, so Zuckerman is more than appreciate of the modern-day comforts found on today‘s tractors.

“I appreciate trucking today so much, because I didn‘t have the air conditioning or all the electronics kids today take for granted,” he said. “It makes driving a lot easier.”

The important thing Zuckerman believes will get him - and others like him - through the current rough patch is the ability to adapt, the remain open to learning new skills (especially ones related to business management), and to renew his focus on the small details of trucking. For today, every single penny counts - not a one can be wasted, he told me.

“How do you survive? You need to make smart business decisions and pay attention to the small stuff,” Zuckerman said. “I never used to give a second thought to the small stuff, like $10 air filters. Now I do - and the $5 and $1 items as well. Not only am I paying attention to all the numbers, I am also trying to manage my time and effort better too - that‘s worth money to me as well. Because your time is NEVER free.”

Zuckerman’s also been working with Tim Brady — FleetOwner’s contributing editor, a former driver, and formidable trucking consultant in his own right — to beef up his business and financial management skills as well. “You have to go with the flow or get left behind in this business now,” Zuckerman explained. “I‘ve been an owner-operator for over 15 years, but just now I am getting my business organized on a laptop computer so I can track the numbers better.”

Yet he‘s also a big believer in keeping home and work life separate from each other: a hard thing to do when you are an owner-operator, but one he thinks is necessary. “Business is business and personal is personal: you need to remember you wear two hats when you drive for yourself,” he said. “I go so far as to not park my truck out in front of my house: I keep down the street a ways in a secure area. That way when I am home, I am completely focusing my time and effort on my family.”

Zuckerman applies his “steady as he goes” philosophy to his equipment as well, staying on a strict maintenance schedule that he thinks helps him stave off larger, more costly repairs over the life of his truck. For example, Zuckerman said he changes the oil on his 2000-model Volvo VN 660 every 10,000 to 14,000 miles - a much shorter interval than the manufacturer suggests - because he wants to keep the inside of his engine just as clean and in good working order as the outside of his truck.

“It‘s got 847,000 miles on it and I only had to rebuild the bottom-end of the motor at 500,000 miles and change one fuel injector. That‘s it in terms of major repairs,” he said. “I change all the filters at every oil change and change the transmission fluid every other year because that helps keep my truck in good working order. This truck has never given me any problems as a result.”

Still, he and his wife and their three kids are tightening their belts, cutting costs where they can, not going out to eat as much, watching every penny. His wife recently took her retail clothing business online so she could save the money spend on store rent. They plan to do what it takes so Zuckerman can keep driving, awaiting better days to return.

“The first four years after I bought my new Volvo were great - then the costs started increasing,” he said. “Also, the business isn‘t what it used to be. Common courtesy on the road isn‘t there anymore. We as drivers don‘t treat each other as equals anymore. But I am going to do what it takes to stay in this business. I‘ve been driving all my life: I could never sit in an office and push paper. This is what I love to do.”

“A business exists because the consumer is willing to pay you his money. You run a business to satisfy the consumer. That isn‘t marketing. That goes way beyond marketing.” –Peter F. Drucker

You hear a lot about the importance of “brand names” in the market place - especially in terms of supporting the brand and what it stands for. Truckers are more than familiar with this concept because they are some of the most “brand loyal” customers you‘ll ever fin. I mean, I‘ve talked to countless fleets and owner-operators that stick with Peterbilt, Kenworth, International, Mack, Freightliner, Sterling, Western Star, Volvo, you name it, and wouldn‘t switch truck brands unless you paid them.

(Of course, with the national average price of diesel fuel now at $4.21, they might be more easily swayed by a lot of greenbacks.)

Yet, seriously, while much of the brand loyalty in trucking comes from a certain mystique or character built up around each particular brand of road iron, a lot has to do with the dealerships and service behind each nameplate. Even when a trucker is considering switching brands for something lower prices or touted to get better fuel economy, the service he or she has received over the years gets factored into the decision.

I remember talking to veteran owner-operator Chuck Racine a while back as he shopped around for a new truck. For years he‘d owned Kenworths, but found himself willing to consider different brands if he could get better fuel economy. In the end, however, his long-time relationship with his Kenworth dealer in Evansville, IN proved to be the tiebreaker. Their service over many years kept him loyal to the brand and put him behind the wheel of a new T660, one equipped with a 2007 emission-compliant engine to boot.

(That’s Chuck Racine on the right, in front of his old truck, talking with Billy Paxton, VP at Paxton Van Lines, Chuck’s employer.)

That‘s why focusing on your own brand - whether you‘re a fleet or owner-operator - is so important, almost like a “mantra” these days. (And “mantra” is a term from India meaning words or vibrations used as “spiritual conduits” to instill one-pointed concentration in the devotee. It originated from the Vedic religion of India, later becoming a fundamental part of both the Hindu and Buddhist religions.)

I‘m going to let Professor Jerry Osteryoung from the college of business at Florida State University continue this line of thought, as he has some interesting points to share of the subject. Professor Osteryoung, as usual, the floor is yours:

“Branding is such an important element of marketing and the vision of the firm as it represents the promise to meet a customer‘s needs. Branding is concept that covers so much more than marketing. As branding is such a critical element with any firm, I am going to write a series of articles on this very important concept. This is the first of these articles in the series branding dealing with brand promises. A brand promise is the just a set of expectations and guarantees that a company offers to its customers.

(Probably one of the most recognizable and premier brands in the world today is Walt Disney World.)

As Peter Drucker says, customers buy your products and services and you must satisfy the customer. Branding is the way a business satisfies the customer besides prices. Just look at Apple or Disney who have great brands that came from years of working and developing their own brand. Not only must brands bring customers in the door, but also once they are there they must deliver on their promise. What would happen if Disney had a dirty park?

It is so important to understand that a brand is not yours but it resides in the customers mind. That is for a brand and a brand promise to be successful; it must be always viewed from the viewpoint of the customer.

While a cute logo is okay, what really differentiates a brand is the brand promise. Just look at Coca Cola whose brand promise is ‘The Real Thing‘ and how much they can charge for their brand over other non-branded drinks. Southwest Airlines has always had a brand promise related to price and FedEx‘s brand is “peace of mind.” When FedEx started its brand promise was delivery by 10:30AM. It still has this delivery time as part of its core values but it has changed the brand to reflect changing values in our society.

With any brand promise it must be customer-centric. If it is not related to the customer, it just is not effective. Additionally, some brand promises have to create a new industry classification, just look at Red Bull. They knew that the cola and citrus market were saturated as well as sports drinks. Red Bull used as a brand promise to ‘revitalize body and mind.‘ Just look at how this customer centered brand promise that clearly differentiates it from other industries. Disney‘s brand promise is ‘family fun entertainment.‘

Volvo car‘s brand promise has always been ‘safety.‘ I bought both of my kids a Volvo as I recognized this brand promise and it meant so much to my wife and me as it gave us piece of mind. Volvo is trying, however, to update this brand image for the 21st century.

(Vehicle testing being conducted at the Volvo Safety Centre in Sweden. Volvo cars, it should be noted, is now owned by Ford Motor Co.)

Bank of America‘s brand promise is ‘The Bank of Opportunity.‘ In order to get to this brand promise they analyzed the strengths in all of their businesses. While they used hard data to come up with this brand promise, there was so much that was not quantifiable. They had to use judgment, creativity and flexibility.”

Good points, I think, and one truckers of all shapes and sizes can use in their business. For in these tight times, every advantage you can gain with the customer - especially in terms of keeping them for the long haul at a good rate - is critical.

You can reach Professor Osteryoung by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.

“Unprecedented high diesel fuel prices, continued softness of freight demand, weaker demand in the used equipment sales market, and worse than normal winter weather conditions created the most challenging quarterly period in many years for Werner and the truckload industry in first quarter 2008.” -From Werner Enterprises‘ first quarter earnings report.

Every trucker worth his salt knows it‘s tough out there. Now, we‘ve got the data to prove it, as first quarter earnings reports roll in from some of the biggest publicly traded carriers in the industry.

According to truckload carrier Werner Enterprises it‘s been one of the toughest quarters in many years (as the quote above duly notes) and that‘s saying something for a company that‘s been around since 1956.

Werner noted in its first quarter earnings release that revenues, excluding trucking fuel surcharges, declined 6% to $417 million in first quarter of 2008 compared to $443.5 million in first quarter of 2007. Earnings per share decreased 43% to12 cents a share, compared to 21 cents per share in first quarter last year.

It‘s interesting to note, though, that if you include fuel surcharges, Werner‘s revenue stream actually increased 2% to $512.8 million in first quarter of 2008 compared to $503.9 million in first quarter 2007. Yet despite that gain, fuel costs are still eating a hole in Werner‘s pockets.

Compared to the same months in 2007, Werner said diesel fuel costs were 88 cents per gallon higher in January 2008, 92 cents per gallon higher in February 2008, and 117 cents per gallon higher in March 2008. “Due to the rapid increase in diesel fuel prices during first quarter of 2008, there was a lag between the timing of the fuel cost increase and the delayed recovery of fuel surcharge revenues that caused the company‘s fuel surcharge recovery percentage to fall below the typical recovery rate,” the carrier noted. “For the first 16 days of April 2008 compared to the same period in 2007, average fuel prices increased 110 cents per gallon.”

Then of course there‘s the continuing softness in freight demand, most noticeable in Werner‘s medium-to-long haul dry van business segment.

“The continuing softness in the housing and automotive sectors that are not large markets for Werner caused carriers that serve these markets to compete more aggressively in the consumer non-durable markets principally served by Werner,” the company noted. “In addition, slowing economic growth and retail inventory tightening also contributed to lower freight demand. These factors and the significant increase in truck supply caused by the industry truck pre-buy prior to the 2007 engine regulation change led to a very competitive market in first quarter of 2008.”

Other carriers are noting similar conditions. Describing the business climate as “lackluster at best,” Douglas Stotlar, president and CEO of Con-Way Inc., said, “We‘re operating in a challenging and uncertain economic environment, which continues to restrain demand and place pressure on pricing and margins. Based on current economic data and feedback from our customers, there appear to be few catalysts to accelerate demand in the freight markets, at least in the short term.”

Some metrics that Con-way noted show the impact higher fuel prices are having on the bottom line of many carriers. For Con-way, the impact on its trucking freight business looks like this:

– Operating income of $36.1 million, a decrease of 24.3% from the $47.7 million earned in the first quarter of 2007. The decrease reflected the effect of unprecedented fuel costs, the influence of pricing pressures on cost recovery, and higher operating expense. Income in the first quarter of 2008 also was lower in part due to $5.2 million in expenses for completion of Con-way Freight‘s business transformation.

– Revenues of $743.3 million, a 9.4% increase over last year‘s first-quarter revenues of $679.7 million.

– Tonnage per day handled by Con-way Freight increased 3.1% over the first quarter of 2007.

– Yield for Con-way Freight improved 7.8% from the first quarter of 2007 … however, if you exclude the carrier‘s fuel surcharge, yield improved only 2.1%.

– Finally, there‘s the operating ratio - and in this case the higher the number, the worse the ratio. Con-way Freight said it recorded an operating ratio of 95.2 in the first quarter of 2008 compared to 93.2 in first-quarter last year, reflecting the extraordinary escalation in fuel costs, pricing pressures and higher operating costs. Excluding the previously noted business transformation costs, the operating ratio reached 94.4 for the first quarter this year.

Not pretty, by any stretch of the imagination, but then again all things considered things could be worse.

Nevertheless, Con-way is lowering its earnings outlook for 2008, now expecting diluted earnings per share from continuing operations to be between $3 and $3.40 per share, down from its previous estimates of $3.40 and $3.80 a share.

“Given the weak demand environment and the inflationary effect of unprecedented energy costs, we believe pricing will remain under pressure for some time,” said Stotlar. “Until such time as we have tangible evidence of improving economic conditions we believe a cautious, measured approach to the outlook for earnings is warranted.”

So I am cranking down I-15 south out of Las Vegas, heading for Palm Springs, California, a few years back. I‘d just given a lousy speech about the growth in telematics in commercial trucking and now aimed to cover the Truck Renting and Leasing Association (TRALA) annual meeting. I‘d called ahead to my hotel in Palm Springs to get directions and they‘d given me a tip all travelers like to hear: a short cut.

You see, instead of taking I-15 in a big half circle from Barstow to San Bernardino and then on into Palm Springs via I-10, I could cut through the Mojave Desert via Route 247 from Barstow to Yucca Valley and then drop down into Palm Springs - shaving maybe an hour to an hour and a half off my travel time. Since I‘d be driving into nighttime hours, this shortcut seemed a clear no-brainer.

Except, of course, for one important caveat that my ever-so-helpful guide on the other end of the phone forgot to give me: Fill up with gas in Barstow before you enter the desert. She forgot to give me that small detail but, frankly, I should‘ve known better. I‘d never driven from Las Vegas to Palm Springs before in my life. It‘s also a cardinal rule of business travel that you keep the fuel gauge reading above half a tank as you never know when a traffic jam or misdirection will put you on the side of the road on empty.

(The Buick Cenutry: my trusty steed during my almost ill-fated Mojave Desert crossing.)

So, here I am, barreling south in a silver Buick Century sedan, admiring the emptiness all around me. Truly gorgeous scenery of rocks, sand, and shimmering haze … each vista so very different from the last. I also noticed (more casually than I should‘ve) how weak the cell phone coverage was out here. That small detail should‘ve raised a warning flag or two in my mind.

(Desert vistas are big and beautiful … but oh so empty.)

I hit Barstow with less than half a tank and kept going, watching the sky slip slowly from dusk to dark. I hung a left at the one-horse town of Lucerne Valley and kept going, watching the light fate out into total night. Aside from a wan piece of moon, nothing glimmered outside of my headlights - a home‘s faded porch light or two, but little else.

Utter darkness. And my fuel gauge needle dropping below the quarter tank mark. That‘s when I recalled Davy Crockett‘s famous last words at The Alamo: “Uh oh.”

So I sat there, the empty miles stretched out in front of me for lord knows how long, and figuratively kicked myself for a while. How could I be so freaking DUMB to overlook so simple a task as filling up the tank when the opportunity presented itself? Sure, the mileage doesn‘t LOOK all that much on the map, but then again … a small, simple detail I‘d overlooked, sure, but one that pretty soon might put me smack dab in the middle of a Stephen King novel for all I knew. Add to that no cell phone coverage and it began looking like I might spend a very long night out here.

A while later, though, rescue popped up out of the dark sands in the form of a weathered country store with a well-worn fuel island out front. You could have heard my sigh of relief back in Las Vegas I think. I gassed up, used the lavatory, and asked the guy behind the counter how much farther it would be before I hit Yucca Valley.

“Left Barstow without filling up, did you?” he told me. I sheepishly nodded my head in the affirmative.

“You got lucky,” he said. “It‘s a long walk out here at night. There are a couple of coyotes around here, too. Makes a walk in the dark unpleasant.”

(Palm Springs is also known as one of the wind farm capitals of the world, with big turbines like these generating lots of electricity for the surrounding area.)

He might have been putting me over, pulling the leg of yet another unprepared traveler, but no matter. I just should‘ve known better: ignoring a small detail that quite nearly left me stranded on the side of the road. Fortunately for me, at least this one time, the dice didn‘t come up snake eyes for my oversight.