Trucks at Work Blog

“We‘re witnessing the growing influence of non-state actors. They can be businesses, they can be stateless terrorist groups, or they can be criminal organization. Their power is expanded, enhanced by technology change.” -Mike McConnell, Director of National Intelligence

Here we sit, on the brink of about as historical a presidential election as you can get, and we as a nation continue to look inward. We‘re worried about jobs, the financial sector, if the former “Big Three” U.S. automakers can survive, the housing market, energy costs … everything except the dangers outside our borders that - in my opinion - pose the greatest hazards to all of us in the U.S.

Mike McConnell - a former Naval officer and only the second person to hold the new position of Director of National Intelligence (DNI) - gave a speech the other day about the range of geopolitical dangers facing us as a nation. And frankly his analysis - gleaned from the work of 100,000 people across 16 agencies (such as the CIA, FBI, etc.) in six different governmental departments - is downright frightening.

His lead-off quote above really strikes a nerve with me - that the enemies of civilized society as we know it can be anybody, anywhere, and have a much greater capacity to inflict harm due to technological advances - in some cases, using what we consider passive technology for deadly purposes. Remember September 11? Over three thousand people killed, the World Trade Center towers destroyed, the Pentagon itself damaged, all tied off with an economic recession - caused by a handful of terrorists using fully fueled commercial jet airliners as weapons of massed destruction.

Then there‘s the larger geopolitical shift now taking place - a shift that‘s only been accelerated by the global financial meltdown.

“The international system we have known since the mid-‘40s, the one we all grew up with, is being fundamentally transformed … by the rise of emerging powers, an increasingly globalized - means shrinking globe - and the historic transfer of relative wealth and economic power from West to East,” McConnell said in a speech at the U.S. Geospatial Intelligence Foundation GEOINT 2008 Symposium in Nashville, TN, this week.

“Let me repeat that last part just for emphasis: the transfer of economic power and wealth from West to East, something that we haven‘t experienced in our lifetimes, not in your parents‘ lifetimes, or even your grandparents‘ lifetimes,” he stressed.

“By 2025, if not before, our intelligence community futurists believe there will be a global multipolar international system with emphasis on the multi-polar part,” McConnell continued. “We judge these sweeping changes will not trigger a complete breakdown of the current international system, but the next 20 years of transition to a new system are fraught with risks and many, many challenges.”

In terms of size, speed, and directional flow, the transfer of global wealth and economic power, now underway, as noted from West to East is without precedent in modern history, he said, and added that strategic rivalries are most likely to revolve around trade, demographics, access to natural resources, investments and technological innovation. There will also be a struggle to acquire technology advantage as the key enabler for dominance, McConnell pointed out.

Lower costs combined with foreign government policies have shifted the locus of manufacturing and even some service industries to Asia and to some extent to South America, he noted. As a result, growth projections for Brazil, Russia, China, and India (the so-called “BRIC” countries) indicate that they will collectively match the original G-7‘s share of global domestic product by 2040.

“China is poised to have more impact on the world over the next 20 years than any other country. If the current trends persist, by 2025, China will have the world‘s second-largest economy and be in route to becoming the world‘s largest economy,” McConnel said. “China will also start becoming a major military power by 2025. In addition, China will likely be the world‘s largest importer of natural resources and the largest contributor to pollution of the entire globe.”

Despite inflationary pressures, the DNI‘s analysis indicates India should continue to enjoy rapid economic growth - in route to becoming either the third- or the second-largest economy in the future. “India will also strive for a more multi-polar world in which New Delhi is one of the significant polls in this new world,” McConnell explained. “China and India will decide to what extent each is willing to - willing and capable of playing an increasing global role in how they will relate one to the other.”

Then there‘s Russia, which has the potential to be richer, more powerful, and more self-assured in 2025. However, to do so, Russia must invest in human capital, expand and diversify its economy, and integrate with global markets, noted McConnell, but if it does so, it could boast a gross domestic product approaching that of the United Kingdom or France by 2025.

“But to do so, they would have to become more integrated in the global economy, open up to the outside world, address their demographic trends, which are very negative, address the health issues and the lack of capital investment,” he said. “If Russia fails to do that, it will condemn them to a lesser status with nuclear weapons, a loud voice, but overall less relevance.”

The big worry in this is that, for the most part, Russia and China are not following the Western liberal model for self-development - as in democracy.

There‘s another problem too, in all of this - a growing global population facing food, water and energy shortages. The DNI‘s research indicates that roughly 1.2 billion people will be added to the current 6.7 billion people on the globe and that will put a strain on resources.

Energy - especially in the form of oil - is the big one. We‘ve seen the effects here in the U.S. as to economic havoc wild swings in the price of oil can create. The problem is that all current technologies are inadequate for replacing the traditional energy architecture on the large scale in which it‘s needed, the DNI‘s analysis shows.

“New energy technologies probably will not be commercially viable and wide spread by 2025; therefore, the pace of technology innovation will be key, but even with favorable policy and the right kind of funding and the ability to have clean fuels, biofuels, clean coal or hydrogen, the transition to these new fuels will be slow,” said McConnell.

“Most technologies historically have had an adoption lag. We looked at a recent study to just get a feel for this [and found] it takes an average of 25 years for … a new energy technology to become widely adopted. Where does this leave us? What I‘m suggesting [is that] there‘s an increased potential for conflict,” he said. “During the period of this assessment, out to 2025, the probability for conflict between nations and within nation-state entities will be greater. Given the confluence of factors from a new global international system, increasing tension over natural resources, weapons proliferation, things of this nature, we predict an increased likelihood for conflict.”

To say this is sobering is an understatement. It indicates that now more than ever before we as a nation - regardless of our allegiances and regardless of the results on Nov. 4 - must work together. We may be $11 trillion in debt with our economy in recession, but we cannot pull back from the world stage - especially as what‘s taking shape on the world stage doesn‘t bode well for our collective future.

“How many honest men you know? Hell, you separate the sinners and the saints and you‘re lucky to wind up with Abraham Lincoln. Now I want out of this spread what I put into it, so I say let‘s dip some of our bread in that gravy while it‘s still hot!” - Rancher Hud Bannon, played by Paul Newman, from the 1963 movie “Hud”

It‘s one of the great films of all time, adapted from the excellent novel “Horseman, Pass By” written by Larry McMurtry. Though shot black and white, lacking explosions, computer generated imagery, and all the juicy special effects we‘ve come to expect in our jaded technological age, “Hud” nevertheless still crackles with powerful emotions and motifs - the struggle between right and wrong, played out on the barren windswept Texas plains.

It‘s a family drama, with Melvyn Douglas as the aging Homer Bannon, father to a younger son Hud Bannon (played by the late, great Paul Newman) that he regards with barely concealed contempt; a 17-year old grandson (Lonnie Bannon, played by Brandon De Wilde), the only child of his elder son Norman, killed by Hud in a car wreck after a night of heavy drinking; and Patricia Neal as Alma Brown, the wisecracking live-in house keeper. (Douglas and Neal both won Oscars for their performances by the way, as did Jame Wong Howe for Best Cinematography for black and white film.)

Early in the film, Homer‘s cattle get infected with hoof-and-mouth disease and eventually - once the diagnosis is confirmed - must all be put down, shattering the family business. Against this backdrop, Hud and Homer begin the end of their long battle with each other. Hud - a reckless womanizer, boozer and bar brawler, yet lean and charming all the same - pushes for Homer to sell the infected cattle, regardless of the risks, such as potentially touching off a nationwide epidemic. Homer, a man of ingrained principle, refuses - just as he refuses to allow oil wells on his property, an idea Hud pushes hard for.

“That’s your solution for getting out of a tight?” asks Homer. “To pass bad beef on to my neighbors who wouldn‘t know what they was getting? Or maybe risk starting an epidemic in the entire country?”

The nephew Lonnie, beguiled by Hud‘s charm, starts drifting into his corner until a late-night showdown with Homer clears the air for everyone. “I went sour on you a long time before Norman died,” he says, staring down Hud with stone-cold eyes. “You just don‘t give a damn; that‘s the whole of it. You don‘t give a damn about people. You don‘t give a damn about anything.”

[The verbal showdown scene between Homer and Hud .]

It‘s a brutal truth, one Hud confirms as the film progresses - hiring a lawyer to take the ranch from Homer due to the old man‘s ‘incompetence” by allowing the herd to become infected; by trying to rape Alma the house keeper (a truly horrific scene, especially for 1963); by trying to buy his nephew‘s support in his ranch-pinching scheme by promising easy money.

Homer dies before Hud can take the ranch from him - from injuries suffered from falling off his horse, not long after killing his herd - and Hud ends up alone on the empty ranch, with Alma and Lonnie both leaving town for destinations unknown. What becomes of Hud, we never know - but his complete abandonment makes me think he came to a bad, lonely end. Maybe in a bar fight, or from a gun wielded by one of the many cuckolded husbands in town. Perhaps he can‘t sell the land to oil prospectors and winds up dead broke. You just have a feeling the fates are starting to close in on him.

I watch Hud every chance I get (which, fortunately for me, is quite often, thanks to that great Cable TV channel Turner Classic Movies - the second greatest invention of Ted Turner next to CNN) because it‘s a classic character study of what right and wrong really means - especially for businessmen and women the world over.

Hud is always out for one thing: Hud. Nothing else matters. He befriends Lonnie - the son of the brother he killed - for no other reason than to eventually help bolster his attempt to undercut his father Homer. There‘s no guilty conscience there, no reservations about using his brother‘s surviving flesh and blood for his own ends. Hud can also have any woman in town - even the married ones - but because Alma the house keeper resists his advances, he turns to force to get his way.

And then there are the cattle. The first thing Hud does when he realizes his inheritance may be threatened is to try and push the problem somewhere else - even trade on the hard-earned Bannon reputation for good quality beef and get a high price for it, no matter the eventual consequences. As long as Hud gets his money, the devil may take the rest.

[It’s interesting to note that the late Paul Newman was absolutely nothing like Hud Bannon — faithful to his wife, giving all the profits from his food venture “Newman’s Own” to charity.]

Sound familiar? Look at a recent story from the Associated Press about the internal conversations going on at the big credit ratings agencies - Standard & Poor‘s, Moody‘s and Fitch Inc. According to the ongoing investigation by Rep. Henry Waxman (D-Calif.), chairman of the House Oversight and Government Reform Committee, those agencies made enormous profits as they issued ratings on a ballooning number of mortgage-related securities, many of which were given top ratings so long as housing prices went up.

Now, S&P has downgraded more than two-thirds of its AAA-rated securities, while Moody’s has downgraded more than 5,000 mortgage-backed securities - pretty much an admission that they weren‘t worth the paper they were printed on; like infected beef sold to unsuspecting ranchers.

The AP reported that at a presentation made to the Moody‘s board of directors a year ago, top executive Raymond McDaniel warned the board that company employees sometimes “drink the Kool Aid” and accede to pressure for undeservedly high ratings, even as the weaknesses of the securities were becoming apparent. “It turns out that ratings quality has surprisingly few friends: issuers want high ratings; investors don’t want ratings downgrades; shortsighted bankers labor shortsightedly to game the ratings agencies,” McDaniel said.

Similar stuff goes on in trucking, of course - such as abusive “lease-to-own” programs whereby carriers saddle unsuspecting owner-operators with high monthly truck payments, deductions from settlements for maintenance, and then short them on available freight. Sure the carrier gets their money and puts the entire onus of running the truck on the owner-operator‘s back. But bankrupting them in the process isn‘t good business - and that‘s come back to haunt many of them.

It‘s worthy to note here that the late Paul Newman was the complete opposite of Hud Bannon in real life - married to his second wife Joanne Woodward for 50 years and donating 100% of the profits from his food company, Newman‘s Own, to various charities - totaling some $250 million over its history. Sure it‘s a tough world - but that‘s no reason for going out and adding to the misery purely to make a buck. Hud the movie character highlights the pitfalls, while Paul Newman exemplified the good that‘s possible. Those are some worthy lessons if you ask me.

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” -President Ronald Reagan

We‘re in a bad patch right now, no doubt about it - and I don‘t need to recite the litany of bad economic news here to explain why, either, despite the nearly 900 point rise in the stock market yesterday.

The question truckers need to ask themselves is how to pull through to the other side. From a general business perspective, one thing truckers should NOT do is pull back on their outreach and marketing efforts with shippers. That‘s the opinion of Professor Jerry Osteryoung with the college of business at Florida State University. Down times often times mean market share - for truckers this translates into freight - can be gained, and not always just by offering a lower price.

In Professor Osteryoung‘s view, controlling costs coupled with a step-up in marketing can help almost any businesses not just survive but succeed during times like these. I‘ll let him explain that reasoning in his own words. Professor Osteryoung, the floor is yours:

“There is no question that we are in tough economic times. We are in a very clear recession with the falling Gross National Product predominantly caused by the slump in the housing market and compounded by the giant mess with the financial institutions.

Some of the basic elements of this slow down are declining retail sales and plummeting car sales. In September, car sales were 19% lower than one year ago. The stock market is on a dramatic roller coaster ride downward with stocks losing over $8 trillion in just one year. Unemployment has been inching up, and people‘s confidence has eroded.

Our economy has business cycles. It is just the nature of capitalism. Just as there are upturns in these business cycles, there are also downturns. We are now in a falling cycle, but it will turn around, and we will be doing well again!

The natural tendency for a business going through rough times is to pull back and be conservative. As our economy has cooled off, so many entrepreneurs we know have responded by hording cash and cutting back on spending money on expansion. However, this is the wrong approach.

During slow downs, you need to make sure that your business is prepared for the inevitable market turn-around and is seizing the opportunity to grab up market share. For those who have the financial resources, market share is gathered much more easily during an economic downturn as competitors do not have the resources to maintain their market share in the face of competition.

You can gain market share in one of two ways: acquiring other firms that are having financial problems, and attracting new customers with increased advertising and more aggressive pricing. More and more firms are going up for sale at very low prices as the owners can no longer afford the business. They are being forced to get out before losses take away all of their assets.

I promise you are going to pull out of this downturn in the business cycle. Of course, the question of the hour is ‘When?‘ I would estimate that we will not really see a turnaround until late 2009 or 2010, but the economy will turn around.”

That‘s why cost control, especially for truckers, is so vital right now. Steve Russell, chairman and CEO of Indianapolis-based Celadon Group summed that up pretty succinctly in the carrier‘s most recent earnings report.

“In periods of weak demand, cost control is exceptionally important. We continued to actively manage our costs, particularly fuel expense,” he explained. “For the past year we have employed numerous tactics to improve fuel efficiency and lower costs. We have reduced the top speed of our tractors, improved tractor aerodynamics, added auxiliary heaters, implemented a strict tractor idling policy, renegotiated bulk fuel purchasing arrangements, and counseled our drivers in more efficient driving patterns. Although the drop in fuel prices from July through September certainly benefited us, our concerted efforts over the past year contributed more to [our] results.”

It‘s also important to point out that good drivers are a critical asset in times like these - something Russell took pains to point out. “We intend to keep our most important strategic asset–our corps of safe and experienced drivers–intact and ready to capitalize on increased market share when the combination of our efforts and a better freight market improve the operating environment,” he said.

Another tip: don‘t be afraid to up-end the apple cart. Van Buren, AR-based carrier USA Truck provides a great example and I‘ve always paid close attention to the strategic ideas Clifton Beckham, the truckload carrier‘s president and CEO, lays out in every earnings report.

“Our long-term strategic plan calls for a halt to fleet growth until we consistently earn at least a 10% return on capital,” he said in USA Truck‘s third quarter statement. “Our goal is to achieve that return by the end of 2010. We have launched eight supporting initiatives to help attain this goal … designed to help us expand our margins in our asset-intensive trucking operations through more efficient revenue production and cost control.”

He said they are also designed to position USA Truck‘s business model to resume asset-based growth in 2011 after improving our asset-based margins and by building sizeable asset-light platforms for rail intermodal and truck brokerage services - both of which should produce a higher return on capital.

That‘s some sharp thinking - and shows Beckham and USA Truck, along with Russell and Celadon, among others, are indeed saddling up to prepare for the tough times ahead.

“Truckers spend more time on the road than anyone, so they know better than anyone the common sense advice to follow and pitfalls to avoid.” -Tom Corpus, product manager-commercial truck division of the Progressive Group of Insurance Companies.

Here‘s a contest every small fleet and owner-operator can sink their teeth into - offering tips gleaned from years of experience on the road in retrun for a shot at a grand prize worth $5,000 in cold hard cash.

That‘s what the Progressive Group of Insurance Companies is putting on the table as part of its marketing plan to raise awareness among small fleets and individual truck owners about the insurance products they offer.

“Everyone knows we sell automobile insurance, but few realize we sell truck insurance too,” Tom Corpus, product manager for Progressive‘s commercial truck division, told me recently. “We‘re one of the largest providers of truck insurance out there - predominantly for those operating 20 power units and under - yet we have only a 6% to 8% share of the market. Truckers are a large source of business for us and we think it‘s a good area for growth.”

Progressive began its marketing campaign earlier this year built around the “Truck Tips” concept: a strategy whereby truckers not only get exposed to the Progressive name, but also get a variety of business tips they can straightaway put to good use.

“We feel this contest is a way to create a dialog with them.” Corpus told me. “We basically take all comers in that ‘under-20‘ truck segment - experienced hands and well as those that just got their CDLs [commercial driver‘s license]. And we feel these tips are a good way to build our communication with the market.”

The contest works like this. First, submit your best truck tips online at the Progressive Truck Tips Web site in one of six categories — Funny Tips; Fuel Savings Tips; On-the-Road Tips; On-the-Job Tips; Driving Tips; and Safety Tips. The winning truck tip gets $5,000 cash and will also be featured in a Progressive commercial auto insurance radio advertisement. In addition to the grand prize winner, there will be six category winners that get $500 each. The deadline for all truck tips submissions is March 31, 2009.

“We want to give [truckers] a chance to share their knowledge with other motor carriers, while giving them the opportunity to learn more about truck insurance,” says Corpus. “We also think it‘s an opportunity to show them what stands out about us - our claims service. We take pride in providing our own company-employed team of dedicated truck specialists who fly all over the country; we don‘t outsource claims service. That‘s our bread and butter, along with the right rates priced for the right risk.”

“After a year of doom and gloom at the pumps, this is an unexpected bonanza for motorists and consumers.” -John B. Townsend II, AAA Mid-Atlantic‘s manager of public and government affairs.

Oh, how it warms the cockles of one‘s heart - a more than 50% plunge in oil prices in the space of scant four months is wreaking havoc among many of the members of the Organization of Petroleum Exporting Countries (OPEC).

Gone are the snide asides about how wasteful those silly Americans are in terms of energy. Oh, but no one - NO ONE - expected U.S. consumers to react the way they did when oil topped $147 per barrel in July, pushing the price of gasoline above $4 a gallon and diesel well above $5 a gallon. We started driving less - WAY less - and demand for oil started to nosedive. When the financial meltdown on Wall Street kicked in, demand for oil cratered to around $65 a barrel.

The best thing is, Americans are STILL not driving. We‘ve driven 62.6 billion FEWER miles through the first nine months of this year versus 2007 and that trend continues. Gasoline purchases we‘re down 6% last month and oil demand is shrinking so fast that even a 1.5 million barrel per day (b/d) cut in production announced by OPEC last week did ZERO to stem the tide: oil prices still fell $3.39 per barrel right after that announcement.

The plunge in gasoline prices can be attributed to economic uncertainty and a big drop of consumption, as oil traders fret about what a “possible — or imminent — recession could mean for petroleum demand,” says John B. Townsend II, AAA Mid-Atlantic‘s manager of public and government affairs.

“The price of crude oil is the single biggest component of retail gas prices, accounting for 72% of the price of gas the first half of 2008,” Townsend noted. “So there‘s no question that as crude prices tumble, gas prices will follow. It could be an unexpected windfall for motorists trying to find any good news in this economic crisis.”

We even get a nice warm plate of schadenfreude to dine on as OPEC nations such as Iran and Venezuela - two countries we rank highly on our enemies‘ list - face some serious fiscal woes despite raking in some serious oil cash over the past year.

According to a nice story in Time magazine, despite the speed of the oil boom, the price crash has jolted OPEC countries, which appear to have assumed that high prices were here to stay. Nigeria and Iran have both set their national budgets according to prices of about $80 a barrel, and Qatar’s expectation has been $90 a barrel.

“Producers very quickly got used to $100-plus prices,” Julian Lee, senior energy analyst with the Center for Global Energy Studies in London, told Time‘s reporters. “They thought of it as normal and justified. They seem to have very short memories.”

Several oil analysts — who predicted earlier this year that oil would reach $200 by year’s end — recently said that oil could drop to $50 a barrel. Francisco Blach, head of commodities research at Merrill Lynch in London, pegged oil at $90/bbl for 2008 last month, but he can easily see $50/bbl if there’s a global recession.

According to Ed Leamer, director of the UCLA’s Anderson Forecast, the current price slide could drop another $200 billion to $250 billion into consumers’ pockets, given that as of the second quarter personal spending for gas fuel oil and other energy was about $442 billion on an annualized basis. “For consumers, its welcome relief,” he explained to Time. “And because the U.S. is out of its peak summer driving season, there‘s not too much of an incentive to drive a lot more just because gas prices are down.”

All of this is turning the dice up snake eyes for OPEC producers who spent heavily propping up their nations, gambling that oil prices would stay high. For example, according to the Washington Post newspaper, Iran drained much of its rainy day fund to pump up its economy even before oil prices fell. Its foreign exchange reserves fund, which contained about $40 billion when Mahmoud Ahmadinejad was elected president in 2005, may be empty (though HE ain‘t saying) whereas it should be total some $130 billion due to the oil price jump this year.

The Post also noted Venezuela might run a deficit to pay for massive social spending; that Mexico has spent billions of dollars defending the peso; and Russia, Saudi Arabia and the United Arab Emirates are all dipping into their cash hoards to rescue domestic financial institutions.

Now, for sure, pump prices are still way higher than last year [and if Congress really wants to make itself useful, figure out why when oil prices drop more than 50%, the price at the pump only declines some 25% to 33%] and that‘s probably going to be a permanent fact of life from now on. But if we can keep doing what we‘re doing - driving less, using more mass transit, buying more fuel efficient vehicles, further reducing overall energy use - then I think we‘ll set ourselves up for a better future, one for once far less dependent on OPEC.

“From the early days of this award to the present, you have always found the best of the best in human instinct. The rush to respond in an instant is not in every person who is witness to accidents and tragedies. However, when the instinct to react is there, it is genuinely and act of heroism. It should always be clear that this is a damn good program.” -Boyd Lowell Applegate, truck driver and recipient of the 1993 Goodyear national highway hero award

I don‘t know Boyd Applegate, but I wish I did - just like I wish I‘d been able to meet any of Goodyear Tire & Rubber Co.‘s national highway heroes. These folks are more than truck drivers; they are living, breathing proof that everyday people are capable of extraordinary things.

Boyd recently wrote a letter to Donn Kramer, director of Goodyear‘s commercial tire marketing department, talking about how he found himself in the middle of yet another potentially fatal highway scene - an injured man in the roadway - earlier this year (on Good Friday no less) yet managed to not only avoid hitting the pedestrian but also stopped to render much needed aid.

Months later, he wrote that the trauma of that evening came back to him upon reading a small item about the latest Goodyear highway hero winner, causing him to shake and cry. Yet Boyd‘s nerves were solid as steel when he saved that pedestrian - never flinching for a second when he braked and swerved in such a way to avoid the man but also prevent his rig from jack knifing. Only other drivers in this industry know how hard something like that is to accomplish - and here Boyd did it almost instinctively.

I relate Boyd‘s tale here because nominations for this year‘s highway hero are still open, until November 30 [and you can clink here to nominate one of them or call the Goodyear hero hotline at 330-796-8183.]. I know there are many, MANY noteworthy stories out there worthy of this award and I encourage you to submit them because, frankly, these are tales worth telling.

[It‘s important to emphasize here that all nominees for this award must be full-time truck drivers and must reside in the U.S. or Canada]

I‘ve talked to lots of drivers over the years and heard just amazing stories of heroism - made all the more amazing because the drivers themselves didn‘t give their deeds much of a second thought. Someone needed help - they rendered aid. From their perspective, that‘s the long and short of it - period.

Oh, but it‘s so much more than that. Take Charles Ingram, for example - Goodyear’s 2002 highway hero. A veteran owner-operator for FedEx Ground, Ingram was driving his 18-wheeler in the metro Atlanta area when he came upon an accident with a car on fire. Two passengers were trapped inside the burning vehicle, but none of the gathered bystanders were attempting to fight the fire or rescue the pair. Ingram grabbed a hammer and rushed in to the scene, breaking out the windows to pull both driver and passenger to safety.

As you can see, not everybody can do what the Ingram‘s and Applegate‘s of the world do. People stood around and nearly watched a care fire consume two lives - Ingram jumped in there and stopped that tragedy from occurring. Rightfully, he takes a lot of pride in what he did that day six years ago - and hopes his actions help shine a more positive light on what his brothers and sisters behind the big rig wheels do for a living.

“It‘s so important to the image of our industry to be seen helping others,” Ingram said. “That‘s why I hope more people will consider nominating those drivers who they think deserve the Highway Hero award.”

“Since receiving this honor I have rescued and additional five drivers from overturned or wrecked vehicles,” added Boyd. “All of that would not mean as much as it does if it were not for this beautiful ring [one of the honors bestowed on Goodyear highway heroes]. It is a constant reminder that I am a good person. To this day, the ring is on my finger day and night for the world to see … and I never tire of answering questions when people notice it. This program was an inspiration to me three years before I was nominated - and it still inspires me today.”

There are a ton of drivers out there like Charles and Boyd - men and women alike - and they need to be recognized for the good deeds they‘ve done.

“Today the financial crisis coupled with volatile oil prices poses demanding new challenges for international transport systems. [Because] a healthy global economy requires a strong and sustainable transport sector [and] competitive transport services operated securely and sustainably are essential for growth and development.” –Jack Short, secretary general, International Transport Forum

All is not well in the world of transportation - much less for the world in general. Everyone‘s getting whipsawed by a variety of calamities all at once, first a housing downturn, followed by a freight falloff, then skyrocketing fuel prices, and finally a financial sector collapse. To say it‘s not a pretty picture is to win the understatement-of-the-year award.

That being said, though, it‘s certainly not time to start thumbing through Revelations while laying out sackcloth and ashes fordaily business attire (though it‘s certainly necessary for more than a few Wall Street tycoons). If you as a trucker - large or small - have made it this far, through all that‘s gone before, you should be able to weather the rough road ahead, which is predicted to last well into 2009.

“The world has experienced significant turbulence in financial markets, and we expect this will slow world economic growth over the next three or four quarters,” said Jim Owens, chairman and CEO of Peoria, IL-based Caterpillar Inc.

“While we are encouraged by the coordinated response by governments and central banks around the world and believe the actions they’ve taken will restore global liquidity, the depth and duration of economic decline and the timing and strength of the recovery are very uncertain,” he noted. “Our current outlook for 2009 calls for sales and revenues to be about flat with our full-year 2008 results.”

Everyone is taking a hard look at how the economic turbulence today impacts transportation in the near term. The International Transport Forum, for example, plans to address these issues at its global conference in May next year in Leipzig, Germany under an appropriate banner: “Transport for a Global Economy — New Challenges and Opportunities”

Transport policy makers from 50 countries are going to meet key leaders from industry, the research sector and civil society to discuss the challenges of globalization for the transport sector and consider what transport can do to respond to the needs for global economic and social development today. Key issues include what the present economic crisis means for globalization, what impact high transport costs have on the economy and how the global credit crunch will affect transport investment programs, says Jack Short, the forum‘s secretary general.

“The question of a further liberalization in the transport sector in order to meet the needs of a steadily globalizing economy needs to be discussed as well as improvements of the connections of seaports and airports to inland - rail and road - infrastructure,” he explains. “At the same time the environmental and social implications of globalization are concerning more and more people and they expect answers.”

U.S.-based transportation firms are already battening down the hatches for the rough days ahead. United Parcel Service for one is already cutting pack spending to husband cash in advance of a further decline in freight volumes.

“We‘ve taken steps to effectively manage our costs and enhance service levels in an environment that proved substantially worse than we initially anticipated, with significant slowing toward the end of the quarter,” notes Kurt Kuehn, UPS‘s CFO.

“Our focus on service, revenue management, cost reduction and our sound financial position will help us manage through these tough business conditions,” Kuehn says. “We‘ve implemented a range of initiatives to ensure our network operation matches demand.” That includes reducing UPS‘s 2008 capital expenditure budget by $200 million, with further reductions planned for its 2009 capital spend as well.

“Based on economic forecasts, we anticipate a challenging environment for a number of quarters going forward,” he adds. “We believe the U.S. consumer will be very conservative with spending this year.”

Commercial truck sales - already under pressure in the U.S. from the changeover to more costly emission control technology - are also projected to suffer further declines in several major markets.

“Industry truck sales in Western and Central Europe above 15 tonnes are expected to be comparable this year to the 340,000 units sold in 2007,” says Aad Goudriaan, president of DAF Trucks, the European division of Bellevue, WA-based OEM Paccar.

“After robust growth for a number of years, the European economy and truck markets are now slowing. As a result of the recent slowdown in customer demand, DAF will reduce its build rate during October and anticipates the 2009 commercial vehicle market will reflect the slower economy,” Goudriaan notes. “European industry truck sales in 2009 are difficult to predict due to economic uncertainty, but they could be at a level of 260,000-300,000 units.”

It‘s less rosy in the U.S. market, according to Dan Sobic, executive vice president at Paccar. “Declining housing starts and auto production have impacted U.S. and Canadian Class 8 truck sales throughout 2008,” he says. “Industry retail sales are expected to be approximately 150,000 vehicles this year [and] are projected to improve slightly in the second half of 2009 and are expected to be in the range of 170,000-210,000 as fleets replace vehicles after several years of lower purchases.”

Still - aside from all this gloom and doom - many U.S. carriers are finding freight and posting profits. True, most of the truckers making money are big fleets, but it nonetheless it shows there‘s business - and money - to be had out there in the freight world, despite the choppy economic waters. “Several of our major customers are reporting increased third quarter income due to good freight traffic and lower fuel prices.” Paccar‘s Sobic says.

Indianapolis-based Celadon Group provides a good example. By closely managing freight selection, they were able to obtain a small increase in loaded rate per mile, which was augmented by a significant reduction of non-revenue miles. That led to an approximately 1.5 cent per mile increase in average revenue per total mile (excluding fuel surcharges). Now, while average miles per tractor decreased as a result of a slow economy and choosing to eliminate loads that failed to meet the carrier‘s fiscal requirements, average freight revenue per tractor per week (again excluding fuel surcharges) remained essentially constant with the same quarter last year, despite the very weak freight environment.

“In periods of weak demand, cost control is exceptionally important, particularly fuel expense,” says Steve Russell, Celadon‘s chairman and CEO. “For the past year we have employed numerous tactics to improve fuel efficiency and lower costs. We have reduced the top speed of our tractors, improved tractor aerodynamics, added auxiliary heaters, implemented a strict tractor idling policy, renegotiated bulk fuel purchasing arrangements, and counseled our drivers in more efficient driving patterns.”

I think Clifton Beckham, president and CEO of USA Truck in Van Buren, AR, sums it up the best - it‘s going to be a tough few quarters, but if carriers can control their costs, they‘ll be able to weather the current economic storm until better days arrive.

“These past few weeks have been quite fluid and our ability to predict the near-term future is murky at best. We believe freight demand is likely to deteriorate further over the next few quarters, and that less freight, inflated equipment prices and tightening credit will further shrink industry capacity,” Beckham says.

“Falling fuel prices are the only material factor we see that aids industry-wide capacity retention, and we do not expect that to be sufficient to outweigh the negative factors for underperforming and undercapitalized competitors,” he stresses. “We realize that the U.S. economy is enormous, and that a tremendous amount of freight must be moved even in a slow-growth or even slightly contracting environment. Thus, improving industry fundamentals may emerge next year for those trucking companies that weather the difficult times and survive to compete.”

“On-site renewable energy generation has been extremely efficient and successful for FedEx, and we are continuously looking for new investments.” -Mitch Jackson, director of environmental affairs and sustainability, FedEx Corp.

You‘re probably sick to death of hearing about the many “green initiatives” going on in the freight world - including ones mandated by law, such as the commercial truck emissions rules here in the U.S. Yet “going green” is becoming a bigger and bigger deal for carriers and shippers alike because it‘s increasingly becoming a way both can save a lot of money - especially in terms of reducing energy consumption.

Take Memphis-based FedEx Corp. for example. Its FedEx Express subsidiary is building its first solar-power equipped freight hub outside the U.S. at the Cologne/Bonn airport in Germany - a building slated for completion in 2010. Equipped with new ramp, freight and sort facilities with a fully-automated sort system that will cover a floor space of approximately 50,000 square meters, the Cologne hub will also incorporate a 1.4-megawatt (MW) solar power system that should generate approximately 1.3 gigawatt hours of electricity per year - equivalent to the annual consumption of 370 households. Solar panels fitted to the roof of the new ramp and sort facilities will cover a total surface area of 16,000 square meters, FedEx said.

Remarkably, this isn‘t the first “solar-powered” hub FedEx has built. In August 2005, FedEx flipped the switch on a solar-electric system at its Oakland, CA, hub which has in three years produced more than 3 million kilowatt-hours (kWh) energy, avoiding the release of more than 1,000 tons of carbon dioxide emissions. FedEx noted the solar power system can provide approximately 20% of the Oakland‘s facility‘s total electricity needs and can meet 80% of its

The company‘s LTL trucking arm, FedEx Freight, recently completed the installation of solar-electric systems at terminals in Whittier and Fontana, CA, which generate 1.5 megawatts (MW) of power, avoiding the release of 2.9 million pounds of carbon dioxide emissions each year.

But, as everyone knows, solar power technology ain‘t cheap. On average, it costs about $40,000 to equip a single family home with a solar array large enough to generate significant amounts of energy - an investment that can be hard to recoup over time. However, a new study by Professor David Roland-Holst at the University of California in Berkley figures that energy efficient technology and policies can, over time, reap some significant savings.

Roland-Holst recently wrapped up a study of the California‘s energy-focused policies over last 35 years to determine what - if any - economic benefits resulted from such efforts. Based on his research and applying it to the future, he said that if California improves energy efficiency by just 1% per year, proposed state climate policies will increase the gross state product (GSP) by approximately $76 billion, increase real household incomes by up to $48 billion and create as many as 403,000 new jobs.

“Our analysis provides solid evidence that California’s legacy of energy policy has grown the economy, created jobs and put billions of dollars into the pockets of consumers,” said Roland-Holst. “At this pivotal moment in history, as global markets teeter on the financial edge, our study reveals the economic power of energy innovation and efficiency.”

His study - “Energy Efficiency, Innovation, and Job Creation in California” - examined household reductions in per capita electricity use between 1972 and 2006. As household consumption is the most powerful driver of economic activity in the state - representing over 70% of GSP - household expenditure patterns are the leading determinant of state energy dependence and employment. Roland-Holst said several things stood out from his energy research:

– Over the past thirty-five years, forward looking energy efficiency policies created 1.5 million jobs with a total payroll of over $45 billion, and saved California consumers over $56 billion on energy costs.

– The same efficiency measures resulted in slower (but still positive) growth in energy supply chains, including oil, gas, and electric power. For every new job foregone in these sectors, however, more than 50 new jobs have been created across the state’s diverse economy.

– The economic benefits of energy efficiency innovation have a compounding effect. The first 1.4% of annual efficiency gain produced about 181,000 additional jobs, while an additional one percent yielded 222,000 more. It is reasonable to assume that incremental efficiency gains will be more costly, but they have more intensive economic growth benefits.

– The size and distribution of potential growth benefits that result from the increase of merely 1% in energy efficiency justify significant commitments to explicit incentives for competitive innovation and investment in the discovery and adoption of new efficiency technologies. These technologies offer win-win solutions to the challenge posed by climate change for the state’s industries and consumers.

The whole point here, I think, is that there‘s serious money to be saved by becoming more energy efficient. And in this cash-strapped world we‘re living in now, saving a buck here and there could really make a difference going forward.

“By reaching across the aisle to implement better transportation investments in our cities and communities and across our states, we’ll help meet the unprecedented demand for quality public transportation choices, to maintain our current system, and to create jobs that put Americans back to work.” Gene Russianoff, attorney and spokesperson with the “Build for America” campaign

It‘s a bold move, calling for billions more in highway funding and other transportation investments even as the federal government commits potentially $1 trillion in taxpayer funds to clean up the economic fallout from Wall Street financial sector meltdown.

Is it the wrong place and time to make this move? Maybe. Yet the groups involved see these investments not only as vital to keeping the U.S. economy rolling, they also believe it‘ll help provide new jobs - something that‘s a concern as unemployment is predicted to reach 7.5% by 2009.

“America‘s transportation system — the network of highways, railroads, public transportation, walkways and bikeways — is the backbone of our economy,” says Shelley Poticha, co-chair of the Transportation for America Campaign, known by the acronym T4. “But today that system is broken. The interstates have been built and need upkeep. Bridges are crumbling. Many Americans–young, old, rural–are stranded without transportation choices that are affordable, efficient, and convenient.”

Poticha says that while Americans are looking to cut back on driving, it‘s difficult when only half of us have access to public transportation and most live in places built for car dependence. “Meanwhile, our metro areas are absorbing millions of new residents as our population grows toward 400 million, and struggling to accommodate them while remaining livable.” Poticha notes. “Now is not the time to squander money on projects or plans that do not help save Americans money, free us from oil dependence and create long-term jobs.”

T4, if you are wondering, defines itself as a “broad coalition” of housing, environmental, public health, urban planning, transportation and other organizations focused on creating a “21st Century national transportation program.” That means building a modernized infrastructure and healthy communities where people can live, work and play by aligning national, state, and local transportation policies with an array of issues like economic opportunity, climate change, energy security, health, housing and community development.

That‘s a mouthful, for sure - and probably a little too starry-eyed to boot. That aside, though, their transportation investment plan for the U.S. - called “Build for America: A Five-Point Plan to Get Our Economy Moving” - contains some thoughtful points well worth considering.

“The U.S. already spends $70 billion a year on transportation infrastructure, and many are calling on Congress to do what has been done in every recent recession and invest still more to simulate economic recovery,” says Poticha. “However, simply using that money to build highway projects conceived in the last century is unlikely to help. Our ‘Build for America‘ blueprint calls for investment in public transit, high-speed and intercity rail, neighborhoods that are less car-dependent, more walkable and more affordable, and restoring the thousands of roads and bridges in failing condition across the U.S.”

The plan centers around the aforementioned five points that, frankly, are very VERY broad in size and scope:

1. BUILD TO COMPETE with China and Europe, by modernizing and expanding our rail and transit networks to reduce oil dependence and connecting the metro regions that are the engines of the modern economy.

2. INVEST FOR A CLEAN, GREEN RECOVERY through cleaner vehicles and new fuels as well as the cleanest forms of transportation - modern public transit, walking and biking - and for energy-efficient, sustainable development.

3. FIX WHAT’S BROKEN before building new roads, and restore our crumbling highways, bridges and transit systems.

4. STOP WASTEFUL SPENDING and re-evaluate projects currently in the pipeline to eliminate those with little economic return that could deepen our oil dependence.

5. SAVE AMERICA MONEY by providing more travel and housing options that are affordable and efficient, while helping people to avoid high gas costs and traffic congestion. Save taxpayer dollars by asking the private developers who reap real estate rewards from new rail stations and transit lines to contribute toward that service.

T4 believes following these five points could reap some big benefits for U.S. citizens in a variety of ways. For example, the groups notes that families living in neighborhoods adjacent to rail transit spend just 9% of their household budget on transportation as compared to 25% for those in automobile dependent areas - meaning a person can achieve an average savings of $9,499 per year by taking public transportation instead of driving.

On the job creation front, T4 points out that road and bridge maintenance and repair create 9% more jobs than construction of new road capacity, according to a 2004 analysis of the U.S. Department of Transportation‘s job-creation model. The same analysis found that construction of new public transportation creates nearly 19% more jobs - a figure does not include the permanent jobs in operating and maintaining the system.

Finally, in 2005 alone, public transportation saved Americans 541 million hours in travel time and 340 million gallons of gas — resulting in a total savings of $10.2 billion. And if more commuters can be moved off the highways and byways, there will be less congestion for truckers to navigate for freight delivery - saving them fuel, time, and a lot of frustration.

“Already, transportation is the sixth largest federal expenditure, at $70 billion a year,” says T4‘s Poticha. “Today, many are calling for infrastructure investments beyond that to stimulate an economic recovery. Given an economic crisis unheard-of since the New Deal era, those investments may be warranted. However, our nation cannot afford to spend those dollars as we spent them in the 20th century.”

Thing is, though, none of this is cheap. The Federal Highway Administration calcualtes we’ll need $512 billion alone over the next few years just to get our highway infrastructure up to snuff — while the public transportation needs of 78 metro areas across the U.S. total over $200 billion. That’s bailout-sized cash — the kind of cash we certainly don’t have, standing as we are in the midst of an $11 trillion federal deficit. Still, there are many good ideas in this plan worth looking long and hard at. We‘ll see if any of them gets some legs in the months ahead.

“Americans are running on empty, with falling home values, rising gas prices, and a lagging economy.” -Shelley Poticha, co-chair of T4 and president and CEO of Reconnecting America.

It‘s been a watershed year by any measuring stick you‘d care to use in just about any area. Take oil: prices spiked at $147.50 a barrel in July, then plunged below $70 per barrel by October. Then the financial sector melts down, causing the stock market to swing by 700 to 900 points over the course of several days. We could add $1 trillion to the federal budget deficit this year ALONE the way things are going, too. Talk about time to cinch the seat belt a little tighter!

Then we have the presidential race - historical by every measure. Either the first ever African American is elected president, or we elect the oldest president ever, the first former prisoner of war to sit in the white house, and the first female vice president. All of this is but the tip of the iceberg of change we‘ve slammed into - with much more to come.

[Now, I predicted Obama would win the presidency in this space way back in January - before the Iowa caucus, back when Hillary Clinton had been practically anointed the Democratic nominee. With the economy the way it is, it‘s looking more and more likely that he‘ll fulfill that prediction … but as they say in everything, it ain‘t over until a certain large woman bursts into song.]

For truckers, I believe, a whirlwind awaits no matter who gets elected president or which party controls Congress. To use that horribly overdone phrase, this is the time and place where a major “paradigm shift” (oh, I am gritting my teeth upon seeing these words AGAIN!!!) begins to occur. Not just for this industry, but for this country.

We‘ll see more taxes ahead, that‘s for certain - we can‘t avoid them when the deficit is set to reach $11 trillion dollars. We‘ll see far fewer services from government, both at the state and federal level, as cutbacks are an inevitable byproduct of the need to pay down debt. If we are smart, we‘ll see passage of legislation that‘ll a price “floor” for gasoline and diesel at $4 per gallon. That‘ll generate a lot of tax money, take big fluctuations out of fuel prices for more stable trucking fuel surcharges, plus keep people buying fuel-efficient cars and using mass transit.

That‘s a really big deal, because it takes five YEARS for automakers to bring new cars to market. And if we want to keep focused on energy conservation, we‘ve got to give people incentives to stick with change. Month to month fluctuations in buying and commuting habits based on fuel pricing plays hell with establishing trends - and we sure don‘t want to keep lining the pockets of our adversaries in the Middle East, Russia, and Venezuela.

The freight trends for truckers are going to pose difficulties, too. Clifton Beckham, president and CEO of truckload carrier USA Truck down in Van Buren, AR, noted that in comments made in the company‘s third quarter earnings statement.

“Freight availability declined throughout the quarter from its highs in June,” he said. “Although lower diesel fuel prices certainly helped our third quarter earnings, the diesel price decrease prevented some weak carriers from failing or encouraged them to bring on capacity that had been idled, both of which contributed to more competition for less freight.”

Beckham also noted that the crazy trend lines of the past few years - massive fuel cost spikes, pricier equipment due to emission reduction mandates - fostered the creation of new strategic initiatives for USA Truck.

“Our long-term strategic plan calls for a halt to fleet growth until we consistently earn at least a 10% return on capital,” he said. “Our goal is to achieve that return by the end of 2010. We have launched eight supporting initiatives to help attain this goal. These initiatives are designed to help us expand our margins in our asset-intensive trucking operations through more efficient revenue production and cost control … [while] positioning our business model to resume asset-based growth in 2011 after improving our asset-based margins and by building sizeable asset-light platforms for rail intermodal and truck brokerage services, both of which should produce a higher return on capital.”

And while the economic earthquakes rumbling through the U.S. economy are turning many freight predictors sour (Noël Perry, managing director & senior consultant, FTR Associates, said last week his firm believes a 1.5% to 2% decline in truckload in 2009 is in the offing - which approaches the worst level reached since 1982) there is still hope that truckers who can weather the changes going on today could reap a sunnier tomorrow.

“We realize that the U.S. economy is enormous, and that a tremendous amount of freight must be moved even in a slow-growth or even slightly contracting environment,” said USA‘s Beckham. “Thus, improving industry fundamentals may emerge next year for those trucking companies that weather the difficult times and survive to compete. To that end, we are poised to weather the uncertainty of the next few quarters.”

Hold onto your hats, then - we‘re in the whitewater rapids. Let‘s see if we come out safely on the other side.

[Impertinent editor‘s note: Change is also affecting me and this space as I was recently bequeathed a new laptop with Microsoft‘s VISTA operating system — complete with wholesale changes to every basic Microsoft program I‘ve used for years. The upshot for you, O Faithful Readers, is that uploading photos to this blog has become impossible for me at the moment. So please bear with me as I labor to master some sea changes of my own. SK.]