“Red-hot steel prices, combined with record diesel fuel costs, are making construction unaffordable.” –Ken Simonson, chief economist for the Associated General Contractors of America

As I’ve said in this space before, our surface road network is in dire need of a big makeover and expansion effort. Any trucker can tell you that. The problem now is that the cost to repair the roads – much less build new ones – is skyrocketing spaceward at a rapid clip. That means just when we desperately need to start fixing our highway infrastructure, our tax dollars won’t go nearly as far as they’ve done in past years.

“The PPI [producer price index] for inputs to construction industries – materials used in all types of construction plus items consumed by contractors, such as diesel fuel – soared 2.1% in March alone,” said Ken Simonson, chief economist for the Associated General Contractors of America (AGC). “That jump was propelled by a staggering 24% increase in diesel fuel costs and a 5.5% rise in prices for steel mill products.”

(Photo courtesy of P.B. Laminators Inc.)

“Unfortunately, there is worse to come,” he added. “Steel suppliers have been burning up the wires announcing huge price increases and canceling previous quotes. And the Energy Information Administration reported last night that the average price of highway diesel crossed the $4 per gallon mark in all regions for the first time, with a 10-cent increase in the national average just in the past week, to $4.05 per gallon. These figures won’t show up in the producer price index until next month, but contractors are paying them now.”

All this at a time when the Highway Trust Fund is going broke and transportation infrastructure funding is way, way off from where it needs to be.

More than half of U.S. urban interstates are now congested, according to research compiled by the HNTB Companies, and it’s projected that next year federal Highway Trust Fund revenues will no longer be sufficient to fully fund planned federal transportation spending.

Also, according to the National Surface Transportation Policy and Revenue Study Commission published earlier this year, all levels of government in the U.S. are spending less than 40% of the $225 billion to $340 billion needed for highway upkeep. As one HNTB employee commented in the survey, “Not all funding can be spent on new facilities while existing facilities are in poor shape and functionally obsolete.”

(Photo courtesy of the Las Veags Review Journal.)

Legislation was introduced recently in the U.S. Senate to create an agency and a National Infrastructure Bank to facilitate and fund large federal projects, with a preference for those that leverage private financing and public-private partnerships. Problem is, with costs spiraling upwards so fast, those federal dollars won’t go nearly as far as they need to.

“Public agencies as well as private owners need to adjust to these realities,” said AGC’s Simonson. “Too many of them are still assuming construction costs are rising no faster than the consumer price index (CPI), when in fact the PPI for construction inputs has gone up 6.5% in the past 12 months and 34% since steel prices first surged in December 2003. That is more than double the run-up in the CPI.”

He added that diesel prices are now more than 60 cents a gallon higher than the $3.44 average price for gasoline, putting a triple burden on contractors that use diesel to power off-road equipment and construction trucks, along with fuel surcharges on the thousands of deliveries and backhauls at a large job site.

“As the highway paving season gets under way, asphalt prices also are poised to take off,” Simonson concluded. “Asphalt at the refinery cost 13% more in March than a year ago. But many states and the federal government are running low on highway funds because motorists and truckers have been driving less.”

(This kinda says it all, doesn’t it? Photo courtesy of Eric Siegmund.)

Needless to say, the cost hurdles are getting higher and harder to overcome where transportation infrastructure construction is concerned, so we’re going to need some sharp thinking in the days and years ahead to overcome them.

“The men and women of the Armed Forces have all the motivation and tools necessary to move successfully from the military into many areas within our industry.” –Bill Graves, president and CEO, American Trucking Associations.

Military veterans have always been a prized labor pool for the trucking industry, largely for their work ethic, ingrained discipline, and ability to get the job despite the circumstances.

Now, however, the trucking industry is ratcheting up its efforts to recruit from this honored segment of the U.S. populations is an effort to get ahead of the impending labor crunch coming down the pike over the next few years as the so-called “baby boom” generation begins to retire form the workforce.

(Photo courtesy of the Department of Defense.)

For example, the American Trucking Associations (ATA) just signed a recruiting partnership agreement with the U.S. Army Reserve that will provide experienced truck drivers for the military while also opening up careers to truck drivers leaving the military.

The two organizations said they would focus on recruiting commercial vehicle drivers into the U.S. Army Reserve, and recruiting members of the U.S. Army Reserve and those transitioning from active duty to the Army Reserve into careers in the trucking industry.

“Army reservists are ideal candidates for America’s professional truck drivers,” said Bill Graves, ATA’s president and CEO, in a statement. “By the same token, the Army Reserve can offer qualified transportation professionals exciting opportunities to learn new skills, develop management and leadership abilities, excel in a high-stress climate and work in a team environment.”

“This is a mutually beneficial relationship for the trucking industry and the Army Reserve,” added Lt. Gen. Jack Stultz, Chief of the Army Reserve and Commanding General, Army Reserve Command. “Together, we will build and sustain a strong shared workforce.”

The alliance with the ATA is the first of its kind in the nation between the Army Reserve and the motor transport industry, said Stultz, who aims to give employers incentives for employing Army Reserve soldiers. “We’re into the seventh year of the global war on terrorism, and employers are bearing the burden when their soldier-employee takes a leave of absence from the workplace to support the war in Iraq or Afghanistan” he noted. “We’re offering employers who want to partner with us the chance to gain tangible benefits by hiring Army Reserve Soldiers.”

(Photo courtesy of Department of Defense.)

More importantly, the trucking industry gets a line on new driver and technician candidates in what’s soon to become a very tight labor market as the “baby boom” generation retires and is replaced by a far-smaller population termed “Generation X.”

“Look at the overall demographic shift here – you have 78 million baby boomers that start retiring in 2008 being replaced by Generation X, which is comprised of only 45 million workers,” said Richard White, VP-marketing and communications for the Automotive Aftermarket Industry Assn. “Basically, you have a lot of people retiring very soon and not enough people to fill the jobs they are leaving.” That trend is only going to worsen between 2012 and 2025 as the baby boom generation fully retires, he noted.

It’s not all peaches and cream for veterans, however, as many are dealing with a variety of physical and mental health issues due to combat duty in Afghanistan and Iraq. However, many groups are taking the lead in helping funnel veterans to job vacancies as this report from television station KMEG 14 in Iowa shows.

The effort to tap into the ranks of military veterans by trucking isn’t new; what is new is how it’s becoming much more widespread and is now being coordinated at higher levels in the industry. Indeed, all kinds of transportation companies – from trucking fleets to third-party logistics providers and railroads – are trying to attached fresh blood from the ranks of military veterans, using various sites on the Internet, such as MilitarySpot.com, to reach them.

PaYS was developed to help the U.S. Army attract, train and deploy talented young people who want to serve their country, but also want to help secure their future success once their Army service is complete. Under terms of the agreement between USAREC and Cardinal, enlistees interested in gaining specific job training and qualifications will receive that training while in the U.S. Army.

(Photo courtesy of Cardinal Logistics.)

As part of the enlistment process, recruits sign a statement of understanding of intent to work for Cardinal upon completion of their term of service and, as they near the end of their enlistments, the soldiers get an opportunity to interview with Cardinal for a specific job at a specific location nationwide.

“We see the PaYS program as the perfect vehicle for attracting, training and hiring outstanding employees for many years to come,” said Jerry Bowman, Cardinal’s president and COO at the time. “We look forward to tapping into the incredible talent, skills and integrity possessed by our country’s enlisted men and women who join us through this program.”

“Wise men read very sharply all of your private history in your look and gait and behavior.” –Ralph Waldo Emerson

Changing your behavior – especially as a manager in the trucking business – is no easy task. But it’s something many business experts say is vital, especially if a manager’s ingrained work habits are counterproductive. They also caution that to achieve change it must be done in small amounts over time and must occur in a positive manner, or the change won’t take permanent root.

Professor Jerry Osteryoung of the college of business at Florida State University has a good take on how behavior impacts business output in his work with entrepreneurs. So I’m going to let him give you his view on the subject. Professor Osteryoung, the floor is yours:

”Our behaviors are important aspects of how we function each and every day. For example, we do not have to think about brushing our teeth every day. We do it habitually as it is a very good behavior. However, not all behaviors are good. If one of our behaviors is coming in to work late, this is certainly not a good habit.

We were helping a very successful entrepreneur get through some rough industry and economic conditions. He was a fantastic salesperson, but he was spending most of his time doing the clerical work that was necessary to process all of the orders. After spending much time talking to him, we decided that he needed to spend much more time in the selling mode; however, he felt that every second he was selling – which he loved – something was not being done back at the office. He had developed the behavior that the clerical work had to be done before he could do any selling.

Changing someone’s behavior is not an easy task at all. Just ask my wife who has been trying to change certain behaviors of mine for close to 40 years without any success. Most people will only change their behavior in a crisis (which I can personally attest to) or if they are given a goal with very small, achievable steps. For example, if you want someone who has never exercised before to exercise 30 minutes a day, the best method is to give him or her a series of small steps. You could have this person do five minutes a day for a week, then increase it to ten minutes, and so on.

In the case of this entrepreneur, it was clear that in order to change his behavior, we had to devise a series of very small steps leading up to a big goal at the end. We suggested that he spend just two half days in the field selling, a plan that he admitted would not affect the way he processed orders. I told him that I wanted to follow up with him in a month.

At the time of our follow-up meeting, I told him what a terrific job he had done and that I was so proud of what he had achieved. I, also, told I knew that this very tough for him. During this meeting, I, also, increased the expectation by encouraging him to now spend three half days in the field and begin looking for someone else to process his orders. In subsequent meetings, he gradually spent more time out in the field and less time in the office.

I was trying to change a behavior that had grown to be habitual and was killing his business day by day. The entrepreneur followed my suggestions, and I can now report that he spends 80% of his time selling, and he has hired a part-time assistant. Not only is his business flourishing, but being free to do what he really likes and what he is really good at has made him a much happier man.”

“They’ve invested in hiring and training employees to serve the growing needs of today’s owner-operators and truck fleets.” –Mike Conroy, director of dealer network development at Peterbilt, on the award winning performance at Peterbilt of Sioux City

It’s a tough time to be selling trucks these days, no doubt about it. Class 8 sales fell nearly 47% last year, dropping to 150,965 units from 284,008 in 2006, according to Ward’s AutoInfoBank. Sales in the medium-duty Class 6 & 7 market fared only slightly better, contracting by 36,608 units or 22% to 220,128 units in 2007.

This year hasn’t been much better. Bill Jackson, general manager for Peterbilt Motors Co., for one, believes Class 8 sales in the U.S. should total 175,000 to 215,000 units for 2008, while medium-duty Class 5-7 sales should total between 80,000 to 95,000 units for the year.

With those statistics in mind, you’d think this would be a time for dealers to pull in their horns, ratchet back on costs across the board, probably delaying investments in their business until some form of light is visible at the end of the current economic tunnel we’re in. But that’s not always so.

Take Sioux City Truck Sales (SCTS) for example. Founded in 1954 by G. L. Wilson, SCTS operates three full-service Peterbilt dealerships serving Iowa, eastern Nebraska and southeastern South Dakota (in the cities of Sioux City, Des Moines and Council Bluffs, respectively) providing new and used truck sales plus all-makes parts and service. And they don’t just sell one kind of truck, either: SCTS offers a full-line of Peterbilt highway tractors, vocational and medium-duty delivery trucks.

(SCTS’s dealership in Sioux City, Iowa, which racked up several national awards for sales and customer satisfaction.)

As a family-owned business, SCTS is what I like to call “old school” in a good way: the biggest reason being how the company quickly gives credit for their success to their hard-working employees. That’s the basis of SCTS’s reputation and the reason they’ve managed to keep selling trucks and other services despite the current downturn.

“I believe our great success during 2007 was built on a combination of ingredients,” said Brad Wilson, the company’s CEO. “Our employees have a long history and good reputation of providing quality service to our customers. Now, our skilled workers have an excellent new facility through which they can more efficiently serve our customers.”

He’s talking about their now-finished effort to replace its 40-year-old building at the Sioux City dealership and construct a new $5 million facility, plus hire additional employees. The new building, which opened in fall of 2006, features an indoor vehicle inspection/diagnostics area and quick lube area, offers 16 service bays, a body shop completed with a frame correction and alignment center, 80-foot-long paint booth, two wash bays and stalls for working on seven trucks.

(The new interior at Peterbilt of Sioux City.)

“We invested in the new facility that allows us to provide a higher-level of service to even more customers,” Brad noted. “And our customers responded during 2007 with increased purchases in several categories.”

He also pointed out that his family’s Peterbilt of Sioux City location recently received the 2007 “Best in Class Dealer of the Year ” and the “TruckCare Dealer of the Year” awards from Peterbilt Motors Co. – and he gave all 60 employees working there a custom jacket in honor of their contribution toward earning these awards, something I think goes a long way to reinforcing esprit de corps in this industry.

Note, too, that his Sioux City dealership won the awards in competition against all other Peterbilt dealers in the U.S. and Canada – and that’s some pretty serious competition in anyone’s book.

“The ‘Best in Class’ award recognizes overall dealer performance, including the business side of the dealership – profitability, growth, business processes and financials,” said Mike Conroy, director of dealer network development at Peterbilt. “The Sioux City dealership demonstrated outstanding performance during 2007 in all of these business measurements,” noting that Sioux City’s market share of Class 8 trucks sales more than doubled Peterbilt’s national average during 2007.

The “TruckCare Dealer of the Year” award recognizes the dealership that achieved its parts, service and preventative-maintenance contract sales goals and provided the highest levels of customer satisfaction – an Sioux City received a perfect score of 100% for its roadside assistance call center response rate and a 99% customer satisfaction rating.

“The TruckCare award is a tribute to the employees in our service, body shop and parts departments for outstanding performance and growth in 2007,” said Wilson. “The sales volume for parts and service increased 29% and 23% respectively during their first year in the new building. This award honors the skills and dedication of our customer-focused employees.”

You don’t rack up numbers – or awards – like that without staying focused on the fundamentals in the trucking business, and those fundamentals are getting tougher all the time. It’s nice to see some very hard work get some high accolades as well.

(Displaying Sioux City Peterbilt’s awards are (left to right) Jeff Petersen, sales manager; CEO Brad Wilson; Rick Burkhart, parts manager; Jim Gard, warranty manager; Jerry Hesse, body shop manager; and Harland Gylfe, service manager.)

“Without an adequate transportation system, the nation’s economic growth is at risk.” –Janet F. Kavinoky, executive director, Americans for Transportation Mobility Coalition

So we know the U.S. transportation network is a mess – overused, overstressed, and way out of date. And it’s going to take hundreds of billions of dollars we don’t have (at last check, the U.S. deficit is nearing $9.5 trillion. That’s with a ‘T’ people) to not only fix it, but also actually expand it to carry the expected volume of people and goods without massive gridlock.

(Construction progresses on the new Woodrow Wilson Bridge outside Washington D.C.)

At the risk of flogging a dead horse, I’ll repeat the above synopsis in more detail here – tallied up very well by the just-released report “The Transportation Challenge: Moving the U.S. Economy,” published by the Americans for Transportation Mobility Coalition (ATM), and the National Chamber Foundation of the U.S. Chamber of Commerce.

“If the U.S. declines to invest in transportation infrastructure and ignores the transportation needs of key industry sectors, our economy will become less productive and less competitive,” warns Janet Kavinoky, ATM’s executive director. “The U.S. transportation system is failing to keep pace with the demands of a 21st century economy and a piecemeal approach to improving the nation’s transportation infrastructure no longer works.”

She notes that countries like China are building highways and rail lines, developing ports, and constructing airports while the U.S. transportation system erodes meaning the margin of the U.S. competitive advantage is shrinking. Now, granted: it’s a whole lot easier to lay down a transportation network in a country ruled by a virtual dictatorship, and one that doesn’t adhere to even a tenth of the environmental rules and regulations in the U.S.

But without investment in transportation infrastructure here in the U.S. guided by new policies, the study says our transportation system will fall further behind the growing demand of five major economic sectors — agriculture and natural resources, manufacturing, retail, services, and transportation — that account for 84% of the U.S. economy.

(Photo courtesy of the Texas Transportation Institute.)

Given population growth, shifting demographics and steady economic growth, a high-performance transportation system is a necessity. The U.S. population is projected to grow from 300 million today to 380 million people in 2035, while the economy is likely to double over the next 30 years, as is demand for freight transportation, the study found. Expanding demand and shrinking capacity for both freight and passengers across every mode of transportation raises fears about increased congestion, less reliability, and higher costs, it says.

OK: so what do we do? The report urges policymakers to become much more strategic in planning and investing in the U.S. transportation system. If we do not, our transportation system will become a competitive disadvantage for U.S. industries, and it will be harder to sustain the growth of our regions and the national economy.

What’s that translate into? Here are some of the report’s recommendations:

– Greater emphasis on economic needs and issues, including attention to regional mobility, in formulating national transportation initiatives.

– Development of a national consensus among citizens, businesses, and political leaders on the importance of increased investment in transportation infrastructure.

– Immediate attention to the approaching deficit in the federal Highway Trust Fund.

–Greater emphasis on investments in a national freight transportation program that would implement highway, rail, and marine transportation improvements to benefit commerce.

–More public investment in infrastructure, using all potential revenue sources, including user fees and other revenues collected at different levels of government.

–Increased use of financing and credit options including tax credits and public-private partnerships, to leverage an estimated $200 billion in private capital available for transportation infrastructure investment.

Another thought that’s been floated as a way to gin up more transportation infrastructure funds is the concept of “congestion pricing.” New York City recently saw such a proposal go down to defeat, but one that I think is deserved. My own opinion here: if you want to raise taxes DEDICATED (I stress) for transportation infrastructure repair and expansion, fine. Throw tollbooths up all over the place to collect that money, forcing traffic to a crawl even on good days. Forget about it.

(Photo courtesy of the Texas Transportation Institute.)

That’s why I think the New York State Legislature rejected New York City’s proposal to charge drivers a fee to drive into parts of Manhattan during most daylight hours. The American Trucking Association (ATA) in particular didn’t like the plan because truck drivers would have paid $21 per weekday, while auto drivers paid just $8, to drive in Manhattan below 60th Street between 6 a.m. and 6 p.m. Truckers have to make deliveries: commuters can choose other forms of transportation.

“Like many areas of the United States, New York’s transportation networks are strained, and the city is searching for a solution to its problem,” said Bill Graves, ATA’s president and CEO, said after the proposal’s defeat. “But congestion pricing schemes are unfair, ineffective and ignore our real transportation needs. While there is a need to heavily invest in infrastructure, congestion pricing does little to relieve congestion and is merely a revenue raiser.”

One thing is for certain: we need to generate some serious coin to bring our transportation infrastructure up to snuff. That would mean more taxes and cuts to a lot of other federally funded initiatives. We may not like these ideas, but frankly, there’s not a lot else we can do. “We have only one option: Invest now, or pay later,” says ATM’s Kavinoky. That’s the truth, the whole truth, and nothing but the truth right there.

“The trucking industry is experiencing the highest prolonged fuel prices in history.” –Bill Graves, president and CEO, American Trucking Associations

It’s been a grim first quarter for 2008, to say the least, as we wait for publicly traded trucking companies to start releasing their earnings reports so we can see what tales the numbers tell.

The indications are it could be a rocky first quarter for most. United Parcel Service, for example, indicated that it lowered its first quarter earnings expectations to around 86 or 87 cents per diluted share from a previously anticipated range of 94 to 98 cents a share.

(Fuel prices and low package volume are hurting UPS.)

At UPS’s investor conference on March 12, Kurt Kuehn, the company’s chief financial officer, said high fuel prices and lower volume trends experienced in February through March are the chief culprits. “The U.S. economy has continued to weaken, causing a reduction in domestic package volume and a shift away from premium products,” he said. “Significantly increased fuel costs in the quarter also contributed to the lower-than-expected results.”

“Significantly increased fuel prices,” by the way, is the polite way of saying we are in the sort of record-setting territory no one ever wants to be in. According to the Oil Price Information Service (OPIS), retail and wholesale fuel prices shattered all previous records last month, and products used in the transportation sector began April with numbers up as much as 238% from five years ago.

(Fuel has long been ultra-pricey for truckers.)

The wallet-killing fallout from OPIS’ Transportation Fuel Index (TFI) includes some traumatic statistics:

· Americans spent about $247.7-million more each day on gasoline in March 2008 than they did in March 2007 – and OPIS estimates that the increase from five years ago is now $626-million per diem.

· Wholesale diesel prices ended March at an all time high of $3.288 a gallon, with the average retail diesel price at $4.019 per gallon. The largest increases – nearly 50 cents per gallon – occurred in northeastern states, but every region saw price advances of at least 41.8 cents per gallon.

· The average nationwide price for wholesale jet fuel in March 2008 was $3.172 per gallon, up 42.4 cents a gallon from February 2008 and up an incredible $2.235 a gallon from March 2003 – an increase of 238.7%. (Is it any wonder Aloha and ATA Airlines disappeared in the blink of an eye?)

Regional retail gasoline increases on a month-to-month basis ranged from 13.6% in New England to 26.4% in western states. Wholesale gasoline prices were up some 33.1% in the month, suggesting that the up-trend in pump prices will persist into early April.

The longer term view produces some eye-opening comparisons, according to OPIS: wholesale gasoline prices are up $1.691 gallon from March 2003; and wholesale diesel prices have advanced by well over $2.00 a gallon in every region in the country.

(Truckers large and small alike are feeling the pain at the pump.)

“For some motor carriers, however, fuel is beginning to surpass labor as their largest expense,” said Bill Graves, president and CEO of industry trade group American trucking Associations late last month. “This ultimately will increase the cost of everything delivered by truck.”

The ATA wants the federal government to help bring down the price of diesel fuel in a number of ways, including:

· Release oil from the Strategic Petroleum Reserve

· Establish a national diesel fuel standard

· Allow environmentally responsible exploration of oil-rich areas in the U.S. that are now off-limits

· Require speed limiters set for 68 mph or lower on all new trucks

· Set a national maximum speed limit of 65 mph

· Suspend the collection of the 12% federal excise tax on motor carriers’ purchase of auxiliary power units (APUs), which cut the consumption of fuels in idling truck engines

· Require states to grant a weight exemption for APUs

“The signs are troubling. We are concerned about fuel’s direct impact on our industry and also its effects on the nation’s economy,” said Graves. “The industry is doing its part to conserve fuel, but we need help.”

(Sadly, we may see a lot more of these unfortunate signs before the year is out.)

He noted that the trucking industry is on pace to spend $135 billion on diesel fuel this year, $22 billion more than in 2007 and up $83 billion in annual expenditures compared to 2003.

Those are some pretty grim numbers indeed. Now we must wait and see how they’ve impacted trucking’s bottom line over the course of the first quarter.

“We have to be creative with our customers and our drivers as well.” Matthew “Bo” Bates, Vice President, The Evans Network

I’m a big admirer of fleets that look for new and different incentives to improve safety, especially during these tight times in the trucking industry. For it’s not easy for a fleet to go out and set up rewards for drivers that drive accident-free when fuel is up over $4 a gallon and freight volumes are sluggish.

The Evans Network of Companies, based out of Schuylkill Haven, PA, gets my vote this time around for a neat safety award: a Harley Davidson motorcycle. Since 2005, the Evans Network randomly selects a winner for its grand safety prize (the Harley) from a select pool of eligible drivers – those with perfect driving records in a calendar year, as in no accidents, failed roadside inspections, etc.

“Each month of the year, eligible drivers are selected at random for various prizes, such as computers, digital cameras, apparel, bags, coolers, among many other items,” said Kim Lorimer, director of safety for the Evans Network. “Drivers are eligible for our safety program by following all government rules and regulations, such as completing daily logs and inspections, and maintaining a record of no accidents or incidents.”

Evans’ grand prize winner for 2007 is Luis Alfonso, who believes being a safe driver should be “second nature” in this business. “Safety on the road for the protection of life and quality delivery of cargo is my most important responsibility when I get into my truck each day,” he said. “This is the primary thought of every dedicated driver and the golden rule at Evans. To be honored for something that is second nature is extremely exciting. Now, I have to make time to enjoy my new motorcycle.”

(Luis Alfonso plans to take his new Harley Davidson out for many a ride.)

Alfonso has driven for Evans out of its Jersey City terminal for since December 2006. A 10-year truck driving veteran, he came to the U.S. from Cuba and resides in Kearny, NJ, with his wife, Grisel, and his two children, Claudia and Albert.

“Luis’s driving record demonstrates an outstanding commitment to safety and I’m proud our drivers value every phase of safety, just as Luis does,” noted Matthew “Bo” Bates, vice president of the Evans Network. “Our safety incentive program was implemented in 2005 to reward drivers who always operate safely and to ensure our trusted and dependable service that our customers expect.”

(That’s Matthew “Bo” Bates on the right, giving Luis Alfonso the keys to a new Harley.)

I got the chance to talk with “Bo” Bates not too long ago about the state of the trucking business and from his perspective the market dynamics right now are not pretty. “The freight environment is certainly spotty and soft and that’s lasted longer than I thought,” he said. “We think pricing is going to be flat at least for the foreseeable future.”

There are a ton of other issues, too: traffic congestion, anti-idling and truck pollution restrictions, tougher security requirements, etc. All of that adds more cost to trucking operations – cost that’s hard to make up when rates are flat.

The Evans Network is a collection of six trucking companies – West Motor Freight, All Points Transport Corp., Hale Intermodal Trucking, Century Express, Evans Delivery Company and DM Transportation Management Services – that operates a combined fleet of over 1,350 tractors and 80 service centers nationwide. Those six different companies provide a wide range of services, too, everything from transporting intermodal containers and trailer drayage, truckload and flatbed services. All told, the Evans Network generated $150 million in revenues last year.

And that money wasn’t easy to come by, as there’s a lot of competition in all of those markets right now, especially for intermodal containers. “We’re competing against local drayage operators and big intermodal fleets like J.B. Hunt and Schneider National,” Bates told me. “How we compete is that we offer services across a very wide spectrum, with significantly more capacity at ports than most, and we sell our IT system, which gives the customer unified data in real time.”

It also helps that the Evans Network has consolidate all the “back office” functions of the six carriers under its umbrella – billing systems, safety compliance record keeping, accounting, etc. – to make it more nimble while substantially reducing overhead. “That makes us a lot more efficient and helps us share freight more easily among our divisions,” Bates noted.

But at the end of the day, it’s the drivers – and the rest of Evans’ combined staff – that makes the real difference. “We really try to keep a personal connection with drivers – to make sure we can be available if they have an issue,” he said. “And I rely on a great team to get it all done. My time here at Evans is really all about developing people – finding the right players for our team.”

We have more information now than we can use, and less knowledge and understanding than we need. Indeed, we seem to collect information because we have the ability to do so, but we are so busy collecting it that we haven’t devised a means of using it. The true measure of any society is not what it knows but what it does with what it knows. –Warren Bennis

Are your drivers happy with their jobs? Angry? Indifferent? A lot of carriers don’t really know until the driver gets up and leaves – and by then, of course, it’s too late. That’s why creating some sort of channel for feedback might be a good way of giving them a chance to air their views non-combatively in order to figure out if there’s a way to change things.

Now, sure, employee surveys are considered by many to be a joke – and for good reason. Everyone is trying to put food on the table and pay the bills while getting miles driven and freight delivered, yet here comes another piece of paper to fill out. But if viewed properly, surveys can be a good way to sample the mood of your driver corps, if not the company as a whole – giving you a chance to address problems before people start voting with their feet.

Professor Jerry Osteryoung of the College of Business at Florida State University has some thoughts on the subject I’d like to share, and while his comments are broadly based, I think there are some good ideas fleets can draw upon for their own use. Professor Osteryoung, the floor is yours sir:

“I have seen so many cases where the culture of an organization changes dramatically because of new management, a new work environment or just complacency of management – all of which affect both turnover and morale. Probably, the biggest problem with the culture of an organization is just a lack of management knowledge of the employees’ real perceptions and feelings about the organization.

It is estimated that each time you lose a worker; it costs your firm 150% of their annual salary for retraining, rehiring and just reeducating a new employee. It is so very important to keep turnover low especially given the tightness of the forthcoming national labor shortage.

Employee surveys are effective in improving retention rates, increasing profitability, lowering absenteeism and just making your business a better place to work. Many firms are moving to employee surveys conducted on the web in order to evaluate employee perception of their work environment, as well as management effectiveness. These online surveys are very cost effective, especially when compared to the archaic approach of compiling surveys with hand written responses.

When surveying employees you need to make sure that the results remain anonymous. If workers think that they can be identified, participation and effectiveness decline dramatically. You need to guarantee each worker that their responses will remain anonymous, and you must make sure that each worker feels comfortable with the process of submitting their thoughts and feelings.

One of things that really helps raise the response rate is to notify your staff that the survey is coming. There are so many ways to do this. For example, you can post the information on bulletin boards in your business or include it emails to your staff. Some firms assign participants a specific time to complete the survey so that they can do so when they are free of other work duties. Additionally, many firms offer employees incentives, from restaurant gift certificates to cash. With these types of incentives, the response rate is frequently increased by 15% to 20%.

One of the best things that you can do is explain the purpose of the survey both in advance, as well as on the survey instrument itself. The purpose could be anything from gauging worker morale to evaluating the ability of the firm to accept change. Regardless of what the purpose is, it must be communicated many times to each survey participant.

Not only must you communicate the purpose of the survey, but you must also communicate how the results will be used. In one instance, they may be used to generate a plan of corrective action. However, whatever the case may be, the intended use of the results must be communicated very succinctly to your staff.

Once the survey is complete, you must also communicate the results and your plan of action. This must take place as soon as practical in order to prevent employees from thinking that their efforts just went into a black hole, never to be seen again.

The final piece of the survey process is a follow up survey. The follow up survey will help you evaluate how effectively your plan is producing the desired results. Normally, most surveys are done at least annually to keep track of these important issues.”

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

“Retention is Job #1.” –One of many mantras emblazoned on the walls at Mercer Transportation

I look forward to my annual visit to Mercer Transportation every year ahead of the Mid America Trucking Show. It’s a great opportunity for me to sit down with Dale Corum, Mercer’s general manager, to get a feel for what’s going on out there in the trenches of the truckload freight world.

(Dale Corum at his desk.)

Needless to say it’s been tough out there, with freight slow and diesel fuel prices high. And the number one complaint Dale gets from Mercer’s owner-operators is all about the high cost of fuel – but there’s a lot more to this situation than meets the eye, Dale said.

“Fuel is indeed a huge issue – but it’s not all about the price at the pump,” he told me. “It’s about how you manage fuel. Look at fuel economy, for example. If one of our drivers is getting 5 miles per gallon, with all the fuel surcharges added in, he’s paying 23 cents a mile for fuel. Get his truck up to 6 miles per gallon, however, and his fuel cost drops to 9.7 cents a mile. That’s a big, big different to the bottom line.”

(Rigs parked at Mercer’s headqaurters in Louisville, Ky.)

Not only does the fuel efficiency of their trucks make a big difference, how they select loads impacts their costs as well. For example, some flatbed drivers pass on a load 10 or 20 miles from their current location they’d need to tarp, and instead deadhead 100 miles for a non-tarp load. “That decision takes a lot more money out of their pocket, as bad as fuel prices are,” Dale pointed out.

One thing Dale emphasized to me over and over is that owner-operators by and large are excellent drivers – they know all the finer points of shifting gears, securing loads, and maneuvering in traffic down cold. It’s the business side of things – paying taxes, building up cash reserves, and managing their money – that tends to trip them up.

(The front door to Mercer’s headquarters.)

“I had one guy with a million-mile truck that blew a motor – and he needed $5,000 for a new one,” Dale said. “When you’re running a truck with that many miles, you know something like that can happen so you need to put away money just in case. You need reserves to fall back on.”

That being said, Dale is well aware of how much more frustrating it is to be a truck driver today – much less and owner-operator – than even three or four years ago. The high price of fuel and insurance, plus the demands of family back home, are driving many to hang up the keys for good. “I know a lot of guys who are on their last truck,” he said.

(Libby Fagan helms the front desk at Mercer — home also to a flag the carrier earned by helping out the Special Olympics.)

That frustration is reflected in Mercer’s 39% turnover rate in 2007 – a number most fleets would kill for, but a level that the folks at Mercer can’t stand, as they are usually dealing with turnover levels in the teens. “We roll everything into that number, by the way – if a driver gets dismissed, or has an accident, or quits for a non-trucking job, or goes to another carrier, that all gets rolled into our turnover figures.”

That’s why Mercer works so hard at recruiting and especially retention – not just bringing warm bodies in the door, but also figuring out what will be needed to keep them on board for the long haul.

(Safety director Len Dunman collects toy trucks, as you can see from the wall behind him.)

“It’s about hiring the right people at the beginning,” said Len Dunman, Mercer’s safety director. “You do everything up front – explain your expectations, listen to their needs – and that saves you a lot of trouble down the road. You need to respect the driver and treat them well – that’s missing from so much of our industry today.”

I talked to Len in Mercer’s new building: a 53,000 square-foot facility that houses the company’s safety and recruiting departments, along with other administrative functions and 23,000 square-feet of warehouse space. “It’s allowed us to dedicate a building to our driver lounge,” Dale told me. “We are also tearing down our old warehouse to add more parking spaces for our drivers.”

Mercer’s also adept at developing unusual strategies for finding and keeping its prized drivers. Chris Swanks – one of Mercer’s young recruiters – gave me a tour of the company’s latest venture, www.showusyourtruck.com. It’s a monthly “show truck” contest where both Mercer and non-Mercer drivers send in photographs of their rigs. Every month, Mercer’s staff picks a Mercer and non-Mercer winner that each get $200 worth of coupons for work at the famous Four States Truck chrome shop in Joplin, MO.

(You can see one of Mercer’s show truck winners on Swank’s’ computer behind him.)

The big prize, however, is a $13,000 sleeper makeover Mercer is sponsoring with sleeper-maker ITC: raising the profile of their show truck site even more.

It’s a sharp site – partially funded by sponsorships – that serves as both a subtle recruiting and retention tool, Swanks told me. “I can go to a non-Mercer driver and start talking right away about their pride and joy – their truck,” he said. “It’s a way to really connect with a prospect first before getting into the recruiting pitch.”

But it also serves as a way to recognize long-time drivers by encouraging them to put their rig Mercer’s show truck ring. “Our veterans also encourage their non-Mercer friends to participate – putting more good drivers in touch with us,” said Dale. So far, the show truck web page been quite a hit and is driving traffic to Mercer’s other sites, and by selling sponsorships, it lowers Mercer’s costs to fund such outreach as well. Pretty smart, if you ask me.

(A long-time husband and wife team for Mercer, Tom and Debbie Berkel, sit down to catch up with some of Mercer’s staff in the company’s new building.)

All of this dovetails with Mercer’s other long term recruiting and retention efforts, such as matching up drivers and dispatchers with similar interests: former Marines, or ones that like the same NASCAR teams, or that enjoy fishing. Everywhere you look, there are mantras reminding everyone in the office how important drivers are to the operation – that they are not an afterthought to the business. “Drivers are what make this company roll. Without them, we don’t haul freight and we don’t make money. So we make sure that everyone here understands that – and understands it every single day,” said Dale.

Well, before I begin this entry, let me just say in my defense that I just couldn’t resist. Our publication’s long time managing editor, Marilyn Wilson, just retired after over two DECADES editing and untangling the (at times!!) garbled prose of hacks like myself. Now, she made me PROMISE not to write about what she and her husband Nick plan to do with their retirement … ah, but Marilyn, I had my fingers crossed behind my back when I promised! And as you well know, that cancels out said promise!!!

(Let it be known, too, that Marilyn has a degree is child psychology … quite germane to a career spent dealing with microscopic juvenile minds like mine!!)

Anyways!

Marilyn and Nick are – as we speak – heading out to traverse this great country of ours by mobile home. Specifically, pulling a house trailer with a big Ford F-350. The first stop on Marilyn and Nick’s nationwide tour is the sunny state of Florida (and oh how we are envious!) But then any number of destinations may follow next: Civil war battlefields, the Grand Canyon; the St. Louis Arch; the brew pubs of Indianapolis (Well … maybe not those. But I’d sure like to visit them!)

(Marilyn will be driving a Ford F-350 like this one cross country over the next few months)

At our Fleet of the Year awards dinner recently, we talked about Marilyn’s upcoming adventures on the roads and H. Craig Jackson, a vice president of sales with Con-way Freight, noted that the F-350 is no little pickup. “That’s a real truck, now!” he remarked. “That’s got some serious power!” All the more fitting for a (now former) trucking editor to be tooling around in, I say.

(That’s Jackson in the middle accepting the 2007 For-Hire Fleet of the Year award for Con-way Freight)

So, to you Marilyn: I wish you the best of luck, the best weather, the best food, the best of everything. It’s going to be so different around here now with you gone – though we can’t wait to hear about your tales from the road. I’ve personally treasured getting to know you over the past eight years I’ve been at FleetOwner (and has it really been that long??!!). Have a great time – we’re going to miss you!