“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.

“Ironically, while high gas prices are encouraging more people to ride transit, rising diesel prices are also causing mass transit systems nationwide to raise fares, cut service, lay off staff, and delay capital spending. So, at a time when demand for buses and trains is at one of its highest points in history, we have transit agencies cutting back. This makes no sense.” –Warren S. George, president, the Amalgamated Transit Union (ATU).

There are more than a few unspoken issues in Mr. George’s comment above regarding cutbacks at mass transit agencies across the U.S. (big dollar unionized health and pension benefits, plus substantial annual cost of living pay increases, being some of them) but his overall point is very important – especially for truckers that’ve dealt with heavily congested highways in and around our major cities year after year.

We’re at a point where a massive shift is starting to take place, whereby daily commuters are abandoning their personal vehicles in favor of using buses and trains to travel from home to work and vice versa. This is a vary big deal, because it’s the removal of these daily commuters from the highways that’ll help reduce roadway congestion and cut fuel demand – which should help lower fuel prices and thus diesel costs for truckers.

Of course, like anything in life, there’s a big IF in the middle of all of this. If transit agencies can handle the increased ridership, if they can provide consistent on-time service, if commuters don’t start backsliding if the price of fuel starts to decline … if, if, if and more ifs to boot. Yet we could be poised for big changes to our transportation habits – and that could end up substantially reducing our need for imported oil.

For example, the American Public Transportation Association (APTA) reported that Americans took 2.6 billion trips on public transportation in the first three months of this year – almost 85 million more trips than in 2007 during the same time period.

“There’s no doubt that the high gas prices are motivating people to change their travel behavior,” said William Millar, APTA’s president. “More and more people have decided that taking public transportation is the quickest way to beat the high gas prices.”

Last year 10.3 billion trips were taken on U.S. public transportation – the highest number of trips taken in fifty years. In the first quarter of 2008, public transportation continued to climb and rose by 3.3%. In contrast, the Federal Highway Administration has reported that the vehicle miles traveled on our nation’s roads declined by 2.3% in the first quarter this year, APTA reported.

The problem is that the cost to operate transit systems nationwide is exploding as well – driven by the same fuel price spikes that are leading to heavier ridership. The Amalgamated Transit Union (ATU) noted that transit agencies are paying 44% more for fuel now versus last year and want the U.S. Congress to pass legislation providing transit systems with funds to help offset the high cost of fuel. “Transit needs to be part of the solution – not the victim – of high gas prices,” stated ATU’s George.

He believes that would be extra money well spent, too. ATU’s analysis indicates that if Americans used public transportation for roughly 10% of their daily travel needs, the U.S. would reduce its dependence on imported oil by more than 40% — nearly the amount of oil the U.S. imports from Saudi Arabia each year. In fact, increased use of public transportation is the single most effective way to reduce America’s energy consumption, he believes.

But without help from the federal government, service cuts and fare increases will continue. “Between the price of fuel, food, and health care, working families are getting squeezed like never before,” noted George. “People are looking to transit for relief. The last things they need are fare increases and service cuts to make their lives more difficult. Congress needs to provide the resources necessary to keep these systems operating at maximum capacity and subsidizing transit fuel costs to move millions of people more efficiently just makes sense.”

And public transportation providers consume a lot of fuel – more than 760 million gallons of diesel and gasoline annually, according to APTA’s research. And for every penny added to the cost of diesel and gasoline, public transportation providers face an increased cost of more than $7.6 million dollars.

“A penny increase in diesel and gasoline costs would add more than $5.4 million to the cost of bus operations nationwide,” noted APTA’s Millar. “ Based on the current national average fare revenue of 89 cents per unlinked bus trip, agencies would need to add more 6 million trips on an annual basis to recover just a penny increase. An increase in fuel cost of $1 per gallon would require that agencies carry more than 600 million additional passenger trips per year, on bus services alone; an increase of more than 10 percent over current bus ridership levels. Such an increase would no doubt require additional services, and additional operating costs, so it’s easy to see why agencies are struggling to meet surging fuel costs.”

Is offering more subsidies to public transit the best way to go? Maybe, maybe not. One thing is for certain, however – the more people off the road means less congestion and delay for truckers. And that is a good thing.

“This was a much darker film than what I set out to make, but I wanted to show what trucking is really like. And I knew it was a success when truck drivers came up to me after seeing and said ‘that’s the real deal.’” –Doug Pray, the director of “Big Rig.”

Point of full disclosure here before we get started: I love movies, especially documentaries. I’ll sit back and watch Ken Burns’ legendary epic “The Civil War” for hours, even view those ghastly “Rock & Roll” documentaries on VH1 when they come on the tube. So getting a chance to talk with Doug Pray, the director of instant documentary classics such as Surfwise (made last year about the legendary Dorian “Doc” Paskowitz and his family) and Hype (released in 1996 about the Seattle grunge music scene) is like winning the lottery for me.

Pray also just made a documentary about trucking called “Big Rig,” a film now available on DVD and one that’s going on a “summer tour” of sorts today, being shown at 25 TA/Petro truck stops starting in Foristell, MO and wrapping up in El Paso, TX, on August 14. Pray and his producer, Brad Blondheim, and an assistant spent months out on the road in two-week blocks, traveling 21,000 miles across 45 states and dozens of truck stops to film independent owner-operators at work: delving deeply into their lives, personal struggles, and above all their love of truck driving.

“We spent days in truck stops pitching what we were doing to drivers, and most of them were shocked we were making a documentary about them,” Pray told me. “They were like, ‘why the hell do you want to make a movie about truck drivers?’ But it’s a subculture that’s always fascinated me. I loved ‘truck driver’ songs, loved the truck driver movies of the 1970s, so I really wanted to see what it was like.”

He knew his naïve and boyish “Smokey & The Bandit” perception of the industry wouldn’t hold up under the cold light of his camera lens. What Pray didn’t expect to learn was just how hard it is to making a living in trucking today, how the commonly held stereotypes about truck drivers are miles and miles from reality, and most of all how truly sad the “old timers” are about how this industry has changed.

“The drivers that have been out here for a decade or more, the ones with 1 million or 3 million miles under their belt, they are the ones that are the saddest,” Pray said. “They remembered how drivers used to be a close-knit community, how they used to be viewed as heroes of the highway, how it used to be so much fun to drive a truck for a living. While they still love driving trucks and seeing this huge, amazing country of ours, they now deal daily with a culture of disrespect. ‘We used to be a family’ one driver told me. It’s not like that anymore.”

The days are long, fuel prices are out of sight, and the pay doesn’t begin to cover the needs of most of the independents Pray talked to. “Now, I realize our film is slanted that way in part because I didn’t get to talk and film company drivers, or ones working in more profitable segments such as car haulers,” he explained. “But what truly shocked me is how much we rely on trucks to keep this country functioning, yet we treat drivers and the industry so poorly. We completely depend on them, yet we treat them like dirt.”

Pray quickly stressed to me that he did not approach making this film with an agenda in mind. His modus operandi was simple – find subjects willing to talk, to let him and his assistant ride shotgun in their truck as they discussed whatever happened to be on their mind. When the interviews ended, Blondheim – following them in an RV – would pick the team up and they’d go shoot exteriors, scenic vistas, etc., until they found another subject willing to talk on camera for a while.

“We got kicked out of a lot of truck stops, let me tell you,” Pray told me. “And it would have been a very different film if we just followed one character around for a month. But I just love the way this project turned out – the meandering, almost random journey we take with these drivers is just great.”

His cameras follow Jessie, a Mississippi driver who is battling Graves disease while his son fights in Iraq; Loretta, a mother from Ohio who carries a concealed weapon in her cab for fear of truck stop violence; Ron, a native-American who uses his 18-wheeler to visit tribes throughout the country while delivering vinyl; and Bear, an Idaho steel-driver whose love of country has him wanting to overhaul the government, to name a few. All of them are fiercely independent souls who, as one young driver says, “represent the last of the spirit of the American cowboy… it’s a dying breed out there.”

(Big Bear at the wheel, with his canine companions by his side.)

Screen Media Films is releasing Big Rig, with financing by international sales company, Ocule Films. The movie runs about an hour and a half and features a musical score by Canadian hip-hop artist Buck 65. Brad Blondheim produced it, along with executive producers Kirt Eftekhar and Randy Wooten.

The “Big Rig Summer Tour 2008” will be presented by Sirius Satellite Radio’s Road Dog Trucking Radio, and the DVD also contains a short documentary about the Freewheelin’ with Meredith Ochs and Chris T. radio program.

“The main thing drivers tell me about this movie is that they feel they’re being portrayed honestly for the first time,” Pray told me. “And non-drivers that see this movie tell me the feel very different about trucks and truckers afterwards, that they don’t look at tractor-trailers as just big ‘boxes’ on the road anymore. I don’t sugarcoat anything; I feel it’s an honest a portrayal of this industry and its people. The main thing for me was to be a conduit for their stories. It truly was a great and fun experience for me.”

“Driver productivity is going down. The ‘quality’ of drivers is flat and will not be going up anytime soon.” –John Taratuta, president of truck driving school Know Safety, LLC, Grand Rapids, MI.

The words above were sent to me a year or so ago by Mr. Taratuta in response to a story I’d written about the driver recruiting needs of carriers – and Mr. Taratuta stressed to me a key point he believed I’d overlooked. In his view, carriers simply weren’t paying attention enough to the training needs of new drivers – that they blamed truck driving schools for any lack of skills, real or imagined, without truly being part of the solution anymore.

It’s a point well worth considering. I remember back in 1995 when J.B. Hunt decided to close its top-rated driver training school, taking some of the monetary savings from that decision and applying it to driver pay rates. Hunt aimed to effectively build a better, more highly trained corps of drivers by paying for them – not by doing the hard and thankless work of training them from day one.

Yet it’s hit or miss with truck driving schools in many ways. There are many excellent ones and many poor ones out there (there’s a reason “CDL Mills” is an apt derogatory term) as we still lack national standards for them. (Yes, there are many VOLUNTARY standards, such as those promulgated by the Truckload Carriers Association, but that word VOLUNTARY takes the punch out those standards in some ways.)

Now, the Federal Motor Carrier Safety Administration (FMCSA) is trying to help improve things. Yesterday, the agency awarded a total of $1 million in grants to nine technical and community colleges to enhance classroom safety curriculums and behind-the-wheel training courses for students enrolled in commercial driver’s license (CDL) training programs.

“Our nation relies on a workforce of well-trained, safety conscious, professional truck and bus drivers to move our economy,” said FMCSA Administrator John Hill. “Through this grant program, we are helping provide the cadre of highly qualified commercial drivers that our nation needs. This is also an investment in individuals and in communities seeking enriched economic opportunities for the future.”

It’s worthy to note that to be eligible to get these annual commercial motor vehicle (CMV) grants, you must be an accredited public and private institutions of higher education, federally recognized Native American Tribal Governments, and city, county and state governments.

These monies are part of the CMV Operator Training Grant Program, established by Congress back in 2005 through the Safe, Accountable, Flexible, Efficient Transportation Equity Act—A Legacy for Users (SAFETEA-LU. Ostensibly, this program has two goals: to expand the number of CDL holders possessing enhanced operator safety training to help reduce the severity and number of crashes on U.S. roads involving commercial motor vehicles; and to assist economically-distressed regions of the U.S. by providing workforce training opportunities for qualified individuals to become CMV operators.

Will it work? That remains to be seen. Mr. Taratuta, for one, believes what’s really needed is more positive involvement by carriers themselves in the driver training process.

“And small carriers are not in the position to do the same amount of training that the larger carriers or allowed to train by their insurance companies,” he stressed to me. “That leaves the medium to large carriers to break in whomever are the new people. Now I have heard the argument that a driver is like an apprentice that has to pay his or her dues. But someone just learning to swing a hammer or whatever still gets to go home every night, relax, eat cheap and eat what they like.” Not so the new driver, he rightly points out.

It’s a debate that’s going to go on for a while, how to best train new drivers for the rigors of the road. We’ll see where it leads us.

So, with all the bad news out there — high diesel prices, a slumping economy, war, famine, the never-ending Democratic primary slugfest, you get the idea — I figured that for today I’d just share another music video clip … just something to keep our heads up under the barrage of negative news everywhere.

Yes, I know it’s ironic to use Blackfoot’s classic southern anthem “Train, train” for a trucking video … but, hey, that song rocks! The band — a contemporary of Lynyrd Skynyrd — has reunited and is touring again, so check them out if you’re a fan of this style of music.

You’ll also catch a glimpse of the one and only David Kolman, a longtime trucking industry veteran and editor of our sister publication Refrigerated Transporter — definitely one the funniest editors you’ll ever meet on the trucking beat.

“Taking a pragmatic approach, we will go on to be a smarter player in the challenging U.S. express market.” –Frank Appel, CEO of Germany’s Deutsche Post World Net, the parent company of DHL.

Sometimes, you just gotta shrink to survive – and partner with former competitors, too. That’s the conclusion Germany’s Deutsche Post World Net reached concerning its money-losing DHL express operation in the U.S., but it’s a lesson I think many domestic trucking companies can learn something from as well.

I mean, let’s face it: when you’re faced with either reducing the size of your company or going out of business entirely, which option do you pick? It’s also got to be galling for DHL to forge a deal with erstwhile rival United Parcel Service to handle a big chunk of its air express shipments, but again, what other choice is there to make? DHL is on track to lose $1.3 billion this year, so something had to be done – and done quickly – to staunch the bleeding.

Frankly, it’s pretty gutsy to play the cards Deutsche Post got dealt this way – straight up, with a minimum of spin. They took a cold, unsparing look at the reality before DHL and made the decisions that should allow it to survive and return to profitability down the road – preserving jobs in the process, I might add. They didn’t have to do it this way – they could have sold DHL off to the highest bidder and washed their hands of the job losses that followed. Yet they didn’t do it.

OK, so let’s look at this in a little more detail. Under the plan, DHL and UPS agreed to develop a contract whereby UPS provides airlift for DHL Express U.S. domestic and international shipments within North America. In addition, DHL aligns its U.S. express infrastructure to existing shipment volumes by redesigning its ground linehaul network to better match capacity with customer requirements (that’s a convoluted way of saying it’s reducing the number of trucks in its fleet). The impact on service levels will be minimal with less than 4% of shipments affected, noted Frank Appel, CEO of Germany’s Deutsche Post, allowing DHL to remain focused on delivering international and domestic express products while keeping a strong commitment to the U.S. market.

Here’s how the plan breaks down:

1. DHL reduces its infrastructure network capacity by approximately 30% overall, first by consolidating and closing smaller sorting facilities into modernized, larger stations, resulting in reductions of approximately 34%. Next, it’ll reduce pickup and delivery routes by 17% and further “rationalize” its ground linehaul network by 18%.

2. The contract between DHL and UPS to get airlift for DHL Express U.S. domestic and international shipments within North America, which also reduces overhead and other administrative costs. UPS should start providing airlift late this year.

3. DHL and UPS are also pursuing an 10-year airlift contract that would create a single airline partner for DHL Express in the U.S., allowing DHL to continue operating its courier and ground network as well as pickup and delivery services to its customers across the country.

“We have promised to relentlessly focus on improving financial performance and … I am confident we have found a sustainable way forward for U.S. Express in the best interest of customers, employees and investors,” he noted in a press release. Deutsche Post added it’ll cost $2 billion to restructure DHL’s U.S. operations, yet those efforts should save DHL around $800 million in 2010 and around $1 billion by 2011.

“The U.S. express market remains one of the most challenging marketplaces worldwide in light of the current economic downturn,” said John Mullen, CEO at DHL Express. “Our future focus will be where customers have told us they need to do business the most. Our … restructuring will enable us to bring a new level of reliability and increased service performance to our international and U.S. domestic customers while cutting unnecessary costs such as maintaining infrastructure that customers don’t ask for.”

It’s tough to face an unpleasant reality like this, no doubt about it. But it sure seems the wisest course is the one Deutsche Post and DHL are taking, to not only face it but also make plans to deal with it, rather than just folding up the tents and walking away.

“Boeing recognizes that algae biomass holds tremendous potential for use as jet fuel, and it fits into our plan to guide aviation toward commercially viable and sustainable fuel sources – fuels with substantially smaller greenhouse gas footprints that do not compete with food or require unacceptable quantities of land and fresh water resources.” –Billy Glover, managing director-environmental strategy, Boeing Commercial Airplanes.

Did anyone ever think we’d come to this: examining the potential of lowly ALGAE to be major source of fuel for the world’s transportation system.

That’s what will be the topic of discussion at the second annual Algae Biomass Summit in Seattle, WA, October 23-24 this year, hosted by the Algal Biomass Organization (ABO), whose charter is to help accelerate the development and commercial application of algae biomass. Boeing’s Billy Glover, quoted above, is the co-chairman of the group’s steering committee, which is aimed at raising the profile of algae as a potential fuel source for global transportation systems.

Note, too, that this is BOEING we’re talking about – the billion-dollar global behemoth that makes a wide variety of commercial and military aircraft – not some mom and pop operation trying to sell snake oil (with many apologies for the negative use of the term “mom and pop” by the way.)

(Diesel fuel stock? From this green gloop? Maybe …)

So why is algae getting so much attention? Here’s what the folks involved with the ABO believe are the benefits this organic substance can bring to the transportation fuel issue table:

Renewable Fuels: Algae are an ideal low-cost, renewable and environmentally progressive raw material that can be converted into biofuels. They can grow rapidly (doubling in biomass in as little as a few hours), require limited nutrients, and can annually deliver up to 2,000–5,000 gallons of fuel per acre of non-arable land.

Environment: Algae do not require fresh water to thrive, and so they will not compete for limited supplies of fresh water. In addition, they can also be used to clean wastewater and to recycle greenhouse gases such as CO2, NOx and SOx. As the algae grow, they can be harvested and converted to next-generation biofuels.

Economic Development: As developing nations continue to look for ways to spur economic development, algae-based industries can be a central part of an overall strategy. Many developing nations currently import nearly 100% of their fuel. An algae-based energy strategy provides a way to either reduce oil import costs, create fuel/feedstock export revenue, or both, without competing with food crops.

There’s serious involvement on the part of the scientific community, too, as Dr. Greg Mitchell from the Scripps Institution of Oceanography and Dr. Phillip Pienkos with the U.S. government’s National Renewable Energy Laboratory are members of ABO.

“Given the social, economic, and environmental possibilities for algae, and the growing number of companies, technologies and products being developed to address them, it is becoming increasingly important to harness their potential for use across multiple industries now,” said Boeing’s Glover.

To that I say, let’s see where the research takes us.

“Guard against the prestige of great names; see that your judgments are your own; and do not shrink from disagreement; no trusting without testing.” – Lord John Emerich Edward Dalberg Acton

Trust may be a rare and fragile commodity in trucking these days, but this is so for some very good reasons. I don’t have to sit here and write stories about how freight brokers have betrayed a trucker’s trust, delaying or even defaulting on payment for a delivered load – that’s a story you’ve all experienced first hand, sad to say.

Nor must I re-tell tales of shippers being deceived by fly-by-night truckers, lumpers fleecing drivers, or any number of broken relationships within this industry. We’ve seen them all before and will see them again, unfortunately, for these are just everyday hazards in business, much less trucking’s world.

I talked to Bob Voltman, executive director of the Transportation Intermediaries Assn. (TIA), about this very topic a few years ago and while he pointed out to me that trust works 99% of the time in transportation, the consequences when it does NOT work out can be severe.

“That 1% could put a small carrier out of business or cause a shipper’s factory to shut down,” he noted. That’s why when TIA was formed in 1978, the first thing its 14 original members did was to formulate and sign a code of ethics. “To us, ethics is a badge of honor; it’s the ‘Good Housekeeping’ seal of approval. It tells the market that we agree – of our own free will, without government oversight – to follow a set of rules regarding payment, conduct, etc.,” Voltman explained.

“For there are no cops on the business beat in transportation – no enforcement of contract rules like what we have for trucking and railroad safety,” he added. “It’s still a market where a great deal of trust is needed in order to function properly – trust between the shipper, the freight broker or third-party logistics provider and the carrier that services will be provided and paid for.”

Professor Jerry Osteryoung with the college of business at Florida State University also has some thoughts on this from a broader perspective, though he readily admits these aren’t the happiest of thoughts, which I’ll let him explain in more detail. Professor Osteryoung, the floor is yours:

“After reading this, many people will think that I have been dropped into a big pit of pessimism; however, I really hope that every reader will understand the message I am trying to get across: Trust should always be monitored. For you can never assume that it is there and that it will always be reciprocated.

In business, we have to trust that our staff is being honest with us and that our employees are protecting our assets. There is just no way for any entrepreneur to be completely protected from employee theft at all times. If we were to make a business theft-proof, the rules and regulations would be onerous, taxing and so detailed that nothing would ever get done. There are just always going to be penetrable holes in our theft shield. That being said, however, trusting in employees too much will allow you to relax the theft shield to a point where it becomes very dangerous.

All of us have frailties and weaknesses, and I just might have the most. If you put enough temptation in front of some people, they will steal from you, and they will continue this dishonest behavior until it is stopped. After all, if an employee gets away with stealing once, they will think that they can do it over and over and never get caught. It is the job of the entrepreneur to minimize the temptation to steal.

One entrepreneur had a very trusted employee steal from her. The entrepreneur thought that this employee was always looking out for her best interests, and as a result, she allowed too much trust to develop between them. She inadvertently found out that this very trusted employee had been stealing from her for over five years.

While the theft was awful in terms of the monetary loss, the betrayal of trust was what shook this entrepreneur’s values and foundation to the core. She had a fundamental belief and expectation that if she looked out for her staff, they would look out for her. When this belief collapsed, she just seemed to lose her bearings and confidence.

With time, she eventually did recover, but her trust foundation was never fully restored. What she did gain as a result of this situation was an insight into the unreasonableness of her initial assumption. Trust is not always a two-way street.

She is doing very well now, but she clearly understands that no trust can ever be 100%. She set up a number of additional checks and balances in order to reduce the potential for theft as much as possible, and she is so much more cautious about limiting the amount of blind trust.

This is a lesson that every business entrepreneur can benefit from. No matter how long an employee has worked for you, you still need to be cautious, as employees and situations change. Limit trust and utilize checks and balances to protect yourself and your business. You cannot assume that your trust will be reciprocated.

In addition, trust issues are not limited to direct monetary theft. Entrepreneurs must trust that employees are doing their jobs as intended. Even things like incorrectly priced bids, unauthorized overtime on the time clock and missing office supplies are all indirect violations of trust.”

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