Trucks at Work Blog

“I used to listen to these songs when I drove a truck for a living and always imagined myself singing them. This album is something I’ve always wanted to do – and, with my own label, no one could tell me ‘no’ anymore.” –Aaron Tippin, former trucker turned country music superstar

OK, point of full and honest disclosure here – I’m a country music fan in addition to my love for heavy metal (I know, I know – I am violating a lot of good taste melding those two) and one of my favorite country artists is Aaron Tippin. So needless to say I jumped at the chance to talk with him by phone from his 500-acre farm in Tennessee about his new album “In Overdrive” – an album of classic trucking songs that he’s put his own unique stamp upon.

Tippin isn’t your average music star, by the way. Raised as a farmer, he’s also a pilot (owning four planes stored in a hanger on his own private airstrip), winemaker, outdoorsman (he owns two hunting supply stores), and competitive bodybuilder (it’s true – I’ve met Tippin in person and the dude is in phenomenal shape). Married for nearly 14 years, with two sons (Tom and Ted), Tippin still identifies deeply with his roots – a fancy way of saying musical fame and fortune hasn’t gone to his head.

“First and foremost I’m a farmer,” he told me. Born in Pensacola, Florida, back in 1958, Tippin grew up on a farm in Travelers Rest, South Carolina. “But as part of growing up on a farm, I learned to drive trucks from a young age. I started driving hay trucks, then dump trucks, and then started hauling heavy equipment,” he said.

He started driving commercial trucks to help pay the bills as he tried to make a living as a country western singer and songwriter, piling up the miles on the highway while singing in countless bars and honkytonks. “I started driving local routes, then moved on to truckload teams on the west coast,” Tippin recalled. “I wrote a lot of songs with my driving partner back in those days – none of which ever went anywhere, and all of them mostly love songs.”

But he listened over and over to the staples of trucking music on the road – especially the late Jerry Reed’s “East Down and Bound” – always wondering if he’d ever catch a break. Eventually he did – competing on The Nashville Network’s (TNN) You Can Be a Star talent contest in 1986, which landed him a song publishing contract. He moved to Nashville, TN, in 1987 and began penning tunes for the likes of The Kingsmen, Charley Pride, and others.

That hard work paid off in 1990, when Tippin performed his first Nashville nightclub show and bagged a contract with RCA Records as a result. His first single – “You’ve Got to Stand for Something,” released in 1991 – became hugely popular with the U.S. servicemen and women fighting in the Gulf War; so much so that Bob Hope invited Tippin to come along as Hope toured the Mideast to entertain the troops fighting in Operation Desert Storm.

One of his biggest hits, however, came just after the horrific attacks of September 11, 2001: “Where The Stars And Stripes And The Eagle Fly,” which reached number two on the country billboard charts. [You can watch the music video for it below – it’s a classic “anthem” devoted to the American working man and woman.]

Like all musicians, though, Tippin’s career has seen a lot of ebbs and flows. After five albums and a greatest hits package with RCA, he switched to Lyric Records in 1998, where he released two more albums and a number one single “Kiss This,” co-written with his wife, Thea. But in 2006, Tippin and Lyric parted ways, leading him to form his own label – Nippit Records – and helping him get back to appreciating what to his mind is a critical constituency of country music: truckers.

“Seems like somewhere along the line trucking music got shoved off the country music plate,” he observed. “I don’t understand exactly why. The trucks are still out there. And they’re busier than ever keeping America rolling. I know the folks who work and live in the trucking world still love this music—and so do most fans of real country music. This album launches my crusade to bring that music back.”

He told me that every time he plays the “trucking classics” at his live shows – Alabama’s “Prisoner of the Highway” and “Roll on,” plus “Truck Drivin’ Man” by Terry Fell and “Six Days on the Road” originally made famous by Dave Dudley back in 1963 – the fans “just go ballistic” in his words. “People still love this music, but country music doesn’t always seem proud of it,” Tippin told me. “It’s still great music.”

He broached the idea of putting together an album of trucking music to Jerry Reed – with Reed’s classic hit “East Bound and Down” at the top of the list – and got an enthusiastic response. Though Tippin kept in touch with Reed as the album “In Overdrive” came together, Reed’s failing health prevented him from playing a bigger role in the project (though Reed’s grandson plays the drums on Tippin’s version of “East Down and Bound.”)

“I got to spend a lot of time with him before he passed on – a guy that, in many ways, never really got recognized by Nashville for all he did for country music,” Tippin told me. “To my mind, his accomplishments got overlooked – especially all the work he did for veterans at the end of his life. But now he’s getting his glory.”

And Tippin also hopes this album brings a little “glory” back to truckers – a group of men and women that perform a vital job in this country of ours, yet who remain largely ignored. “I have a lot of respect for truckers and job they do – it’s important for them and their contributions to our country to be recognized,” Tippin told me. “Everything you get today comes by truck. Folks need to remember that.”

Amen to that.

“Ford and the entire auto industry faced an extraordinary slowdown in all major global markets in the fourth quarter that clearly had an impact on our results.” –Alan Mulally, president and CEO, Ford Motor Co.

Witnessing Ford Motor Company post a $5.9 billion net loss in just ONE fiscal quarter doesn’t just singe the eyebrows – it burns them right off, along with a good chunk of flesh and bone to boot.

No matter how you look at it, this is certainly rotten news – and it shows pretty definitively that the U.S. domestic automotive industry is in dire straits, for Ford is actually in the BEST fiscal health among the former “Big Three” American automakers, with reported total liquidity standing at $24 billion, including automotive gross cash of $13.4 billion as of Dec. 31 last year.

Still, despite the blood on the floor, Alan Mulally – Ford’s president and CEO – believes the manufacturer is going to survive these turbulent times. “We continued to take the decisive actions necessary to lower production to match the lower worldwide demand and reduce costs, which we expect will allow us to significantly reduce negative operating cash flow in 2009 and position Ford for growth when the economy rebounds,” he explained.

“The progress we continued to make in the fourth quarter gives us great confidence that we have the right plan, the right people and the right products to create a viable, profitably growing Ford for all of our stakeholders,” Mulally added. “Our market share growth in the fourth quarter in the U.S. and Europe is a positive sign that customers recognize the value of our new products and understand that a new and different Ford is emerging.”

Based on current planning assumptions, Mulally said Ford has sufficient automotive liquidity to fund its business plan and product investments WITHOUT a bridge loan from the U.S. government – and remains on track for both its overall and its North American Automotive pre-tax results to be at or above breakeven in 2011, excluding special items. In the meantime, the automaker is drawing on available credit lines due to concerns about the instability of the capital markets with the uncertain state of the economy – allowing it to add $10.1 billion in cash to the company’s bottom line for the first quarter of 2009.

The United Auto Workers (UAW) union has also agreed to end the “jobs bank” at Ford, further helping lower the automaker’s costs. In fact, the company noted it reduced automotive costs by $1.4 billion in fourth quarter last year and by $4.4 billion in 2008 versus 2007. All told, Ford reported its achieved $5.1 billion in cost reductions throughout its North American operations by the end of 2008 compared with 2005, excluding favorable impact of depreciation and amortization from asset impairment at the end of the second quarter last year.

Still, Ford – along with General Motors and Chrysler – still has a tough row to hoe. On an after-tax basis, Ford’s fourth quarter operating loss from continuing operations, excluding special items, was $3.3 billion, or $1.37 per share, compared with a loss of $487 million, or 23 cents per share, in the fourth quarter of 2007. Ford’s fourth quarter 2008 revenue plummeted to $29.2 billion, down from $45.5 billion in the same period during 2007 – a decline primarily due to lower volume, plus the sale of Jaguar and Land Rover and foreign exchange translation costs.

Special items also reduced Ford’s pre-tax profits by $1.4 billion in the fourth quarter, largely reflecting costs associated with global personnel reductions and retiree health care charges related to new agreements with the UAW.

For 2009, the outlook is pretty grim at Ford (not surprisingly) as the OEM anticipates weak volumes across all markets, with worldwide sales down more than 10 percent. Significant government policy stimulus plans being implemented in most global markets (by the U.S. and European nations most notably) is expected to improve the environment for sales later this year, Ford believes. However, financial markets remain under significant stress, and further government and central bank actions to provide liquidity and stabilize banks are needed, the company said.

“Ford continues to take the decisive actions necessary to match our production in line with demand. This allowed us to reduce dealer stock by about 50,000 units and benefit from one the lowest days supply in the U.S. industry,” said Lewis Booth, Ford’s executive vice president and CFO.

“As production volumes stabilize, payables will stop declining and generally will grow as volumes recover. In addition, with the major F-150 launch behind us, we expect spending to decline in 2009,” Booth said. “We expect this will allow us to significantly reduce our negative operating cash flow in 2009 and maintain the liquidity we need to fund our product-led transformation.”

Let’s hope so.

“Responsible drivers who purchase insurance end up paying for injuries caused by uninsured drivers.” –Elizabeth Sprinkel, senior vice president, Insurance Research Council

Here’s a growing problem that should worry truckers, whether you are a fleet or owner-operator – a rising number of uninsured motorists on the highway.

According to a study conducted by the Malvern, PA-based Insurance Research Council (IRC), approximately one in six drivers across the U.S. may be driving uninsured by 2010. Although the group said the estimated percentage of uninsured motorists decreased nationally, from 14.9 percent in 2003 to 13.8 percent in 2007, the recent economic downturn is expected to trigger a sharp rise in the uninsured motorist rate.

“An increase in the number of uninsured motorists is an unfortunate consequence of the economic downturn and illustrates how virtually everyone is affected by recent economic developments,” said Elizabeth Sprinkel, the IRC’s senior vice president.

The IRC study examined data collected from nine insurers, representing approximately 50 percent of the private passenger auto insurance market in the U.S. for its report – entitled Uninsured Motorists, 2008 Edition. She noted the IRC estimates the uninsured driver population using a ratio of insurance claims made by individuals who were injured by uninsured drivers to claims made by individuals who were injured by insured drivers.

It doesn’t take a rocket scientist to figure out that if a trucker gets involved in an accident with an uninsured motorist, getting recompense for damages is going to be hard if not impossible. And since car drivers are responsible for causing truck-car collisions about 70 percent of the time, having more of them uninsured increases the business risks for truckers when it comes to accident claims.

In all fairness, we should note the IRC is a division of the American Institute for CPCU and the Insurance Institute of America. Though the IRC’s mission is to provide timely and reliable research to all parties involved in public policy issues affecting insurance companies and their customers and neither lobbies nor advocates legislative positions, they are funded by insurance providers – so that may color their work just a tad.

Putting that aside, though, the numbers are still worrisome. The IRC’s report found that the magnitude of the uninsured motorist problem varies widely from state to state. In 2007, the five states with the highest uninsured driver estimates were New Mexico (29 percent), Mississippi (28 percent), Alabama (26 percent), Oklahoma (24 percent), and Florida (23 percent). The five states with the lowest uninsured driver estimates were Massachusetts (1 percent), Maine (4 percent), North Dakota (5 percent), New York (5 percent), and Vermont (6 percent).

The report also found a strong correlation between the percent of uninsured motorists and the unemployment rate: An increase in the unemployment rate of one percentage point is associated with an increase in the uninsured motorist rate of more than three-quarters of a percentage point. Based on current unemployment rate projections, the percentage of uninsured motorists is expected to rise from 13.8 in 2007 to 16.1 in 2010.

“Dropping auto insurance coverage should never be an option as a way to save money,” said William Pearse, vice president of product strategy and design for Hartford, CT-based Travelers Insurance, in written comments about the IRC’s study. “Not having auto coverage could mean financial ruin if you are in an accident where property is damaged or individuals are injured,” he stressed.

He also pointed out that nearly every state requires individuals to possess auto liability coverage and every state has laws in place regarding financial responsibility. Therefore, if a particular state does not require auto liability coverage by law, an individual must have the financial assets to pay all claims in the event of an accident, Pearse noted.

That doesn’t help the trucker much if a car driver is both at fault and un-insured in a truck-car crash.

“This is putting an unbearable burden on truckers today.” –Billy Sutton, an owner-operator from Batavia NY

The burden Billy Sutton is referring to above is the price differential many truckers face at the fuel pump when they buy diesel with credit and debit cards instead of cash – a differential, however, that often times disappears when you go from the truck fueling island over to the pumps reserved for everyday motorists driving cars and pickups.

Sutton told me he encountered this proper at a Pilot fuel stop in upstate New York near his home base. He uses a debit card to refuel his classy Western Star rig and pays eight cents more per gallon to do so. Then a funny thing happened – he took his diesel pickup to the very same Pilot location, refueled it with diesel at the island reserved for motorists using the very same debit card … and paid the CASH price.

“So I’m asking myself, why is this going on?” he told me by phone. “I mean, truckers buy a lot of fuel – up to 100 gallons a day, up to 400 or 500 gallons a week. And eight cents more per gallon adds up to an extra $30 to $40 a week. And most like myself don’t carry lots of cash to pay $200 or more for a fill up.”

Of course, Sutton’s suspicion is that the higher fuel price for credit is there for those very reasons – to take advantage of truckers, especially independents. They buy lots of fuel per week and rarely carry wads of cash, so let’s squeeze them for all we can get. “You know, we’re their best customers – we buy large amounts of fuel at regular intervals. Yet we end paying more for it,” Sutton pointed out to me. “That’s not right.”

Now, sure, many in the petroleum industry might complain that truckers just don’t understand the complexities of the petroleum industry – the costs involved to produce, store, and transport diesel fuel throughout the U.S. Thing is, though, fuel is the lifeblood of truckers – typically the single highest cost on a small trucker’s balance sheet, according to the Owner-Operator Independent Drivers Association (OOIDA). And every time the price per gallon goes up just a couple of pennies – regardless of whether it’s due to rising oil prices or the cash-credit differential – trucker’s start losing their livelihood.

“As you may know, small business truckers – operating six or fewer trucks – comprise close to 90% of the trucking industry,” Jim Johnston, OOIDA’s president, said in an open letter to President Bush’s administration last year during 2008’s brutal run-up in global oil prices. “Considering that trucks account for the movement of 69% of all goods transported in the U.S. and are the only providers of goods to 75% of American communities, small business truckers are quite literally the backbone of our nation’s economy. Volatile and often high fuel prices have devastated these businesses years.”

Small business truckers in particular suffer greatly from erratic and escalating fuel prices, he stressed.

Each time the price of fuel increases by 5 cents per gallon, a trucker’s annual costs increase by roughly $1,000 – an enormous burden on the small business trucker whose average annual income is $37,000 to $40,000, Johnston noted.

The petroleum industry can say all it wants about the high costs and complexity of drilling and shipping oil, then refining it into diesel and gasoline – all of it true – but the problem is a lot of “smoke and mirrors” gets deployed along the way to justify pricing schemes and other sleight-of-hand that leads many believe a lot of price gouging is going on out there.

Look at just the difference between diesel and gasoline prices, for starters. Last week the average price of gasoline in the U.S. hovered around $1.83 a gallon, with diesel prices pegged 44 cents higher at a U.S. average of $2.27 per gallon.

Then look at the cost of fuel relative to oil prices. Last year, diesel prices skyrocketed to a U.S. average over $4.76 per gallon by mid-July – climbing beyond $5.02 per gallon in California as oil prices shot past $133.60 per barrel before crashing to $32.49 per barrel by mid-January this year. Yet though the price of oil fell by almost 70%, diesel pump prices only declined by a little under 50%. Hmmmm, one says. The petroleum industry says the price of oil is the biggest factor in fuel prices … yet their prices sure aren’t falling at the same rate, now are they?

Then there’s that farce known as “zone pricing” – a practice under which refiners sell gasoline to retailers at wholesale prices that differ across geographic areas. Generally, these geographic areas vary in the level of competition and traffic counts, according to a report by the state of Illinois. Thus refiners charge more in areas where demand is high and/or competition is low. This practice is viewed by some as price gouging and by others as a natural outcome of competitive markets, according to the state.

It also makes absolutely no sense. From my own experience, “zone pricing” results in the price of gasoline being different at the eight filling stations in and around where I live – the cheapest a good 17 cents below the most expensive. Yet they are all in the same area, all within the same relative easy distance to the big fuel storage depots in Matua and Newington. So why the difference (and it’s a BIG difference)?

Illinois, for example, studied gasoline pricing along a 170-mile stretch along Interstate 55 from the towns of Litchfield to Dwight. This is an area outside the immediate influence of the Chicago and St. Louis regions. Areas were grouped into three categories: 1) large cities, 2) along the interstate, and 3) rural towns, with Springfield and Bloomington the only two larger cities in the third area of study.

According to a month’s worth of data compiled by the state, prices average five to eight cents per gallon higher at stations along the interstate than at stations in the cities of Bloomington and Springfield. Prices were also four to six cents higher in the smaller cities and towns located away from the interstate. Clearly, the higher level of competition within Bloomington and Springfield results in lower prices. On the other hand, the captive market along interstates or in the smaller towns results in higher prices. Whether this is a function of wholesale zone pricing or a higher retail markup is unclear, Illinois concluded.

That’s not much help to motorists like myself trying to watch every penny in this hard times, but that’s even worse for truckers. They must either buy higher priced fuel along the highway or burn more of the black stuff in search of cheaper prices on local roads. Either way, the petroleum industry makes money.

Sure, now, there are fuel cards and other discount programs truckers can sign up for that’ll give them discounts. But what if there’s other funny business going on? Like, for example, selling “hot fuel.”

OOIDA joined with other groups in shedding some light in that subject last year – an issue that costs truckers and consumers and estimated $2.5 billion annually. The phrase “hot fuel” refers to expanded diesel fuel or gasoline that is sold at retail pumps at temperatures higher than the century-old government standard of 60 degrees. The warmer the fuel, the less measurable energy (Btu) and fewer miles to the gallons a vehicle will receive. For example, if a tractor-trailer averages six miles per gallon, 200 gallons of 98-degree fuel is going to take that truck 36 fewer miles than 60-degree fuel.

OOIDA challenged the U.S. Department of Weights and Measures last year to require fuel retailers in all 50 states to install temperature compensation devices as a solution to the hot fuel problem, but I am not sure what became of that effort.

These are just some of the frustrations facing truckers when it comes to buying the fuel that keeps them working. The petroleum industry could go a long way to get more support from this vital part of their customer base if they’d do away with a lot of these pricing gimmicks. Somehow, though, I doubt that’ll happen any time soon.

“So far in 2009, our markets have continued to decline. We anticipate that our markets will decline through at least the second, and possibly the third, quarter. We estimate our markets for all of 2009 will decline by between 7% and 8%. As a result, we anticipate our revenues in 2009 will likely decline by 8% compared to 2008.” –Alexander Cutler, Eaton Corp.’s chairman and CEO, form the company’s 2008 earnings statement.

I think we all know it’s far from a pretty economic picture out there. The question one asks and tries to answer, though, is how trucking is faring. Not good, of course – for either truckers themselves or the OEMs that serve this market – but folks are finding a way to survive. It’s not a pretty process for sure – in fact it’s downright ugly in many respects – but then looks don’t matter when you’re trying to survive in a severe economic recession.

“Forecasting earnings in 2009 is particularly complicated in light of the uncertain global economic environment,” noted Alexander Cutler, chairman and CEO of Eaton Corp., an OEM serving not only the trucking industry but the aerospace and hydraulic markets as well as others.

“Looking at the first quarter of 2009, our revenues will be impacted by plant shutdowns implemented by many of our hydraulics, truck, and automotive customers late in the fourth quarter of 2008, which in many cases are extending into the middle of the first quarter of 2009,” he said in the company’s fourth quarter 2008 earnings statement. “These shutdowns will lower revenues in the first quarter of 2009 compared to the fourth quarter of 2008. As a result of these shutdowns, combined with the impact of the $110 million of severance costs associated with the employee reductions we have taken in January, we anticipate earnings in the first quarter will be the weakest quarter by far of 2009.”

Eaton’s employee reductions in 2008 and 2009 total about 10% of its full-time workforce – something one hates to see. Even despite those cuts it’s going to be hard sailing, as Cutler noted Eaton’s first quarter 2009 operating earnings per share will likely be about breakeven – a number that dips into the red when a 15 cent per share charge is added in for the cost of integrating two companies it acquired last year into its structure. Still, it’s the long view that counts, and Eaton’s full-year 2009 outlook remains positive – earning between $3.80 to $4.80 per share after all integrating and severance charges are added in.

In terms of its trucking-related business, though, things are pretty grim. Eaton’s truck markets in the fourth quarter last year declined 10%, with U.S. markets down 5% and non-U.S. markets down 16%.. Operating profits were $41 million, a decline of 49 percent compared to the fourth quarter of 2007.

“Fourth quarter [2008] production of NAFTA [North American Free Trade Agreement] heavy-duty trucks totaled 46,000, about 10% lower than in the third quarter,” said Cutler. “We expect NAFTA heavy duty truck production in 2009 to be about 155,000 units, as the economic downturn and lack of financing limit the desire of truck buyers to purchase additional trucks in advance of the emissions law change on January 1, 2010. We also expect weakness in our non-U.S. markets, with an expected decline of about 10% in 2009. “

The reason for that decline is oh-so-simple: less freight on the highway. “Many in our industry hoped for an increase in freight volumes historically experienced from fall through Christmas; however, excess capacity and the continued economic downturn presented our industry with unprecedented negative freight trends throughout the fourth quarter [of 2008],” noted Coralville, IA-based truckload carrier Heartland Express in its earnings report.

“The first quarter [of 2009] is off to a dismal start,” the carrier continued. “Freight volumes have continued to decline from those experienced in the fourth quarter [of 2008]. With the current economic environment we believe freight volumes are not likely to improve in the near term. Given the recent trends and current economic conditions, the company is prepared to downsize its fleet through attrition if the demand for freight services worsens.”

Heartland noted this decline in freight volumes comes on the heels of high fuel prices which were unprecedented in the second quarter and early third quarter of 2008. As fuel prices increased it became clear fuel surcharges originally instituted to shelter carriers from fuel spikes were not sufficient. That deadly combination of high fuel prices, a tightening economy, and tight credit drove many in the industry to bankruptcy.

[Russ Gerdin, founder and chairman of Heartland Express.]

“The precipitous decline in fuel beginning in the third quarter provided needed cost relief to many. [But] though fuel cost has recently declined, it remains high compared to past years,” Heartland noted. “This along with the harsh realities of declining freight volumes will make it an even tougher operating environment and more difficult for the weaker carriers to survive.”

Omaha, NE-based truckload carrier Werner Enterprises pointed out in its year-end earnings report that the overall freight market became increasingly challenging as each month progressed from mid-September to December 2008.

“A very weak retail environment combined with extremely soft housing and manufacturing markets resulted in fewer available shipments. This was especially heightened in the truckload market and caused increased price competition for freight in the spot market as carriers competed for loads to keep their trucks productive,” the carrier said. “Freight rates were also lower in the spot market due to the increased competition for freight and because the decline in fuel prices resulted in lower freight rates from third party brokerage companies.”

The severe tightening of the credit and financial markets may create significant challenges for highly leveraged carriers that have financing issues or refinancing needs, Werner added. “Unless freight and financial market conditions improve quickly, the company believes there is a higher probability of increased carrier failures in 2009,” it reported.

Like I said, it ain’t pretty out there as economic conditions create big hurdles for any trucking provider to overcome, large or small – including the OEMs that serve the trucking market. However, an old saying in the world of athletics opines that sometimes you’ve got to be able to win ugly in sports. For trucking, this is indeed one of those times.

“If you don’t market yourself, you don’t have a job. And in this economy, that comes home to you in spades.” –Rick Galliher, 1-800-Got-Junk franchise owner, Chantilly, VA

This is as tough a time as any for small companies to get through, much less ones that rely heavily on trucks to get their respective jobs done. Though my last post reported that confidence is running higher than many thought among small businesses about their prospects this year, no one expects success – much less survival – to come easy.

For small businesses using trucks to make a living, it’s even harder, for as we all know truck-based companies are capital intensive. You’ve got monthly payments to make (whether you buy or lease your equipment), you’ve got maintenance to manage, detailed safety regulations to follow, breakdowns to fret over, and of course fuel costs – they can give you migraines. All that before you even get to marketing your services to customers.

Rick Galliher is a guy that knows plenty about all of the above – and then some. After working for 20 years in road construction in the North Virginia area – mostly for Driggs, a big general contractor – he went out on his own in August 2003, buying a 1-800-Got-Junk franchise to haul away unwanted and unsalvageable goods from mostly residential customers.

“We essentially sell labor and a big truck,” he told me. While the company’s Vancouver, British Columbia-based headquarters helped Galliher obtain a vehicle with the right specs for the junk-disposal business, everything else is on his shoulders – building up a customer base, hiring personnel, and maintaining his fleet of six medium-duty GM/Isuzu brand trucks equipped with specialized dump bodies.

Doing all of that during an economic recession like this one can be tough – even brutal. His overall tonnage dropped by 25% in 2008 versus 2007, with some months posting well over a 30% fall off in demand versus the prior year. As a result, Galliher cut back on his own pay to keep his business going, but he’s also constantly looking for new angles of approach in the junk hauling business.

“I look at it this way – would I rather be a mortgage broker right now? Or a realtor? One thing about this business I’m in – there’s always junk that’s got to be removed,” he told me. “The trick is adapting to the market and finding opportunities. So, since the residential market is crashing, I’m looking more at commercial business now. We’re also looking at servicing the foreclosure market in more focused way, as that will be booming for a while.”

[Below, Galliher explains the advantages and the new angles of approach he’ll use to try and build up business for his company this year.]

That also means finding new ways to raise his profile in what’s becoming an ever more crowded marketplace. Five years ago, for example, just he and one other company served the specialized junk hauling niche in Northern Virginia – now he competes with TEN other firms.

As a result, he’s getting his truck crews more involved with customer outreach – getting them to drop off flyers, toy trucks, $100 coupons and other sales materials at businesses along the routes they run every day. “For example, I can’t visit 200 realtors in a day,” Galliher told me. “But with my crews spread out all over, we can. It’s about getting everyone involved.”

It helps that he’s keeping his experienced hands on board, too – a result of the economic downturn – as that experience in managing jobs and making decisions helps keep his business more nimble than some competitors. “When I am on the truck with them, it’s one thing,” Galliher explained. “When I am here in the office, there’s only so much I can do. Often times, when they first arrive at a job, it looks too huge, but when it’s done, it wasn’t nearly as bad as they feared. They get more experienced about the work involved the more they do it.”

For a small truck fleet exposed to harsh conditions – all the trucks visit landfills every day; not exactly equipment-friendly environments – it also pays to build good relationships on the maintenance side of the ledger. Galliher works exclusively with a local garage, G & C Express, rather than a national chain simply because it gives him more flexibility in making maintenance decisions – doing what needs to be done today and maybe delaying other items for tomorrow.

“The fleet maintenance vendor we could use would require me to pay $300 a month per truck and take them out of service according to the shop’s schedule, not when it is best for me,” he explained to me. “I also have to get everything done when they say it’s got to be done, regardless of the vehicle downtime. With G & C, I get much more flexibility.”

[Galliher goes into more detail on the maintenance strategy for his fleet below.]

Yet even though it’s tough out there, Galliher doesn’t regret going out on his own. “I still enjoy being on the trucks – I like being my own boss, though working in the office is a headache,” he told me. “Sure, I might have been more financially stable had I stayed at my old job with a paycheck. But there it was working on computers all day in an office. It wasn’t what I liked to do. And besides, look at everyone else in the job market – every profession is hurting out there. I’d rather be doing this.”

“Despite incredible changes in the economy, small businesses still see vibrant opportunities. That eternal optimism and entrepreneurial spirit in the face of adversity is an asset that bodes well for the future of our economy.” –Jim Beach, professor of entrepreneurship, University of Tennessee.

It’s good to see that a positive mindset may be taking hold among a critical freight constituency for truckers – small businesses.

In the first UPS Business Monitor United States survey conducted for delivery giant United Parcel Service between September and October last year, 91 percent of small-business owners or managers said they expect their company to be in the same or better financial shape in a year than it is today.

OK, that’s SO last year you say. Yet a follow-up survey, conducted in mid-December after U.S. and global economic conditions worsened considerably, showed only a small decline in the first survey’s optimism, with 86 percent of small-businesses owners expecting their company to be in the same or better financial shape in one year. Those are some pretty good indicators that America’s small business owners, at least, have tightened the chin straps and are ready to get back at it.

“Small businesses are the key to capitalism and to the job market,” noted Professor Jeff Rosensweig at Emory University’s Goizueta Business School. “[This survey] give us a great finger on the pulse of small business – and these latest surveys give us reason to lighten the prevailing mood of ‘gloom and doom.’”

UPS’s Business Monitor surveys, by the way, are currently conducted in the U.S., Canada, Latin America and Asia and are designed to tap into the thinking of small business decision-makers, monitoring their opinions on a range of business issues (hence the title of these reports).

Alan Gershenhorn, UPS senior vice president of worldwide sales and marketing noted another important trendline gleaned from this survey – the optimism out there is rooted in realism as small-business owners surveyed do not project a speedy economic recovery. In the first survey, almost half (47 percent) of small-business owners said they believe that the U.S. economy will begin to improve in 2010 or later. That number climbed to 67 percent in the December survey, he noted.

TNS conducted this study for UPS, contacting 600 small businesses for the first survey and 151 in the follow up conducted in mid-December last year. Not a lot, I know, but still – to get these many positive results after the steady drumbeat of negative news since the crash of Lehman Borthers last year is, to mind, very significant.

Small-business leaders also are optimistic about their workforce prospects, Gershenhorn said. Two-thirds (66 percent) of respondents in the first survey said they plan to keep the same size workforce for the next 12 months. Almost one-quarter (24 percent) said they will increase their workforce; only 10 percent said they plan to reduce it. A greater number of small-business owners in the second survey expect their workforces to remain the same. Almost three-quarters (74 percent) said they expect their workforce to remain the same this year, 13 percent expect to increase their workforce and 12 percent said they plan to cut staff, he noted.

Companies involved in international trade, Gershenhorn pointed out, are particularly optimistic: in fact they were more likely to project that their business would be in a better economic position 12 months from now compared to those who did not. In the first survey, 56 percent of small-business owners who engage in cross-border trade expect their company to be in a better economic position in one year, compared to 41 percent of companies that did not trade. This gap widened in the second survey, with 62 percent of small-businesses owners who trade internationally expressing optimism compared to 39 percent of non-traders.

Despite this trade-related optimism, the majority of small businesses surveyed aren’t exporting. Almost three-quarters (73 percent) of respondents do not engage – and do not plan to engage – in international trade. Unfamiliarity with global markets, language barriers and apprehension about preparing customs and other documents were among the main reasons why small-business owners say they aren’t trading across borders.

“This survey shows that the vast majority of small-business owners are missing out on the key opportunities offered by international trade,” said Gershenhorn. “By expanding opportunities in new markets, cross-border trade can help small businesses diversify, buffering them against risk, and helping them stay strong in tough times.”

Finally, a “no-brainer” statistics that’s refreshing to say the least: the survey found that small-business owners may be particularly optimistic for a very important reason – they love what they do. When asked in the first survey what else they would do if money were no object, more than one-third (37 percent) said they would continue running their businesses and 12 percent said they would invest more money in their companies, while only 13 percent said they would retire.

In short, this kind of information gives me a lot of hope that things are going to turn around sooner rather than later at any rate.

“The cost disadvantage of producing biofuels is significantly higher than the benefits achieved from their use. This scenario is unlikely to change until 2015, even with the use of second generation biofuels.” – Kaushik Madhavan, research manager, Frost & Sullivan

The quote above from a recent report compiled by global research firm Frost & Sullivan tells you the future of biofuels isn’t all sweetness and light, by any means. That also means increasing the use of biofuels here in America – a key part of President Obama’s energy strategy – is also going to be a lot more challenging than originally thought.

For starters, according to Frost & Sullivan, first generation biofuels are outdated and second generation biofuels are not yet commercially feasible. Improvements in conversion processes of second generation biofuels will be an important factor in regions of world such as Europe, which mandated that 10% of the vehicle fuel it consumes must be some form of biofuel by 2020, noted Kaushik Madhavan, research manager at Frost & Sullivan.

“At the same time, end consumers are apprehensive about the increase in food prices, because of alternate demand for biofuels,” he said in the report. “Worldwide production of biofuels exceeded 12 billion gallons in 2005, which is only a small fraction of the total fuel demand.”

Although the primary aim of promoting biofuels is to reduce dependence on fossil fuels, regional discrepancies in adoption rates and strategies have led to a complex global biofuels scenario, added Madhavan. “On the one hand, countries like Brazil and Sweden are pushing hard for increased bio-content with mandates for both OEMs and oil companies. In other regions, the bio-content mandate is staggered mainly due to feedstock concerns and end consumer fears related to the food vs. fuel debate,” he said.

Here’s the kicker: According to Madhavan’s research, the cost disadvantage of producing biofuels is significantly higher than the benefits achieved from their use. This scenario is unlikely to change until 2015, even with the use of second generation biofuels. “Second generation biofuels will be commercially successful only if the price of extracting biofuels is lower than or equal to the price of producing fossil fuels,” he stressed.

“Farming subsidies given by local governments are becoming critical as farmers choose biofuels over food crops,” Madhavan pointed out. “Countries with high biofuel consumptions, such as Sweden, are importing feedstock from countries like Brazil thereby increasing food prices. Vast areas of forest land have been erased in Malaysia by farmers wanting to make quick money by exporting feedstock to Europe.”

Challenges related to vehicle warranties are also dampening market prospects, as OEMs cannot offer any assurances or guarantees in the event of using high biofuels content, owing to the absence of certification and standardized vehicle testing guidelines, he noted.

“Regional variations and regulations pertaining to the certification of biofuels have resulted in qualitative differences. OEMs are concerned about sourcing feedstock from Southeast Asian countries citing quality issues as global certification of biofuels will be necessary to ensure compatibility across regions,” Madhavan added.

“Diesel exhaust after-treatment, for example, is an important concern in applications with high biofuels content,” he said. “The efficiency of DPFs [diesel particulate filters] is compromised if the biofuel content [of diesel fuel] exceeds 5% to 6%. OEMs using the post-injection based regeneration techniques are not confident of authorizing high bio-content usage in their vehicles.”

Not a pretty picture, to be sure, but one that does not paint an end to the possibilities for biofuels playing a significant role in powering vehicles of all shapes and sizes. It just refines the challenges biofuels face and must overcome in order to play a more stable – and thus more environmentally sound – role in meeting ongoing global energy needs.

“Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America: They will be met.” – From the inaugural address of President Barack Obama, the 44th President of the United States

And so it begins – perhaps the most awaited U.S. Presidential term in recent memory. What does it hold for our nation and for we as a people? Mired as we are in an economic recession, burdened by trillions in debt, and facing an ever-shadowy global network of terrorists and evil-doers, the road before us seems rockier than ever. Yet the first speech by President Obama lays out a plan that he believes shall help us deal with – if not overcome — all of these obstacles before us.

“Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. Homes have been lost; jobs shed; businesses shuttered. Our health care is too costly; our schools fail too many; and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet,” Obama said after taking the oath of office on the steps of the U.S. Capitol in Washington D.C.

“These are the indicators of crisis, subject to data and statistics,” he noted. “Less measurable but no less profound is a sapping of confidence across our land – a nagging fear that America’s decline is inevitable, and that the next generation must lower its sights. [Yet] the time has come to reaffirm our enduring spirit; to choose our better history; to carry forward that precious gift, that noble idea, passed on from generation to generation: the God-given promise that all are equal, all are free, and all deserve a chance to pursue their full measure of happiness.”

Obama stressed that “greatness is never a given. It must be earned. Our journey has never been one of shortcuts or settling for less. It has not been the path for the fainthearted – for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things – some celebrated, but more often men and women obscure in their labor – who have carried us up the long, rugged path toward prosperity and freedom.”

So what does this mean for the country over the next four years, and for trucking?

Well, for starters, expect a heavy focus on alternative energy. President Obama laid out an over-arching strategy to get America to embrace a variety of alternatives to petroleum for both environmental and national security reasons. “We will harness the sun and the winds and the soil to fuel our cars and run our factories,” he stated.

Expect, too, an massive rebuilding an expansion of our infrastructure – a major tenet of his campaign he still plans to carry forward with vigor.

“The state of the economy calls for action, bold and swift, and we will act – not only to create new jobs, but to lay a new foundation for growth,” Obama said. “We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology’s wonders to raise health care’s quality and lower its cost. And we will transform our schools and colleges and universities to meet the demands of a new age. All this we can do. And all this we will do.”

Obama noted in speech Jan. 8 at George Mason University that everyone in America must share in the task ahead as well as shoulder some of the blame for how we got here. “This crisis did not happen solely by some accident of history or normal turn of the business cycle, and we won’t get out of it by simply waiting for a better day to come, or relying on the worn-out dogmas of the past,” he noted in his talk at the school.

“We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC. For years, too many Wall Street executives made imprudent and dangerous decisions, seeking profits with too little regard for risk, too little regulatory scrutiny, and too little accountability,” Obama said. “Banks made loans without concern for whether borrowers could repay them, and some borrowers took advantage of cheap credit to take on debt they couldn’t afford. Politicians spent taxpayer money without wisdom or discipline, and too often focused on scoring political points instead of the problems they were sent here to solve.”

He also stressed that instead of politicians doling out money behind a veil of secrecy, decisions about where the government invests will be made transparently, and informed by independent experts wherever possible. “Every American will be able to hold Washington accountable for these decisions by going online to see how and where their tax dollars are being spent,” Obama said.

“We will launch an unprecedented effort to eliminate unwise and unnecessary spending that has never been more unaffordable for our nation and our children’s future than it is right now,” he noted. “We have to make tough choices and smart investments today so that as the economy recovers, the deficit starts to come down. We cannot have a solid recovery if our people and our businesses don’t have confidence that we’re getting our fiscal house in order. That’s why our goal is not to create a slew of new government programs, but a foundation for long-term economic growth.”

Will Obama’s efforts be successful? Surely, they are ambitious. But as he noted shortly after taking the oath of office, President Obama believes American and its people are more than capable of achieving all of this.

“There are some who question the scale of our ambitions – who suggest that our system cannot tolerate too many big plans. Their memories are short. For they have forgotten what this country has already done; what free men and women can achieve when imagination is joined to common purpose, and necessity to courage,” he said.

“This is the journey we continue today. We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began,” Obama stressed. “Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions — that time has surely passed. Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.”

Good luck to you Mr. President.

“That was something else they never understood: Lincoln himself. Some might praise him for being flexible, while others called him slippery, when in truth they were two words for just one thing. To argue the point was to insist on a distinction that did not exist. Lincoln was out to win the war; and that was all he was out to do, for the present. Unfettered by any need for being or not being a gentleman, he would keep his word to any man only so long as keeping it would help to win the war. If keeping it meant otherwise, he broke it.” –An analysis of Abraham Lincoln by author Shelby Foote from “The Civil War: A Narrative”

It’s long been exasperating to history majors like myself when the U.S. presidents of today start comparing themselves in what they perceive as reputation-boosting ways to the U.S. presidents of the past. Indeed, President Obama and his staff have worked overtime connecting their incoming administration to the legacy of Abraham Lincoln, going to far as to “recreate” Lincoln’s “historic” train ride to Washington D.C. for the first inaugural of our 16th president back in 1861.

Now, true, I made my own Lincoln connection in this space back in November, but of a very different nature than what’s going on now. And the reason I made it is very simple – Lincoln’s presidency provides (I firmly believe) an example of greatness. Yet those reasons are light years away from the superficial connections being made on behalf of our 44th president – and it would behoove everyone to dust off their history books and get a real understanding of Lincoln’s presidency.

Even something as basic as Lincoln’s “train ride into Washington” that President Obama is supposedly “recreating” is totally bogus. Obama’s trip from Chicago to Washington is an easy victory lap, set against the backdrop of high poll numbers and a cheering electorate. Lincoln, however, only won the presidency because the electorate was badly divided. The nation literally splintered apart on his train ride, with southern states seceding from the Union. People vilified him left and right (if they had polling back then, he would’ve been garnering rock bottom numbers) and he sneaked into Washington in the dead of night in a haphazard disguise for fear of mob violence.

Not exactly what the Obama administration is “recreating” is it?

We hail Lincoln rightly as one of the greatest presidents in U.S. history – in my book, THE greatest. Yet he was detested by much of population during his time in office. We forget that Lincoln imposed a draft, suspended the writ of habeas corpus and other legal rights, muzzled newspapers, and fired a whole slew of generals – many of them popular with the people, the press, even the soldiers. His opposite number at the helm of the Confederacy – Jefferson Davis – dragged Lincoln through the rhetorical mud for those actions … until, of course, dire necessity forced him to do the same.

That “dire necessity” of course was the war – The Civil War – a cataclysm of horror and death that we of today simply cannot grasp. Over 620,000 soldiers alone died in that conflict (a good portion of disease, it should be noted) a little over 2% of the ENTIRE U.S. population at the time. By comparison, if that war were fought today, that death toll would equal 6.4 MILLION. The men of entire towns – fathers, sons, brothers, and uncles – disappeared when the armies met in combat. The Battle of Shiloh alone resulted in 23,700 casualties for both sides in two DAYS – nearly four times the number suffered in our current conflicts in Iraq and Afghanistan after nearly six YEARS of strife.

Not exactly a comparison being made by the incoming administration, is it?

We forget that the Civil War was extremely unpopular – and that Lincoln caught grief from all sides for his ongoing prosecution of it. Many wanted him to let the southern states secede and stop the bloodshed – a level of bloodshed we’ve never seen before or since in the history of this nation of ours. His election alone angered pro-slavery forces to the point where they seceded from the Union. Yet his temporizing and half-steps in support of emancipation drew the wrath of anti-slavery advocates in the North – the people he’d nominally call supporters.

Yet as my quote at the start of this post illustrates, Lincoln focused on one goal and one goal alone – winning the war. He knew – almost instinctively – that everything relied on that one salient fact. So he ignored all the criticism and accepted what would have been dismal approval ratings by anyone’s imagining. He knew what the stakes were and would put the most noble of objectives on hold if it threatened them.

“I will mention another thing, though it meet only with your scorn and contempt,” Lincoln told a gathering of Chicago religious ministers early in the war. “There are 50,000 bayonets in the Union armies from the border slave states. It would be a serious matter if, in consequence of a [emancipation] proclamation such as you desire, they should go over to the rebels.”

So Lincoln temporized and waited – and when he did finally issue his Emancipation Proclamation in September 1862 after the hideous Battle of Antietam, almost after a full year and a half of war, it was notable in that it ONLY freed slaves NOT under Lincoln’s director control. Border slaves states still with the Union, such as Maryland (where ironically Antietam was fought), did not have that “foul institution” (as Lincoln himself called it) affected in any way.

Is THIS a comparison the Obama administration would like to draw with Lincoln? Half-measures on human rights in favor of a larger yet unseen goal?

None of this detracts from the salient fact that we are witnessing history in the making this week as our first-ever African American takes of the oath of office as U.S. president. However, that doesn’t lessen the challenges President Obama faces, either – challenges that require hard choices to solve, require him to remain firm in the face of criticism not only of those that elected him but from his own party, even from his own cabinet.

It’s worth noting, too, that Lincoln possessed other characteristics that get overlooked – ones President Obama might indeed wish to emulate. For starters, Lincoln possessed that most rare sense of humor – the ability to laugh at himself. Lincoln also suffered from severe depressive episodes (another most human condition usually whitewashed from history), too, yet managed not to take counsel of fears and abandon his cause despite his innate melancholy, compounded by years of lost battles and ghastly casualty lists.

Finally, there’s Lincoln’s humility. An excerpt from a note to General U.S. Grant after the fall of Vicksburg, Mississippi, in July 1863 offers a prime example:

“My dear General: I write this now as a grateful acknowledgement for the almost inestimable service you have done the country … When you got below [Vicksburg] and took Port Gibson, Grad Gulf and the vicinity. I thought you should go down the river and join General Banks; and when you turned northward, east of Big Black, I feared it was a mistake. I now wish to make the personal acknowledgement that you were right and I was wrong. Yours very truly, A. Lincoln.”

Can you imagine how refreshing it would be should a modern-day president adopt such a tone? It would indeed be something to cheer. Let’s hope President Obama takes that historical lesson from Lincoln to heart as he prepares to take office.