Trucks at Work Blog

“It is clear the safety message is being heard and that the increased enforcement presence is making a difference.” -Stephen F. Campbell, executive director, Commercial Vehicle Safety Administration (CVSA)

I‘ve been on a safety kick here for a while, and I‘m going to stay on it for one more post, if you don‘t mind.

Yes, the Dow Jones plummeted 350 points last week and, yes, oil futures are now trading north of $143 per barrel, so the challenges facing trucking are growing by the day. Yet this industry keeps improving its safety record, despite an environment conducive to people skimping on vehicle maintenance, which often directly leads to safety issues. That‘s what the numbers gathered by Roadcheck 2008 tell me, anyway.

Despite concerns that a weakening economy combined with ever-increasing fuel prices would push safety to the bottom of the list for commercial motor vehicle fleets, a recent check on the industry shows the lowest rate of out-of-service vehicles in two decades, according to Stephen Campbell, executive director of the Commercial Vehicle Safety Alliance (CVSA), not-for-profit organization devoted to promote commercial motor vehicle safety and security by providing leadership to enforcement, industry and policy makers.

This year‘s Roadcheck event - an annual “safety blitz” conducted across the U.S. and parts of Canada for the last 21 years - recorded a 23.9% vehicle out-of-service rate for Level I inspections. This is the principal barometer used to measure compliance and it is the lowest seen in the 21-year history of Roadcheck, noted Campbell in a pres statement.

From June 3-5, 9,148 CVSA and Federal Motor Carrier Safety Administration (FMCSA) certified inspectors at 1,683 locations across North America performed 67,931 truck and bus inspections. Some 52,345 out of the total were North American standard Level I inspections, and both the total number of inspections and Level I inspections were records for the annual Roadcheck event. Here are the results:

79.2% of all commercial vehicles passed the inspection, with 20.8% placed out of service (a decline from 21.5% placed out of service in 2007).

82.4% of vehicles carrying hazmat loads passed the inspection, and 17.6% were placed out of service (17.7% were out of service in 2007).

87.8% of passenger-carrying vehicles (buses) passed the inspection, and 12.2% were placed out of service (12.3% were out of service in 2007).

For all commercial vehicles: 94.7% of drivers passed the inspection, and 5.3% were placed out of service (6.2% were out of service in 2007).

For hazmat-carrying vehicle: 97.6% of drivers passed the inspection, and 2.4% were placed out of service (3.5% were out of service in 2007).

Passenger-carrying vehicles (buses): 95.5% of drivers passed the inspection, and 4.5% were placed out of service (3.8% were out of service in 2007).

Campbell noted that, for drivers, the 5.3% overall out-of-service rate represents a 14.5% improvement over last year‘s rate - a significant jump - and that hours of service (HOS) compliance rates improved, reversing a trend from the past several years. In 2007, 66.3% of drivers placed out of service were done so for hours of service violations - that dropped to 55.6%. Just 3.8% of all drivers inspected in 2008 were placed out of service for an HOS violation, down from 4.9% last year.

Yet there remain several concerns. Brakes continue to be the dominating vehicle out of service defect, comprising 52.6% of the total vehicle defects - way too large a number, in my mind, as brakes are the single most important safety component on a commercial truck. Yet it‘s worthy to note that the percentage of vehicle out of service defects that were brake related has declined noticeably over the last few years, down from a high of 56.6% in 2004.

Also on the negative side, the number of safety belt violations rose inexplicably this year, and rather dramatically too - from 829 in 2007 to 1,226 in 2008. After all the focus that‘s been put on safety belt usage by commercial drivers, it baffles me that the number forgoing their use should rise - especially since it‘s a costly fine.

Aside from that, though, trucking‘s total safety picture continues to sharpen nicely - and all during one of the roughest economic patches this industry has faced in decades. I only wish more outside of the industry would take note of these positive developments.

“A significant problem we are noticing in recent years is the practice of manually adjusting self-adjusting brake adjusters. If you have a brake that is over-stroking and it has a self-adjusting or automatic brake adjuster, you more than likely have a problem with the brake or the adjuster. If you readjust it, you aren‘t fixing the underlying problem.” -Stephen F. Campbell, executive director, Commercial Vehicle Safety Alliance (CVSA)

Despite all the advances in safety technologies discussed in my last post, when you really get down to it, there‘s really but one - and some would say only one - absolutely critical safety system on today‘s commercial truck: the brakes. Without properly functioning brakes, every other safety device on the vehicle - collision-warning radar, anti-rollover devices, etc. - is pretty much rendered moot. (Except for the seat belt - if your brakes fail, you better be wearing it!)

Back in May this year, the Commercial Vehicle Safety Alliance (CVSA) helped sponsor the “Operation Air Brake” campaign with local and federal-level law enforcement officials across 45 states and provinces across the U.S. and Canada during a 12-hour surprise inspection blitz. Some 11,908 vehicles were inspected, along with 93,751 brakes, and the results point to the industry‘s need to refocus its attention on basic brake maintenance, I think

Here‘s the tally of the Operation Air brake‘s findings:

9.9% of vehicles placed out of service for brake adjustment defects

8.3% of vehicles placed out of service for brake component defects

15.8% of vehicles placed out of service for brake related defects

9.4% of brakes with manual brake adjusters placed out of service

3.8% of brakes with self-adjusting brake adjusters placed out of service

4.7% of all brakes inspected placed out of service for brake adjustment defects

“Poorly adjusted or defective air brakes reduce the braking capacity of large vehicles and further increase their stopping distance,” said Stephen Campbell, CVSA‘s executive director. “Even under ideal conditions, the stopping distance of commercial vehicles can be twice as far as that of cars and other smaller vehicles. Having defective brakes increases the risk to the driver and any passenger, as well as to others traveling the roads.”

In a recent issue of the Technology and Maintenance Council‘s Fleet Adviser Newsletter, Kevin Kuhn, fleet shop maintenance manager for the TravelCenters of America noted that “manually adjusting auto slack adjusters can give operators a false sense of security about the effectiveness of the brakes. Adjusted auto-slacks will likely go out of adjustment again soon after their adjustment and manually adjusting auto slacks does not fix the underlying issue with the braking system.”

Brakes are the basic foundation block for commercial vehicle safety systems of all types, so if they don‘t work properly, the safety of the whole vehicle is compromised - not to mention those traveling alongside it. It just goes to show that, just as in sports, you‘ve got to keep focused on the fundamentals in order to sustain a high level of successful performance.

And on another note, from the “do as I say, not as I do” file …

I just wanted to draw some attention to AB 2800, a section of Proposition 103 heading for California‘s statewide ballot. A group called Consumer Watchdog is all in a lather over this piece of legislation as it would allow insurance companies to put black boxes in the cars to monitor speed, mileage, etc., and thus charge certain drivers higher premiums based on their driving habits.

“The insurance industry would pick driver‘s pockets and peer into their cars with this bill, headed to the Senate Insurance committee this week,” said Carmen Balber of Consumer Watchdog. “It would allow insurance companies to require drivers to install ‘spyware‘ in their cars that tracks speed, acceleration, location, time of day, mileage and other data. Under the legislation, consumers who refuse to give up their privacy would pay higher rates.”

Sponsors say the bill would encourage motorists to drive less by lowering insurance rates for lower mileage and it would also give discounts to drivers who put black box technology in their cars. “Insurers want to know where we drive, when we drive and how long it takes us to get there, but they shouldn‘t get to charge more to Californians who won’t accept their spying,” said Balber. “AB 2800 just lets insurance companies charge drivers more for refusing to let them pry in their cars.”

Oh, I get it: black boxes are OK for commercial trucks, but not consumers. It‘s OK to monitor the performance of commercial truck drivers, but not the average motorist - that‘s “spying.” I think ALL vehicles, tractor-trailers down to cars, should have black boxes - then we all get measured to the same highway safety standards. This legislative effort will show us if the motoring public is willing to be subject to the same black boxes they want for truckers … or if it‘s a case of “do as I say, not as I do” all over again.

“The driver is still the most important element in maintaining vehicle safety. However, [safety] systems can provide the additional split-second deceleration needed to maintain control of the vehicle in an emergency situation.” -Jon Morrison, president and general manager, Meritor WABCO Vehicle Control Systems.

With fuel prices out of sight and freight volumes sluggish at best, it‘s easy to take a dim and grim view of the trucking industry‘s prospects right now. But one thing that gets overlooked pretty consistently by the motoring public these days, much less the mainstream media, are the huge advances in commercial vehicle safety technology going on right under our collective noses.

It‘s not something that‘s just happened overnight, either. All the systems now in play - from Eaton‘s VORAD radar system and similar offerings from Delphi, up to anti-rollover technology made by Bendix and ArvinMeritor - to new products waiting in the wings add up to a vastly improve working environment for truck drivers and the motorists surrounding them on the highway.

For example, I got the great opportunity to see ArvinMeritor‘s OnGuard collision avoidance technology in action earlier this year ahead of the Technology & Maintenance Council meeting in Orlando, FL. [The slideshow below illustrates the kinds of vehicles involved, including some of the participants - especially the ubiquitous David Kolman, editor of our sister magazine Refrigerated Transport.]

Though expensive right now - list price is $4,500 - the system‘s forward-looking mono-pulse radar sensor can detect multiple moving and fixed objects at distances up to 500 ft., “locking in” on relevant objects at distances of 275 to 325 ft., which is a three-second following distance at highway speed. If a moving object is detected, OnGuard automatically engages the throttle, engine retarder and service brakes when it senses a likely collision without immediate action from the driver.

Think about that - automatic braking! Just getting all the technology to work properly is a concern, of course, but this system is already on the road in some 200 trucks operated by refrigerated carrier Prime Inc.

ArvinMeritor‘s competitor Bendix is hard at work on similar product, a new active cruise control (ACC) system it plans to roll out in the fourth quarter this year. The ACC system ties a truck‘s brakes, engine, transmission and the company’s electronic stability program system together with radar sensors so a truck can automatically slow down and come to a full stop if it detects a slowing vehicle ahead. Bendix won‘t offer ACC without its full stability control system because it is needed to prevent further control loss issues from developing in emergency braking situations, the company noted.

(Bendix’s electronic stability program or ‘ESP’ is in use on all kinds of trucks, including mixers. This one was available for test drives at MEMA’s safety summit in Washington D.C. last year.)

Yet it‘s important to look outside the pure competitive nature of these companies to truly appreciate how far we‘ve come in terms of boosting truck safety. All of these firms are working hand-in-glove with the Motor & Equipment Manufacturers Association (MEMA) to get the attention of Congressional lawmakers firmly fixed on the subject of enhancing commercial vehicle safety.

MEMA is holding an annual safety technology demonstration on Capitol Hill next week on June 24, which I‘ll unfortunately miss since I will be on vacation. All of these systems, plus many more for the car and light truck arena, are made available for hands-on testing by congressmen and women, along with their various aides. Seeing all of this technology in action is awesome, yet it‘s still an uphill battle to get any support for fiscal incentives to get truck owners to invest in it.

(Volvo has made Bendix’s ESP standard equipment on its tractors.)

“Over the next 10 years, we feel there‘s going to be a growing appetite for active vehicle safety systems in the U.S.,” Joe McAleese, Bendix president & CEO, said recently. “We believe the best way to drive adoption of safety technology is through incentives, not mandates, because we believe there is substantial payback fleets can achieve from them. And once fleets see that payback, such technology will become ingrained.”

That‘s one reason Bendix strongly supported the Commercial Motor Vehicle Advanced Safety Technology Act of 2007 (H.R. 3820) on Capitol Hill last year. That bill offered tax credits of up to $1,500 per system, $3,500 per vehicle and $350,000 per fleet for installing a variety of safety technologies on commercial trucks, but sadly gained no traction among lawmakers.

“Our primary focus is to deliver cost-effective solutions that make the roadways safer,” said McAleese. “H.R. 3820 was just one example of a congressional initiative that could make critical vehicle safety technologies even more accessible for today‘s safety-conscious fleets. It is our hope that our participation in MEMA‘s legislative summit and similar events will increase the visibility of these important issues.”

As I‘ve been in the truck cabs, watching these kinds of safety systems in action first hand, I‘ve no doubt they can do an awful lot to improve highway safety for everyone. The tough part is convincing Congress and other major players, like insurance companies, to support them.

I mean, at the ArvinMeritor event in Orlando, one fleet manager actually browbeat his insurance representative into attending so he could witness first hand how new safety technologies could lower the carrier‘s risk profile - thus qualifying them for a break on their premiums. It still proved a hard sell, but hopefully it won‘t remain so much longer.

“Painting in watercolor is like walking a tight rope; one must achieve a perfect balance between what the paint wants to do and what the artist wants to do, or all is lost.” -Mary C. Taylor

It can‘t just be about the money. That‘s the conclusion reached by Professor Jerry Osteryoung from the college of business at Florida State University.

Over the many years of a career teaching a wide variety of business courses, he‘s come to believe that business owners cannot just focus on making money to the exclusion of everything else; that, in his mind, is a recipe for eventual disaster.

Osteryoung isn‘t out on the fringe on this one, either, as any recent glance at the business community in this country can tell you. Enron? WorldCom? Countrywide? Bear Sterns? All undone by pure naked greed - an all-consuming desire to generate hefty profits at the expense of just about everything and everyone else.

Of course, as many have told me more than once (usually with a wry laugh), you can‘t focus exclusively on making money in trucking because there IS no money to be made it trucking. I mean, an industry with a profit margin hovering around 5% - if you‘re lucky - doesn‘t attract the kind of speculators now making hash out of the petroleum markets.

Yet trucking is a vital cog in out nation‘s economy, carrying 70% of all U.S. freight tonnage. Despite that critical profile, most drivers in this industry - especially on the long haul, for-hire side of the ledger - must work long hours (a 14 hour day) for an overage five figure annual pay that fluctuates depending on mileage and keeps them away from home for days if not weeks at a time. Not exactly a winning combination.

Yet most drivers and others involved in trucking don‘t do it for the money - they work in this business because they love it on some level. And successful carriers - small and large - stay afloat in this business by treating drivers and the rest of their employees justly - irrespective of the money. That‘s the key, Professor Osteryoung believes, for a business to sustain itself for the long haul. Here‘s why, in his own words:

“When I was in classes getting my Ph.D. in finance, my professors told me over and over, ‘the purpose of a business is to make money for its owners.‘ Unfortunately, I cannot tell you how many times I repeated this mantra to my students over the years. Now, however, I have a very different opinion on the subject.

A firm cannot stay in business just to make money for its owners at the exclusion of everything or everyone else. If an entrepreneur takes the attitude that he or she deserves to make all of the money, the business will suffer and will most likely crash and burn. Just consider who stands to lose the most when a business fails.

Some folks - my former professors included - would argue that the owners lose the most since they have the most at risk. There is no question in my mind that entrepreneurs lose a bunch as they generally have the most invested in terms of dollar amount. They are not; however, the ones hurt the most by a business failure. A business closing is devastating to the employees.

Employees are one of the many entities that have a vested interest in a business‘ success. In addition to owners, stakeholders such as employees, vendors, banks and customers have so much tied up in a business. They are vitally concerned with the firm‘s well being and will put forth much effort to ensure its success. However, success is impossible unless all of the stakeholders are taken care of.

When a business fails all of the stakeholders suffer. Take for example a financial institution. A financial institution risks much of its depositors‘ funds to support a business, and if the company fails, its own financial performance suffers.

If employees are not treated reasonably, the whole business will suffer as both the quality and quantity of work declines. So many entrepreneurs forget how important each and every employee is to the success of the business, and they often fail to treat employees well. If the business should fail, these employees are the ones that are going to pay a very high cost.

My colleague and I recently assisted an entrepreneur who had been operating a business with over 50 employees for a very long time. The business was losing hundreds of thousands of dollars each month, and we tried to give the entrepreneur the resources he needed to turn things around. When the situation failed to improve, we realized that there was only one alternative left: he had to close the business and file for bankruptcy.

Telling this entrepreneur that closing the business‘ doors was the best course of action was, by far, one of the hardest things I ever had to do in this job. What made it so hard was not that we had to give the entrepreneur this bad news, but because we knew what a loss it would be for all of the stakeholders, particularly the employees. Through no fault of their own, the staff would lose their jobs.

In my opinion, the purpose of a business is to serve the stakeholders. Businesses must earn money to acquire additional funds and assets, but its staff and other stakeholders are vital contributors to this endeavor. The key is to balance and deliver on the needs of all the stakeholders.”

As usual, Professor Osteryoung puts some interesting thoughts on he table for consideration. You can always reach him by e-mail at jerry.osteryoung@gmail.com or by phone at 850-644-3372.

OK, so we all know I like show trucks, big sleepers, custom paint projects, you name it. So I’ve collected a few that I’ve encountered on the road — as well as some stellar submissions from several OEMs highlighting trucks created to honor our military veterans — for your viewing pleasure below.

Always feel free to send photos in of your own “glam” trucks by the way to me — even if your pride and joy only has a wee bit of chrome, it still makes your rig a unique item on the highway. Safe travels everyone!

“Since the first of this year, U.S. market and economic conditions have become significantly more difficult. Of greatest concern is the unprecedented rise in oil prices, which have more than doubled over the past 12 months alone. [They] are viewed by most experts as part of a long-term trend toward higher energy costs - a structural change, not just a cyclical change.” -Rick Wagoner, chairman and CEO, General Motors

We‘re witnessing history in the making when it comes to cars and trucks right now - a massive, almost instantaneous shift away from sport utility vehicles (SUVs) and light trucks among consumers. At the same time, automakers are speeding up efforts to bring more hybrids to the four-wheeler market - not an easy thing to do when vehicle development is a process typically measured in years.

Yet desperate times make for desperate measures. When the cost of fuel hit $4 a gallon for gasoline and soared over $5 per gallon for diesel in the U.S., it created all sorts of bad karma for everyone. Some 835 trucking companies went out of business in the first quarter alone this year, reducing truck capacity by 3%, due to the spike in fuel costs. It‘s hitting everyone in the wallet, which is why public transit agencies are witnessing a big hump in ridership - a 3.3% increase so far, which equates to 85 million more trips at this point compared to the same period in 2007.

People‘s car buying patterns are also changing, with all kinds of consequences for automakers - none of the pretty. For the U.S. domestic manufacturers - General Motors, Ford, and Chrysler - it‘s a bad patch, for they all committed heavily to building predominantly SUVs and pickups back in the 1990s, when fuel costs bottomed out at 90 cents a gallon. Now consumers are abandoning those vehicles in droves, forcing the automakers to switch their focus to fuel-efficient cars, hybrids, and alternative fuels - probably for good.

“These higher gasoline prices are changing consumer behavior, and rapidly - significantly affecting the U.S. auto industry sales mix,” explained Rick Wagoner, GM‘s chairman and CEO, in a speech before analysts in Delaware earlier this month.

(It’s tough navigating the rough economic waters of today, Rick Wagoner will tell you.)

”We at GM don’t think this is a spike or temporary shift; we believe that it is, by and large, permanent,” he said. “Reflecting this rapid increase in oil prices, general economic conditions in the U.S. have changed considerably in recent months. While we remain reasonably constructive on the long-term prospects for the auto industry in the U.S., we view the near-term U.S. economic and auto market environment with considerable caution. These conditions, along with the rapid change in auto industry sales mix, require us to take further actions that will position us for sustainable profitability and growth.”

For starters, GM is green lighting a plan to build 1.0- to 1.4-liter engine, which will be the standard power plant for its new next-generation Chevy compact car. Waggoner also noted GM plans to have 20 hybrid vehicles on the market by 2012, is beefing up investments in two cellulosic ethanol startups to help foster much needed growth in biofuels, and plans to turn its Chevy Volt electric prototype into a mainstream offering by the end of 2010.

(Chevy’s Volt sure doesn’t look like an electric car, now does it?)

The Volt is critical, because it‘s an electric car with a small gasoline motor designed to recharge the batteries when plug-in power isn‘t available. Dubbed an “extended range” electric vehicle, it could represent a major breakthrough in vehicle design - the ultimate commuter car, so to speak. That would really alter the energy consumption pattern in transportation - if consumers accept it.

“We believe [the Volt] is the biggest step yet in our industry’s move away from its historic, virtually complete reliance on petroleum to power vehicles,” said Waggoner. “We also believe the technical goals of the Volt are not only achievable, but achievable generally within the time frame we previously outlined … and we are convinced that the Volt is an important investment for the future of our company and our stockholders.”

Yet GM also realizes that the shift away from SUVs and light trucks by non-commercial users means other major structural changes are necessary - such as shutting down plants. “We need to address the rapid industry shift away from trucks and SUVs … so, over time, we will cease production at four GM truck assembly plants,” said Waggoner, by 2009 and 2010. That includes GM‘s Janesville, WI, plant where the Chevy Tahoe and Suburban, GMC Yukon, and Chevy, GMC, and Isuzu medium duty trucks are built. The Toluca, Mexico, plant where the Chevrolet Kodiak medium duty trucks goes silent by the end of this year, as GM sold its medium-duty line to Navistar earlier this year.

(The oversized Hummer is also on the chopping block, according to GM.)

“To reiterate, timing of all these actions is subject to model lifecycles and market demand. If volumes continue to wane, the timing could be pulled ahead,” Waggoner stressed.

Yet it‘s not all bad, stressed Troy Clarke, president of GM‘s North American operations. In a talk given at the Brookings Institution, Clarke noted that vehicle sales are actually growing, especially when one looks at the global picture, and that if electric and hybrid vehicles make up a significant part of that growth in the near future, the pressure on petroleum prices may ease up even faster.

“Despite the current challenges of the auto industry in the U.S., globally our industry is in the midst of tremendous growth,” said Clarke. “There are about 820 million vehicles in the world today; roughly 12% of the world‘s population enjoys the benefits of automobile ownership and driving. As such, we expect that at least 15% of the world‘s population will own a vehicle by 2020 - that‘s a billion vehicles. This expansion is being fueled by growth in emerging markets like China and India.”

While Clarke readily admitted such growth creates serious concerns about the automobile‘s almost exclusive dependence on petroleum, creating issues with supply and availability, sustainable growth, climate change, and even national security, electrification of the automobile could be a solution to all of them.

“Going forward, we can no longer rely primarily on oil to supply the world‘s automotive energy requirements,” he said. “ GM believes that the long-term solution involves a march toward electrification - and the debate has shifted from ‘if‘ this would happen to ‘when.‘”

(Troy Clarke is trying to look on the bright side of the structural changes now occuring in the automotive industry.)

Parallel hybrid automotive powertrains are an important step on the journey, but the real value hybrids bring to the table is that they allow automakers to develop standards, engineering methods and tools, and real world validation models to further advance all-electric cars.

“City transit buses were the exact right place to start with hybrids: City driving cycles; Thousands of stops and starts per day; High up time and reliability requirements; and enough space to package first generation components. This was a great opportunity to demonstrate big fuel savings potential and that we did,” he said. “Over the past five years, we‘ve helped save three million gallons of fuel, and 30,000 metric tons of carbon dioxide emissions.”

This next step represents the transition to a true electrically driven vehicle, Clarke noted, and when you consider that three-quarters of American drivers travel less than 40 miles in their daily commute, a fleet of Volts can have a huge impact on America‘s petroleum dependence.

“The best part is an extended range EV like the Volt can do this while saving its owner a lot of money in operating expenses,” he added. “A conventional vehicle that gets around 30 miles per gallon costs about 13 cents per mile to operate. But, when you do the math to convert a kilowatt hour to cost per mile, an extended range electric vehicle like the Volt will cost about 2 cents a mile for electricity from the grid. So it‘s not going to be difficult for customers to see the advantage in their pocketbooks.”

There are a lot of challenges to work through, such as further improving lithium-ion battery technology so they‘ll last 10 years of life, 150,000 miles in a very rugged and hostile environment. But once that marker is reached, structural change to our transportation environment is really going to accelerate.

“Yes, we want to make an environmental technology statement. But we also want a car that sells and that people aspire to own,” Clarke said. “We want consumers to see the Volt as the game changer it is not only for our business, but for the way the world drives. Once they do, we can build on that success with other creative E-Flex models - but one step at a time.”

All I can say is, let‘s hope they get a move on, for oil prices hovering around $140 a barrel is making mincemeat out of all kinds of household and trucking budgets in rapid fashion.

“Trade‘s been a buffer; it‘s kept GDP [gross domestic product] in positive territory. It‘s clearly a cushion.” -Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez, as quoted in the USA Today newspaper.

There‘s no question our economy is hurtin‘ big time right now - and as you all know so well out there, the trucking industry is feeling more than its share of pain. With oil prices hovering at nearly $140 a barrel, resulting in gasoline costing an average of $4 a gallon nationwide and diesel at nearly $5 a gallon (almost $6 in California), we‘re at historic levels of agony in this industry.

The jump to $2 a gallon diesel from a mere 90 cents a gallon back in 2000 - an upward tick that spawned several dramatic big rig protests on Capitol Hill in Washington D.C. - pales in comparison to what‘s happening now. Did you know that Americans drove 11 billion FEWER miles in March compared to the same month in 2007? That‘s the sharpest monthly drop in driving ever since the federal government began collecting these statistics in 1942. Yet oil prices STILL went up, despite such slackening in demand.

There‘s an awful lot ingredients that form the ugly economic stew we‘re in right now because of such astronomical oil prices. Don‘t forget, it‘s taken a long time to get here: roughly 25 years, since the last major oil shock we experience back in 1973 due to the Yom Kippur war in the Middle East. All those long lines at the gas stations around the U.S. came during a time when we imported 33% of our oil. Today, by contrast, we import over 58%.

We also haven‘t built a new refinery in almost two decades, which puts a rigid ceiling on our ability to produce diesel and gasoline from raw petroleum. Them in the 1990s, the nation as a whole began buying and driving SUVs and trucks in huge numbers, which significantly drove up fuel consumption in the U.S. China and India‘s rapid industrialization of the past decade - and their new-found demand for cars and trucks - is also driving up demand for oil. China‘s demand for oil alone should grow 5.5% this year, a by-product of nearly 20% growth across its economy.

Then there‘s all the speculation in the oil futures market right now, with billions being funneled into contracts by hedge funds, private equity funds, and other non-regulated investment entities that‘s keeping prices up. Deny it all they like, but when U.S. demand for oil drops 5% in the span of several month, yet prices still go up, laws of supply and demand are clearly being bypassed somewhere along the chain.

So that‘s all bad, ugly news to be sure. However, there‘s a lot of GOOD economic stuff happening, too, thanks to burgeoning trade. Sure, we‘re still in a trade deficit since oil is so costly and the dollar is so weak, but exports are running at a fast pace and companies are relocating operations to the U.S. from Europe and other locales because high oil prices are pushing their transportation costs into the stratosphere.

(Boeing is reporting a big rise in jet orders — in part because the U.S. dollar is so weak.)

The 7.8% increase in the U.S. trade deficit this April to $60.9 billion overshadowed 3.3% growth in exports, to $155.5 billion - the biggest jump since February 2004. Leading the way were sales of commercial aircraft, automobiles, and agricultural machinery. John Deere said it sales would jump 30% in South America alone this year. Economists are already revising their growth figures for the U.S. economy based on those strong export numbers, with Morgan Stanley predicting U.S. GDP will increase 1.1% in the first quarter, instead of its earlier projection of 0.9%.

(Containers lined up for export. Photo courtesy of Absolute Freight.)

There‘s still plenty to worry about, not the least being the rapid jump in unemployment figures. One state that‘s not doing well at all is Michigan, with unemployment at 7.2% and a state economy contracting by 1.2%. But overall, things are better in a lot of economic areas than many think. Let’s just hope the good outweighs the ugly sooner rather than later.

“The combination of Navistar‘s truck design, development and manufacturing expertise and Caterpillar‘s worldwide distribution creates a significant advantage for global customers through the ability to offer the right vehicle for the right application.” -Dee Kapur, president, Navistar Truck Group

Hoo boy. Here we go. By the end of today, we‘ll have news stories galore all over the place detailing the just announced “memorandum of understanding” Caterpillar Inc. and Navistar International Corp. to form a strategic partnership aimed at garnering more share of the global truck business, while cooperating on a variety of engine platforms.

They intend to work together to develop, manufacture and distribute commercial trucks in select regions outside of North America - which includes a full line of medium and heavy-duty trucks in both conventional and cab over designs. Will we see those trucks come into the North American market someday in the future? If I was a betting man, I‘d wager a few bucks that they will.

Caterpillar and Navistar also plan to develop a mid-range engines for diesel applications, such as school buses and utility trucks in the U.S. This engine development would support each company‘s stated path not to utilize urea-based Selective Catalytic Reduction (SCR) technology.

(Are Cat’s on-highway products gone for good?)

“There are many opportunities for technology sharing and development that would result in the ability to better meet the worldwide demand for diesel engines in both on and off-highway applications,” said Jack Allen, president of Navistar‘s Engine Group.

Here‘s the big shot across the bow, however: Through this alliance, Caterpillar says it plans introduce a 2010 emission-compliant North American Cat branded heavy-duty truck for severe service applications, such as road construction, large infrastructure projects and oil and petroleum development … but WILL NOT supply EPA 2010 compliant engines to truck and other on-highway original equipment manufacturers (OEMs). In other words, no more on-highway Cat engines — period.

“Caterpillar and our dealers will continue to provide product support and service beyond 2010 for all Caterpillar on-highway engines regardless of truck brand,” said Douglas R. Oberhelman, Caterpillar‘s group president. “This new truck–targeted for 2010–will incorporate the legendary quality of Caterpillar‘s construction and mining machines and provide construction customers a one-stop solution.”

(A diesel particulate filter [DPF] Cat came up with to help its engines comply with 2007 emission regs … which may also disappear from the U.S. market too … )

In addition, with nearly 90% of its engine business being off-highway, Caterpillar plans to continue concentrating on opportunities to supply engines in the petroleum, marine, electric power generation and industrial markets–as well as produce engines for its own construction and mining equipment, Oberhelman said.

“In the past 15 years, Cat has become significantly less dependent on the sale of on-highway truck engines in the total contribution of our global engine profitability,” said Oberhelman. “Our global power systems business has grown significantly–in fact we supply approximately 400,000 diesel engines annually outside of the on-highway truck market. We intend to remain the world leader in clean diesel engines, and this collaboration is a key enabler.”

Caterpillar has long faced problems adapting its engines to the emission mandates being put in place for commercial trucks, you know. One reason it did not follow the exhaust gas recirculation (EGR) pathway every other truck engine maker did was because that technology didn‘t work in the construction, mining, and other engine markets Caterpillar served - forcing it to forge a different route to emission control.

It’s also not surprising Caterpillar made this decision to get out of the on-highway market - especially as two of the largest users of its on-highway models, Peterbilt and Kenworth, are going to get their own proprietary engines starting in 2010.

In early 2007, Paccar announced it would build a $400-million engine plant in Missouri to manufacture 12.9-liter and 9.2-liter engines for its Peterbilt and Kenworth Class 8 trucks for the North American and global markets. These engines are based off what the company is building in Europe via its DAF and Leyland operations.

“The…facility…positions Paccar to capitalize on growing opportunities in North America, Europe and Asia,” said Mark Pigott, Paccar chairman & CEO. “It will provide the flexibility to supply products and components to Paccar facilities and customers on a global basis.”

This is the trend Caterpillar hopes to navigate with its Navistar partnership, for to comply with emission standards that differ by country as well as to keep production costs in check, many diesel engine manufacturers are tying their global network of factories together more tightly enabling them to use a single engine platform to meet worldwide needs. It’s a topic I’ve written about many times, so I’ll share some of that thinking gained from other engine makers over the last few months here.

“Engines are an international business nowadays,” said Lothar Lemmermeier, head of supplier management and assistant general manager for Daimler AG‘s engine plant and foundry in Mannheim, Germany.

(Detroit Diesel’s new DD15 is built on a global engine platform used throughout the world by its parent company, Daimler AG.)

“There‘s fierce competition in the engine market, added to the demands of emissions compliance,” he noted. “As a result, we‘re trying to better optimize our global production flow - standardizing processes across all our plants, worldwide, while maximizing the benefits of scale.”

To accomplish that, Daimler is creating a “synchronous factory” design to manage its far-flung network of factories - coordinating production and support between the Mannheim plant and Detroit Diesel Corp.‘s facility in Redford, MI and Mitsubishi Fuso‘s engine plant in Kawasaki, Japan, along with Daimler‘s foundries in Capetown, South Africa and Rio de Janeiro, Brazil.

Daimler‘s new HDEP global engine platform is being built via this new “synchronous” approach, said Lemmermeier - allowing the company to build just a single engine product line that can be “tweaked” to meet specific market needs, from emission standards to power ratings.

Under this new program, components are built to be shared among all the factories, rather than have each plant build entire engines specific to the markets they serve, he noted. “For example, our Atlantis foundry in South Africa supplies 14.8 and 12.8 liter engine blocks to Redford, with Mannheim supplying camshafts and head liners for the 12. 8 unit,” Lemmermeier noted. “Redford builds the piston heads, liners, and camrods for the 14.8 liter engine - and supplies camrods to Mannheim for our 10.8 liter engine.”

Other engine makers are also engaging in similar global manufacturing strategies - especially Navistar, which partnered with MAN Nutzfahrzeuge AG, based in Munich, Germany to forge a “strategic agreement” back in 2004 to collaborate on the design, development, sourcing and manufacturing of components and systems for commercial trucks. That deal resulted in the new big bore line of MaxxForce engines for International highway trucks.

(Navistar is still going to equip its on-highway products with MaxxForce engines … no Cat need apply.)

How that deal gets affected by the new one with Caterpillar we can‘t say right now - we‘ll learn more later. But it‘s safe to say that Cat-Navistar partnerhsip is going to create a large seismic shift in the truck engine market, meaning fleets and owner-operators alike will again see spec‘ing options they used to enjoy in the past disappear completely in the near future.

“This is an important step for Caterpillar and we look forward to working with Navistar for the continued benefit of our customers, ” said Jim Owens, Caterpillar‘s chairman and CEO.

“This relationship is a perfect example of Navistar‘s strategy of growth through leveraging our own assets and those that others have built,” added Daniel C. Ustian, Navistar‘s chairman, president and CEO. “In partnership with Caterpillar we intend to extend our leading-edge product focus that we have in North America into the rest of the world.”

Needless to say, this is a deal that‘s going to create some interesting reactions in the truck and engine market in the U.S., I can assure you of that.

“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” -Bill Gates

It‘s time to realize that business is undergoing a sea change - the sort of big-time seismic shift that needs to occur to cope with new and nearly overwhelming economic conditions.

We all know what‘s driving this change, too - the price of oil and, subsequently, the cost of diesel and gasoline. We‘re sitting at $4 a gallon for gasoline and over $5 a gallon for diesel across much of the U.S. right now (and can you believe diesel cost 90 CENTS a gallon nine years ago at this very same point in time) and that‘s raising all kinds of havoc for us as a nation, since we‘ve over-relied on cars for decades for much of our daily transport needs.

On the freight side of the ledger, things are much worse. Commercial trucks haul 70% of all tonnage in the U.S. - a far cry from the 1940s and 50s, when railroads carried almost 90% of it. I‘m not sitting here saying we need to go back to those days - the railroads themselves are largely to blame for this topsy turvy turn in the freight world - but trucking needs to make some significant changes to cope with the new reality in fuel costs we‘re facing here.

The business world is trying to cope by relying more on technology rather than movement to handle many daily needs, and it‘s on using technology more wisely as a resource that Professor Jerry Osteryoung from the college of business at Florida State University has some thoughts. As usual, I‘ll let him do the talking today.

You‘ll note he says that shippers need to rethink how they transport their goods and should look to more local and regional carriers - that‘s a trend that is probably going to increase, which may not be such a bad thing as the industry could use more local and regional routing to give drivers more home time. In any event, it‘s something to think about. Professor Osteryoung, the floor is yours.

“With gasoline hitting four dollars a gallon and no end to the increase in sight, it is time to start thinking about the structural changes that we are going to experience in our economy and in our businesses. With the exception of the Internet revolution, this is one of the most dramatic changes that‘s come along in the last 50 years.

A recent report showed that if the current rate of oil consumption in China continues, they will need all of the world‘s fuel in the next ten years. Additionally, production and refinery capacity is going to further limit the availability of fuel, meaning higher prices as well.

Do I think that fuel prices will ever go down to two or even three dollars a gallon? No, because the demand for this commodity is increasing exponentially. I would not even be surprised to see fuel at five dollars a gallon by year end, especially if the dollar continues to do poorly against other currencies.

Not only is this a very big challenge for our country, but it is also an immense challenge for each and every business. One major change that I think we are going to see as a result of these conditions is more and more shopping on the Internet. People are going to opt for this alternative as a way to avoid using gas. Of course, people will still have to shop for items like food; but they will use the Internet much more in order to combat higher fuel prices and maintain their standard of living.

What this means is that your business is going to have to step up your web site. An okay web site is not going to cut it. To prosper in tomorrow‘s economy you must have a great web site that clearly demonstrates your products and services. It must also be easy to navigate and transact business. Users will simply fly by your site if it is not dynamic and relevant to their needs. In light of this, I think it would be very prudent to shift as many advertising dollars as possible to the Internet.

A second trend we can expect to see is telecommuting becoming the norm rather than the exception. With high fuel prices and congested roads, businesses will simply not be able to recruit or afford workers that have to commute. Businesses will have to design the workplace so that more of their workers will not have to come into the office everyday. Of course, mass transportation will eventually fill this void, but this is going to take a long time to develop.

Another major change I see is development growing up instead of spreading out. In the past, new development moved away from the city core, but now it will have to come back to the center to provide housing for people that can no longer afford to live in the suburbs.

This will be especially troubling for the many workers who moved further out to get inexpensive land for their houses. The commute was acceptable when fuel costs were low; however, now that paradigm has changed, and these workers are getting caught in an economic squeeze. They are going to be stuck, both unable to live out of town due to fuel costs, and unable to take on the expense of moving.

Another business cost that will warrant examination is transportation for your materials or products. Now is the time to take a look at ways that you can reduce your shipping costs. Start by looking for vendors or resources that are closer to home, thereby reducing your cost of doing business.

Finally, each and every business will have to change the way it thinks about fuel. Businesses will have to limit travel, opting to conduct more meetings using video conferencing technology. Smaller vehicles will have to become the rule rather than the exception. Bottom line: each business will have to redesign itself assuming that fuel hits $7 a gallon.

Now, there is a solution to this fuel price issue, and the answer is technology. Will this be a quick fix? No, but I believe it will come within the next seven to ten years. But do not be satisfied with minor tweaking here and there. The scope of this issue demands a major structural change - a re-engineering of each and every business.”

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

“Somewhere out there is a guy who‘s sure his truck looks better than yours. Here‘s a chance to kick him right in the spread axle.” -Motto of Mercer Transportation‘s monthly show truck competition.

Ah, the show truck: all that polished chrome, the high-dollar paint schemes, the countless hours spent cleaning every single square inch, including the unspeakably filthy underside of the chassis.

(Photo by Tom Schoening, Peterbilt of Norfolk)

It may indeed be an anachronism in this day and age of five-dollar diesel, environmental consciousness, and concern over profits, but man do they look SHARP. And truck shows are springing up everywhere to help celebrate the enduring passion for chrome in this industry, sponsored by truck stops, radio stations, even carriers themselves.

I love show trucks myself and get to really binge on them at the Mid America Trucking Show every year, collecting countless digital images for my files - some that never even get used in print or on the Internet. It‘s really a rolling work of art, the show truck, and I just wish someone with some seriously deep pockets would one day build a museum to house a good chunk of them.

(Lynn Bierschenk of Molt, Montana, touches up the tires of his big rig in preparation for the truck show. Photo by Tom Schoening, Peterbilt of Norfolk.)

Tom Schoening, communications director for Peterbilt of Norfolk, Nebraska, sent me some shots from the second annual “Pride and Polish Truck Show” sponsored by the Prime Stop truck stop off I-81 in Nebraska and co-sponsored by local radio station US 92. You’ll see four of them in here, including a good one of a bunch of “future drivers” climbing all over a show truck minitaure.

More than 2,000 people enjoyed looking at about 100 customized working rigs at this particular show, held May 31 at the DeVent Center in Norfolk. The show also featured the by-now famous Chrome Shop Mafia, a team of top-notch designers working out of 4 State Trucks in Joplin, Missouri, whose work has been chronicled by the Country Music Television (CMT) network over the last several years on the series “Trick My Truck,” raised the profile of show trucks and the trucks that own and operate them to new heights, giving national exposure to a great subculture within the trucking industry.

(Youngsters play on a miniature 18-wheeler during the truck show. Photo by Tom Schoening, Peterbilt of Norfolk.)

Sadly, the Chrome Shop Mafia and CMT are going their different ways after 41 episodes and three seasons, parting over the usual creative differences that occur when a show like this becomes a hit, with all but two members of the original cast choosing not to be part of future episodes. The biggest concern raised by 4 State Trucks centered on how the program began drifting away from ‘big rigs‘ to feature more small trucks, pickups, service trucks, etc. - all very worthy of attention, but definitely not in a show dedicated to showing off show trucks.

”One of our main objectives this past few years is to promote the image of the trucker and the trucking industry in a positive and respectable way,” 4 State Trucks said. “Our goal … is to offer the best selection and widest range of truck parts and accessories in the nation. We are committed to maintaining an inventory of quality products that allows us to achieve this goal and, in conjunction with this effort, we also intend to promote the awareness of ‘custom trucks‘ within our industry.”

(Leroy McRoberts judges the big rigs on May 31 during a truck show in Norfolk. After taking home top prizes in last year’s contest, he was appointed as one of the judges in the second-annual truck beauty contest. More than 2,000 people enjoyed looking at the customized and polished work vehicles under a warm sunny sky. Photo by Tom Schoening, Peterbilt of Norfolk.)

These guys also like to stress that show trucks and their owners are part of what they like to call “real-working America … not Hollywood,” which is ever so true. It‘s not cheap to turn a commercial Class 8 tractor into a show rig by any means (the paint job along can cost $40,000 or more in some cases) and all that money comes out of the trucker‘s pocket. Yet show truckers do it not only for themselves but also as a way to show off their pride in what they do for a living.