Trucks at Work Blog

“We must move beyond crisis management approaches and start to address some of the key fiscal and other challenges facing this country if we want our future to be better than our past.” –David M. Walker, former comptroller general of the U.S. and head of the Government Accountability Office, currently president and CEO of the Peter G. Peterson Foundation.

Let’s move beyond trucking for a moment and look at the big picture where our country is concerned. At the moment, we’re struggling with one of the toughest economic recessions ever to afflict the U.S. (one in many ways largely of our own misguided making), which is a reflection of a massive global economic downturn.

At some point (soon, we all hope) this recession will lift, freight will start to flow, and truckers large and small will get back to making money again. Yet looming over all of this – indeed, darkening the skies of our nation’s future – is something we’re simply not addressing, either as individuals, companies, or governments entities. It’s not about oil and energy consumption (though that’s a major concern), nor is it about the security of our freight networks against terrorists (still again another big worry).

This issue is both a near- and long-term millstone hanging around America’s neck – and the work required to remove it will be Herculean and involve a level sacrifice I highly doubt the citizens of our nation are ready to endure.

I’m talking, of course, about government deficits and debt – the trillion dollars of red ink that keeps growing like some unholy leviathan; a wrecking ball of mammoth proportions that leaves us financially reliant on foreign nations, such as China, that are also competitors in global business and politics. Unless we start answering some VERY tough questions on our financial priorities – and then make the painful cuts necessary to achieve them – we’re going to find ourselves in deep trouble. And it’ll be the kind of trouble that may make the current economic suffering pale by comparison.

David Walker – former U.S. comptroller general and head of the Government Accountability Office (GAO) and now president and CEO of the Peter G. Peterson Foundation – wrote several columns about this very subject, posted at CNN.com over the last several months. This is a guy who’s seen the America’s fiscal ledger up close and it makes for some pretty frightening reading.

[He also is one of the many stars in a documentary about the subject, too, called I.O.U.S.A. that you or may not have seen in the cinema – referring to our national debt as a “fiscal cancer.” Now THERE is a term that gets your attention!]

“In recent years, the federal government has spent more money than it takes in at an increasing rate,” he said. “Total federal debt almost doubled during President George W. Bush’s administration and, as much as we needed some stimulus spending to boost the economy, the nonpartisan Congressional Budget Office (CBO) now estimates total debt levels could almost double again over the next eight years based on the budget recently outlined by President Obama.”

Regardless of what politicians tell you, said Walker, any additional accumulations of debt are – absent dramatic reductions in the size and role of government – basically deferred tax increases.

To help put things in perspective, the Peterson Foundation calculated the federal government’s total debt load and found it’s accumulated $56.4 trillion in total liabilities and unfunded promises for Medicare and Social Security as of September 30 LAST year – that’s before we tack on the pile of red ink President Obama added to the mix this year.

“The numbers used to calculate this figure come directly from the audited financial statements of the U.S. government,” Walker said. “If $56.4 trillion in financial commitments is too big a number to digest, think of it as $483,000 per American household, or $184,000 for every man, woman and child in the country. Remember the old saw: ‘You can pay me now or you can pay me later, with interest.’”

He stressed that unless we as a nation begin to get our fiscal house in order, there’s simply no other way to handle our ever-mounting debt burdens except by doubling taxes over time. “Otherwise, our growing commitments for Medicare and Social Security benefits will gradually squeeze out spending on other vital programs such as education, research and development, and infrastructure,” Walker pointed out.

Personal savings, while experiencing an uptick lately because of the recession, have been too low for too long, he added. “As a result, when our government has to borrow money, it must increasingly turn to lenders overseas,” Walker noted – not exactly a good idea when it comes to issues of national security, I would think.

“Effectively addressing these issues will require tough choices and comprehensive reforms, including budget controls, changes to our entitlement programs, reductions in health care costs, other spending cuts, and yes, tax increases,” Walker explained. “But as the old saw goes, paying now, or paying soon, won’t be as painful as paying later.”

Indeed – and the consequences for continuing to ignore our growing debt burden as a nation won’t be pleasant, for trucking and every other sector of the U.S. economy.

“Any change, any loss, does not make us victims. Others can shake you, surprise you, disappoint you, but they can’t prevent you from acting, from taking the situation you’re presented with and moving on. No matter where you are in life, no matter what your situation, you can always do something. You always have a choice, and the choice can be power.” –Blaine Lee, The Power Principle

There’s a famous quote by philosopher Friedrich Nietzsche from his work Twilight of the Idols penned in 1888 that I am sure everyone in trucking is familiar with, even if you’ve never heard it before: “That which does not kill me makes me stronger.”

(If that’s even half true, then some serious trucking powerhouses are being forged as we speak.)

One thing business coaches of all stripes are emphatically re-emphasizing in these tough times is to make sure companies make stronger connections with customers. That’s an even greater challenge in trucking (and elsewhere in business) as there are fewer employees to do it; and maybe some of them being tagged to forge those relationships with customers are new to the game.

Jim Walton – president & CEO of Brand Acceleration, a full-service advertising, brand management and public relations firm operating from Indianapolis, IN, and Charlotte, NC – discussed this very subject the other day in one of his email newsletters.

His contention is that connecting with customers isn’t anything new; rather, it’s a tried and true necessity that becomes absolutely critical when economic hard times come round. When things are rosy, attention paid to customer relationships tend to slide and that makes firing them up in rough patches – when everyone is desperate for business – all the tougher to accomplish.

“The other day, I was pondering the fact that many non-marketing people are now having to take on marketing roles, forcing them to polish their sales and marketing skills,” Walton said. “With leaner marketing staffs, company owners and managers are now faced with moving into the very uncomfortable marketing abyss.”

He noted that, several years ago, management guru Tom Peters introduced the world to the idea of “MBWA,” a clever acronym for “Management by Wandering Around” (a principle truck maintenance guru Darry Stuart lives by, let it be known).

Essentially, Walton explained that Peters – an alumnus of management consulting firm, McKinsey & Company – stressed that many managers are remote and out of touch with their people and their customers. “Today, I contend that many business owners are finding out just how out of touch they are,” Walton said. “A slower economy may require non-marketing people to leave their offices, get their proverbial boots dirty and get focused on brining business through the door. Maybe it’s time for a new version of ‘MBWA’ – ‘Marketing by Wandering Around.’”

[Here’s a quick snippet of what a Tom Peters presentation on his decidedly unique perspective of the business world is like.]

The logical place to start getting one’s boots dirty is with people who have been paying your salaries for years, Walton pointed out – and they would be current customers. “A phone call, a visit, and maybe lunch or coffee would be a good beginning,” he stressed. “Show ‘em some love, get reacquainted and explore potential opportunities. If they have more than one decision maker or influencer, it might be worth your while to cater lunch to their office as a way of thanking them for their many years of business.”

On another front, the idea that prospective customers haven’t seen one of your company’s managers or owners in years is one that should make anyone in business cringe. “When business is good, it’s easy to become complacent, assuming that the marketing folks have the situation covered,” Walton said. “Well, it may be time to reevaluate.”

He noted as an example that a good friend of his – a business owner in his particular market for nearly 30 years – relegated himself to the role of “ambassador.” His primary job, as Walton explained, is to connect with both his staff and customers each day, showing deep appreciation and listening to their opinions, problems and needs. Since he’s not “selling,” per se, Walton pointed out that he is much more effective at establishing personal relationships that result in business opportunities.

In short, Walton believes it’s time to get out there, see customers, motivate the troops and hit the road with confidence and enthusiasm. Not easy to suggest in a down market when money is tight, but if you are doing it when no one else is, the resulting connections forged with customers may result in some valuable business being thrown your way when things start improving. It’s a thought to consider, though, at the very least.

“We wanted to show that aerodynamic trucks can be cool, too.” –James Carello, general manager, Regional International dealership

To call “Mayhem” and “Bad Habit” eye-popping show trucks is an understatement – a BIG one.

Yet these products of extreme imagination of Jim Carello and son Jason – dealer principle and general manager, respectively, of Regional International Corp., a chain of Navistar truck and Jerr-Dan equipment dealerships in upstate New York – aren’t just vanity projects. They were designed to prove a point – that aerodynamically-shaped trucks can be just as far-out and glamorous as any rig with a square hood, if not more so.

“Sure, we went to extremes, but we wanted to show off the possibilities,” Jason Carello told me by phone. “Because we believe the aerodynamic truck model – with its fuel economy advantages – is the wave of the future.”

Headquartered in Rochester, NY, Regional originally started out in 1983 as Malcuria Brother Motor Truck Corp. under principle Sam Malcuria, who then sold it to a group of eleven investors in 1989 – the lead investor being Jim Carello – that renamed the company and expanded it to serve the western part of upstate New York along with five northern counties in Pennsylvania.

The genesis for these one-of-a-kind trucks came from Jim Carello’s desire to bring his enthusiasm for hot rods and motorcycles into the truck world – but not just as a hobby. In particular, he wanted to show the truck buying public that “aerodynamic” tractors – the kind favored by fleets for their fuel-sipping sleekness – can pack just as much “wow” factor punch as their classic, square nosed brethren.

“Our primary goal is obviously to promote our dealership, but what we also really want to do is show truckers out there that you can do just as much customization to an aerodynamic tractor as you ever did with a classic model,” Jason Carello told me.

“Mayhem” (at right) is built off a Navistar International ProStar tractor – touted as the most fuel efficient truck in the company’s lineup – with a wheelbase stretched out to 340 inches and powered by a 500-hp Cummins ISX with a 13-speed manual.

Customized by Elizabeth Truck Center in Elizabeth, NJ, over the space of six months last year, “Mayhem” is as tricked out as you can get, with 8-inch chrome exhaust pipes, Lamborghini-style doors, cut-out wheels, and a 6,000 watt stereo system, among many other customized features.

But when the Carello family got wind of Navistar’s new aerodynamic LoneStar tractor, designed to appeal for the owner-operator market, so they decided to get one and perform work it over as well for the very same reason – showing off the “cool” factor of aerodynamic designs.

Dubbed “Bad Habit,” this LoneStar truck mirrors a paint scheme used on one of Jim Carello’s custom motorbikes. With a wheelbase stretched out to 315-inches, powered by a 600-hp Cummins ISX and equipped with an 18-speed transmission, “Bad Habit” took Elizabeth Truck Center four months to create – arriving at the Mid America Trucking Show this year for its grand debut with the paint almost literally still wet.

James Carello said he’ll be taking both trucks on tour this year, from June through December, to participate in a bevy of show truck competitions from coast to coast this year shows – with “Bad Habit” mostly towing “Mayhem” across the long miles of the U.S. highway system.

Though it’s going to probably be a grueling adventure at more than one point [but not all uncomfortable, as the interior of “Mayhem” at left reveals], Jason Carello told me he can’t wait to see what the reaction is going to be to these trucks from the public and drivers alike.

“We’re excited at how these trucks turned out,” he said. “Now we get to find out what everyone else thinks about them.”

“The Roadcheck campaign highlights the important work that commercial vehicle inspectors perform everyday to keep our roads safe and save lives. The number and the severity of crashes each year involving large trucks and buses is declining. We must not lessen our resolve to work together to make our highways and roads safer for every traveler.” –Rose McMurray, acting deputy administrator, Federal Motor Carrier Safety Administration

It’s an annual ritual every June or thereabouts: a 72-hour hour roadside inspection “blitz” conducted by thousands of safety inspectors across America on commercial trucks and buses of all makes and models.

Initially, it might seem foolhardy to broadcast to the highway community at large that such a widespread blitz is taking shape – including the very dates when it’s to occur, as in this case, where inspectors will be out in full force June 2 through 4, 2009. But the Commercial Vehicle Safety Alliance (CVSA), which helps sponsors this yearly event, doesn’t see it that way at all – and for some very good reasons.

“Effective enforcement comes in multiple facets – typically a mixture between overt as well as covert operations,” Steve Keppler, CVSA’s director of policy and programs, told me. “With ‘Roadcheck,’ there’s a certain group of fleets and drivers that’s going to see this coming up and say to themselves, ‘I better make sure my equipment is ready – that all my Ps and Qs are in order.’ If they are doing that, then we’ve already succeeded with this program, because the intent is to get the trucking community to tighten their focus on vehicle and driver safety.”

In that context, then, ‘Roadcheck’ is an educational outreach effort mixed in with safety enforcement; an attempt to reemphasize to fleets and drivers what is critical when it comes to safe operation on the highway. Yes, tickets are written, with trucks and drivers put out of service. But if these efforts result in greater safety consciousness by members of the trucking community – especially in terms of “getting ready” for such a nationwide blitz – then it’s been more than successful, Keppler said.

Last year, 9,148 CVSA and FMCSA certified inspectors at 1,683 locations across North America performed 67,931 truck and bus inspections, with 52,345 of them North American Standard Level I inspections – the most comprehensive type of roadside inspection. Keppler told me both the total number of inspections and Level I inspections were records for this annual Roadcheck event and – more importantly – there were significant reductions in out of service rates for most vehicle and driver types. That means the safety message is getting through, he emphasized.

This year, roadside inspectors will be focusing on several different fronts:

• The NAS Level I Inspection which examines all of the following: driver’s license, medical examiner’s certificate and waiver, alcohol and drugs (if applicable), driver’s record of duty status (as required), hours of service, seat belt, vehicle inspection report, as well as the brake system, coupling devices, exhaust system, frame, fuel system, turn signals, brake lamps, tail lamps, head lamps, lamps on projecting loads, safe loading, steering mechanism, suspension, tires, van and open-top trailer bodies, wheels and rims, windshield wipers, emergency exits on buses and HM requirements, as applicable;

• Safety Belt enforcement;

• Motorcoach and bus safety compliance;

• Unified Carrier Registration (UCR) compliance: In 2005 SAFETEA-LU codified UCR into federal law. It replaced the Single State Registration System (SSRS) and all motor carriers – for-hire, private and exempt – as well as brokers, freight forwarders, and leasing companies operating in interstate or international commerce, are subject to the new UCR.

CVSA sponsors Roadcheck each year with the FMCSA, the Canadian Council of Motor Transport Administrators, Transport Canada, and the Secretariat of Communications and Transportation in Mexico.

Even more important, Keppler noted, are the instances where industry and inspectors are working together to better define safety parameters when it comes to equipment. During a recent visit to Arizona, Keppler said he found that several fleets are sending senior technicians out to the inspection areas to learn hands-on from the inspectors exactly what constitutes a passing or failing grade on equipment inspections.

“That’s an example of a fleet building a ‘safety culture’ as a call it – not just focusing on meeting the regulations, but trying to gain a deeper understanding of what they are for and why inspectors considering them important,” he told me. “Our number one goal with all these Roadcheck events is, of course, to enforce and improve highway safety, but as a secondary goal, we’re trying to foster more such ‘joint activity’ to help move the safety needle in the direction we need it to go with industry support.”

“When we began this campaign five years ago, we embarked on a mission to help drivers become more aware of the rules of the road. We’ve seen the results ebb and flow, and this year, scores are down. This reiterates the fact that each and every one of us need to continually be brushing up on safe driving practices.” –Wade Bontrager, senior vice president-affinity division, GMAC Insurance.

GMAC Insurance recently polled more than 5,000 licensed drivers in the U.S. from all 50 states and the District of Columbia to try and gauge automotive driver knowledge by administering 20 actual questions taken from Department of Motor Vehicle (DMV) exams used across the country.

Now, before we get started discussing the results – which are startling, to say the least – let’s lay a few caveats out on the table. First, it’s my belief that the score one gets on written tests doesn’t necessarily correspond directly to driving skill. While written testing is important part of a driver’s education – you’ve got to know the rules, and there’s no better way to find out if you know them or not than by testing you about them – it’s not the end-all and be-all of separating the good drivers from the bad.

Second, the type of questions that make up these tests is critical, too. One of the reasons I believe there is such ignorance by car drivers of the operating characteristics of big rigs is that the DMV written tests they take lack information about them. So what kinds of questions these tests ask is something that needs to be looked at closely.

Ok, with all that being said, GMAC’s survey still dug up some pretty surprising facts: such as 20.1 percent of licensed Americans – amounting to roughly 41 million drivers on the road – would not pass a written drivers test exam if taken today. The poll also found that drivers in the Northeast had the lowest average test scores (74.5 percent), drivers in the South had the highest failure rate (41 percent), while drivers in the Midwest had the highest average test scores (79 percent) and the lowest failure rates (15 percent).

[If you’d rather “watch” the survey results instead of read about them, view the video below.]

Overall, findings from GMAC’s fifth annual “driver knowledge” survey indicate the number of drivers with knowledge of basic road rules is decreasing, with this year’s test scores lower than last year’s (76.6 percent vs. 78.1 percent).

Idaho and Wisconsin drivers tied for first in the nation, with an average test score of 80.6 percent; New York drivers ranked last, with an average score of 70.5 percent. This is the second time Idaho ranked first and the third time New York has ranked last in the survey’s five-year history, GMAC noted.

The survey – administered by TNS for GMAC – constructed a representative national comprised of 5,183 licensed drivers in the U.S., aged 16 to over 60 and reported at least one factoid I think no one will find surprising; the older the driver, the higher the test score. Drivers 35 years and older were most likely to pass, while young adults aged 18 to 24 recorded the highest failure rates. White males older than 45 received the highest average score, the study noted.

When comparing genders, men are still more likely to pass the test than women. However, the gap is considerably smaller in 2009 (81 percent of males versus 79 percent of females) than in 2008 (87 percent of males versus 80 percent of females).

What conclusions can we draw from the data gathered by GMAC’s survey? Bluntly, we’ve got more work to do in terms of better educating car drivers out there. Because – to my way of thinking – a more knowledgeable driver can eventually become a safer driver. That doesn’t mean book learning translates into better driving skills; not by any means. But better and more thorough knowledge of the rules of the road can help them improve significantly.

“When men are the most sure and arrogant they are commonly the most mistaken, giving views to passion without that proper deliberation and suspense which alone can secure them from the grossest absurdities.” –David Hume

One of the most frequent scenarios I’ve observed over my years covering the trucking industry is a good driver (male or female) struggling to make ends meet. Same goes for a lot of small trucking companies, too. In most of these cases, the person or carrier in question really has a passion for the business – understands how to drive, load and unload, navigate roads and weather, plus maintain equipment to high, professional standards – yet just can’t seem to make a profit hauling freight.

The horrendous times we’re in now, of course, are even forcing folks with good thrifty business sense off the road, but that’s usually rare. The brutal truth is there are lots of good people in the trucking business that are great at it – at everything, however, except making a decent living from it.

Not all of it is the driver or small carrier’s fault, either – too many times to count, the deck gets stacked against them by underhanded deals, bottom-dollar freight rates, and sleight-of-hand pay schemes. Despite their passion for trucking, the harsh reality of business (unfortunate as this may be) wins the day

“Trucking is a risky business,” noted my editorial colleague and former owner-operator Tim Brady in a recent blog post. “Equipment is expensive to acquire and maintain, revenue is elusive, (here one day; gone to a cheaper hauler the next), and the liability risk is astronomical with one’s drivers constantly one vehicle away from a lawsuit eleven hours a day.”

Added to this, anyone with a CDL and a few thousand dollars can be trucking in just a few weeks – regardless of his knowledge of the business of trucking, stressed Brady. “So what separates the men from the boys, the women from the girls, when it comes to succeeding in trucking? The answer is another question: Are you bankable?” he asks.

Being bankable isn’t only what your credit rating is or what your company’s Dunn & Bradstreet report looks like, Brady stressed. It has to do with what you know, how much revenue your company produces against your costs, what your accounts receivable look like, and also considers the quality and diversity of your customers.

“Being bankable is not robbing Peter to pay Paul, but managing all of your assets: cash, equipment, property, accounts receivable, customers, employees and contractors, with a plan,” he said. “This plan must include being prepared for the lean times, equipment breakdowns and replacement, and covering the daily cost of operations while waiting for customers to pay. This strategy must not let growth out-pace capacity, and above all, there needs to be a vision of building net worth.”

[You can also hear Tim and I discuss such trucking business issues – in this instance “Why is Cash Flow King?” – during our weekly online radio segment at American Rig Radio.]

Tempering passion with reality is an important point reiterated by another business expert I follow regularly, Professor Jerry Osteryoung from the college of business at Florida State University.

He’s worked with over 3,000 entrepreneurs spread across many different industries over the last 14 years and it’s his belief that while they all had tremendous passion for their business and care about their staff and their customers, they did not succeed by having passion alone.

“My colleague, Barbara Lay, and I were meeting with an individual that had just been laid off and now wanted to start a business. We asked her many times why she wanted to do this as she had been an employee all of her working life – more than 20 years,” Osteryoung noted in a recent missive. “She responded that she had been laid off four times and just did not want to go through this again. She also said that she had so much passion for a new web concept.”

As he and Lay delved more deeply into her idea, they quickly realized that yes, their client had a passion for this web concept, but she did not care if there was a demand for the service. All she wanted was to follow her passion, and she was sure she would be a success.

“One of my favorite ways to deal with cases like these is to remind the person of the classic baseball movie, Field of Dreams. There is a memorable quote from the movie that says, ‘Build it, and they will come.’ I am here to tell you that this is just not true,” Osteryoung said. “What the quote should have said is, ‘They will come only if there is a good reason for them to.’”

When he brought this up to the entrepreneur in question, the woman’s eyes rolled and she just refused to recognize that what she wanted might not play – or pay – well in the marketplace.

“While she had tremendous passion and skills for making the concept work, there was no real demand for the service,” Osteryoung explained. “That’s one of the hardest things about our jobs: we can give people good advice, but they may not follow it. In this case, I am sure that this individual will move forward with her idea, and unfortunately, she will crash. I hope that I am wrong, but it is very risky for an entrepreneur to move forward on faith without any market validation or demand.”

In short, Osteryoung stressed that those in business today definitely need to have a passion for what they do – but not just passion alone. “Passion is definitely a prerequisite for success, but you also must make sure that passion is tempered with wisdom,” he warned.

“The … reduction in hazardous materials-qualified drivers is not the result of individuals failing the background check – less than 1% fail – but rather is a result of the onerous process associated with obtaining this credential and the fact that drivers often must obtain multiple credentials that entail expensive, duplicative federal background checks.” –Robert Petrancosta, vice president-safety for LTL carrier Con-way Freight

The issue of regulatory simplification is not new – it’s been around since … well, since regulations were invented. What I feel is interesting about the ongoing debate concerning hazardous materials transportation regulations are their economic impacts, especially upon truck drivers, fostered by the complexity and redundancy of the current rules.

It’s important to note here that safety and security of the current rules are NOT being questioned – in fact, they seem to be doing their job quite well.

Robert Petrancosta, vice president-safety for LTL carrier Con-way Freight, stressed that point in his testimony about hazmat rules last week before Congress. Each day, he said, there are approximately one million shipments of hazardous materials in the U.S. – with 94% of them moved by truck – and the rate of serious incidents involving the transportation of hazardous materials by motor carriers is just 0.0001%, with the percentage of incidents involving injuries is 0.00002% or two one-hundred thousandths of one percent. That’s a pretty good record if you ask me.

Furthermore, the trucking community believes the agency in charge of setting and enforcing the rules is doing a great job. “We support the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) leadership in regulating hazardous materials transportation. [They’ve] implemented an enterprise approach to hazardous materials regulation and communicates on a regular basis with key stakeholders, including safety advocates, emergency responders, carriers and shippers,” Petrancosta said.

He noted that the agency also embraces a risk-based, data driven approach to balance the need to ensure the safe and secure transportation of hazardous materials so they move efficiently in commerce. “PHMSA also has earned the respect of the international community and a PHMSA staff member currently serves as the chairman of the United Nations Subcommittee on the Transportation of Dangerous Goods,” added Petrancosta. “Congress should ensure that PHMSA maintains its status as the lead regulatory agency for hazardous materials transportation both at home and abroad.”

Con-way and Petrancosta are no strangers to hazmat, by the way. Out of the 56,000 shipments its 8,500 trucks and 17,000 employees handle every day, some 2,000 contain hazmat cargo. Petrancosta himself is past chairman of the American Trucking Assn.’s (ATA) hazardous materials policy committee, so he lives and breathes this stuff (figuratively, I stress) every day.

Yet there’s room for improvement – especially in terms of simplification. Truckers are finding they must submit – and pay for out of their own wallets – multiple background checks. Federal and state hazmat rules can conflict with each other, causing delays in obtaining permits. Jurisdiction over hazmat rules – jumbled between PHMSA (an agency within the Department of Transportation ) and the Occupational Safety and Health Administration (OSHA) – also complicates things needlessly.

The big issue, though, is redundancy. Many states – even municipalities and local governments – are putting in place background checks and credential requirements for drivers that haul hazmat goods – requirements that needlessly duplicate what’s being done at the federal level, thus not improving safety or security all that much.

“Duplicative background checks and redundant credentials have caused a dramatic reduction in the number of qualified drivers that are available to transport hazardous materials,” Petrancosta told Congress.

“Prior to the initiation of the Transportation Security Administration’s (TSA) background check program, there were more than 2.7 million drivers that had obtained hazardous materials endorsements (HME) to their commercial drivers licenses (CDL),” he said. “We estimate that the number of HME holders will fall to 1.6 million – some 41% – by the spring of 2010.”

Why this happening is pretty easy to explain – and it’s not about failing the background checks (less than 1% of drivers fail them, Petrancosta stressed). No, it’s all about the skyrocketing costs for these multiple checks.

“Drivers that transport hazardous materials must submit to a fingerprint-based background check to obtain HME to their CDL. This credential costs approximately $100, requires multiple visits to the licensing agency to complete the process and involves a delay of several weeks before the credential is issued,” Petrancosta explained. “Many of these drivers also access port facilities and therefore must obtain a Transportation Worker Identification Credential (TWIC) – these drivers receive a discount if they have already been through an HME check, but still must pay an additional $105.25 for the second credential.”

He estimates just obtaining federal credentials for Con-way’s drivers alone to be approximately $250,000.

However, here’s the kicker: “We recently learned that the city of Doraville, GA, has imposed a security background check for individuals that access the Doraville petroleum loading facilities,” he said. “Under this program, Doraville collects fingerprints, transmits the prints to the federal government, receives a criminal history report, and then issues a Doraville credential at a cost of $100. The background check performed is identical to the check performed by TSA under the HME and TWIC programs. Unfortunately, Doraville has refused to recognize the HME or the TWIC as an acceptable credential.”

Petrancosta said the ability of states and municipalities to subject hazmat drivers to redundant criminal history background checks could easily become an unbearable financial burden to hazmat drivers that operate in hundreds of cities throughout the country, if such redundancy is not addressed in the federal regulations.

A similar issue exists at the state level when it comes to hazmat permits. Petrancosta said individual states maintain more than 40 separate hazardous materials permitting programs, triggered based upon the type of hazardous material being transported through the state. “Some states have more than one permit, depending upon the types of hazardous materials being transported,” he noted.

“Compliance with these separate programs is an enormous administrative burden for trucking companies that operate in multiple states, as it is extremely difficult to identify and monitor changes to these different permitting programs,” Petrancosta added. “For some smaller trucking companies, it is difficult to predict which states they may travel through and whether they will transport particular types of hazardous materials through that state in a given year.”

A solution to this problem would be the “Uniform Program,” currently administered by seven states (IL, MI, MN, NV, OH, OK, and WV), which is a “base state” permitting program that ensures participating states will continue to receive the revenue they have come to rely upon under their individual permitting programs. It would also reduce state expenses, as the inspection and administrative functions would be shared by all participating states, while reducing the administrative burden on the regulated industry.

These are good ideas – ones that do NOT lessen hazmat shipment safety or security, but rather lessen the administrative and cost burdens associated with these regulations. That’s smart and simple regulation – and we definitely need more of that.

“Logistics is a key enabler of industry. It is an essential service, not unlike basic infrastructure. Without it, the economy and world trade comes to a halt.” –Choi Shing Kwok, Singapore’s permanent secretary-ministry of transport

I noted in a post earlier this week a big meeting here in Washington D.C. under the joint auspices of the U.S. Department of Commerce and of Transportation about the critical role supply chain management plays in making America competitive in the world’s markets.

Now, this is neither a new idea nor one uniquely American, for supply chain management and the logistics networks it controls are of major interest in all four corners of globe.

Choi Shing Kwok, Singapore’s permanent secretary-ministry of transport, illustrated the global importance of logistics in the keynote speech late last month during the very first International Symposium on Maritime Logistics and Supply Chain Systems.

“The traditional view of logistics gave it a backroom and functional role not fully deserving of senior management attention. This perspective has changed,” he said. “Today, logistics has become a knowledge service to drive both the top and bottom lines. Logistics is now a key source of competitive advantage for both companies and countries.”

This view, I think, is critical for truckers in the U.S. to absorb because they play a very key role in providing several of the critical links within global supply chain networks – and, in some cases, managing the parts if not all of the connected chain as well if they have divisions devoted to providing logistics services, as carriers such as Schneider National do.

Yet logistics is not a stale, one-note field of endeavour anymore – something Choi Shing Kwok stressed in his remarks. “Logistics is a dynamic field and old logistics methods and processes that had worked well in the past will not continue to work in the future,” he said. “Containerisation, the advent of air express services, the rise of 3PL [third party logistics] services – each transformed the world of logistics and brought new innovative companies to the fore while leaving those unable to adapt behind.”

Furthermore, demands on the supply chain have become more sophisticated, he stressed. “Supply chain performance is no longer measured in terms of just efficiency and lower costs, but also responsiveness to changes in demand, integration with suppliers and channel partners, and so on,” Kwok stated

“The definition of good logistics services has become more complex and multi-faceted. Staying ahead in logistics therefore requires new technological advances, new operational innovations, and even new business models,” he added. “It calls for a commitment to R&D [research and development] and continuous innovation.”

Complicating this already complex picture, however, is the rapid move toward “green logistics” on a worldwide front, Kwok noted.

“In particular, concerns over climate change are creating demand for supply chains with lower carbon footprints,” he said. “Shoppers, especially those in developed countries, are showing a preference for companies that demonstrate commitments to lowering their carbon footprint … [and] companies have responded.”

For example, he pointed to retailer Marks & Spencer, which targets to go carbon neutral by 2012. These companies will in turn put pressure on their logistics service providers to lower their carbon footprints, Kwok warned, adding a new dimension to what it means to deliver good logistics services.

“Besides market forces, we can expect stiffer regulation on carbon emissions in the future,” he added. “International discussions are well underway for a new regime to mitigate carbon emissions … [and] the transportation and logistics industry will be expected to play its part.”

Such efforts are already afoot here in the U.S., led by the Environmental Protection Agency and California Air Resources Board – efforts that will directly impact trucks and the logistics services they provide. Expect to see similar measures, though, in other parts of the world, which may balance out the competitive effect of such “carbon control” measures.

The key take away, however, is how good logistics services are increasingly viewed as a competitive skill in the world of freight management – and not just by the U.S. It’s a global view and one U.S. truckers must recognize so they can adapt and provide more value to their customers in this arena going forward.

“Assuming we are serious about getting off fossil fuels, the scale of building required should not be underestimated. Small actions alone will not deliver. Our failure to talk straight about the numbers is allowing people to persist in wishful thinking.” –Professor David MacKay, University of Cambridge

The good folks from CNN posted a commentary from the good professor above online yesterday, and his remarks – excerpted from his book “Sustainable Energy – Without the Hot Air,” which is available free on his Internet site – are really long overdue as we debate the future of alternative fuels and power sources in America.

In very blunt and simple terms, Professor David MacKay states what should be extremely obvious truths about energy policy in our country – that using anything other than coal and petroleum to power our homes, businesses, factories, and vehicles is going to cost a LOT more than expected and require massive changes to the lifestyles of every single person in America, especially the wealthier segments of society.

“We need to introduce simple arithmetic into our discussions of energy,” he said. “We need to understand how much energy our chosen lifestyles consume, we need to decide where we want that energy to come from, and we need to get on with building energy systems of sufficient size to match our desired consumption.”

MacKay – a professor in the department of physics at the University of Cambridge, studied natural sciences at Cambridge and then obtained his PhD in Computation and Neural Systems at the California Institute of Technology – is also pretty brutal when it comes to the value all the “soft” energy savings being bandied about on Capitol Hill these days; things like unplugging cell phone chargers, for example.

“Take, for example, the idea that one of the top 10 things you should do to make a difference to your energy consumption is to unplug your cell-phone charger when you are not using it,” he said. “The truth is that leaving a phone charger plugged in uses about 0.01 kWh per day, 1/100th of the power consumed by a lightbulb.”

This means that switching the phone charger off for a whole day saves the same energy as is used in driving an average car for one second, MacKay said. “Switching off phone chargers is like bailing the Titanic with a teaspoon,” he stresses. “I’m not saying you shouldn’t unplug it, but please realize, when you do so, what a tiny fraction it is of your total energy footprint.”

MacKay expresses energy consumption and energy production using simple personal units, namely kilowatt-hours. So, for example, one kilowatt-hour (kWh) is the energy used by leaving a 40-watt bulb on for 24 hours. “The chemical energy in the food we eat to stay alive amounts to about 3 kWh per day. Taking one hot bath uses about 5 kWh of heat. Driving an average European car 100 kilometers (km), which is roughly 62 miles, uses 80 kWh of fuel,” he said. “With a few of these numbers in mind, we can start to evaluate some of the recommendations that people make about energy.”

In total, the European lifestyle uses 125 kWh per day per person for transport, heating, manufacturing, and electricity. That’s equivalent to every person having 125 light bulbs switched on all the time. The average American uses 250 kWh per day: thus, 250 light bulbs.

As a thought-experiment, MacKay postulates that technology switches and lifestyle changes could halve American energy consumption to 125 kWh per day per person. That’s a BIG leap, but let’s follow along anyways. How big would the solar, wind and nuclear facilities need to be to supply this halved consumption? For simplicity, imagine getting one-third of the energy supply from each, he said. The results:

• To supply 42 kWh per day per person from solar power requires roughly 80 square meters per person of solar panels.

• To deliver 42 kWh per day per person from wind for everyone in the U.S. would require wind farms with a total area roughly equal to the area of California, a 200-fold increase in United States wind power.

• To get 42 kWh per day per person from nuclear power would require 525 one-gigawatt nuclear power stations, a roughly five-fold increase over today’s levels.

Remember, that is IF each and every American cuts in HALF their energy consumption. No more big mansions in Malibu; no more private jets; no more limos for the Academy Awards. In fact, no more Academy Awards event – uses too much energy. [You can hear the denizens of Hollywood screaming now.]

“The sober message about wind and solar applies to all renewables,” MacKay said. “All renewables, much as I love them, deliver only a small power per unit area, so if we want renewable facilities to supply power on a scale at all comparable to our consumption, those facilities must be big.”

Then there’s energy for vehicles. MacKay took hydrogen power as an example of the whole truth not being adequately shared for discussion. “The truth is that, in energy terms, today’s hydrogen-powered vehicles don’t help at all,” he said. “Most prototype hydrogen-powered vehicles use more energy than the fossil-fuel vehicles they replace. The BMW Hydrogen 7, for example, uses 254 kWh per 100 km, but the average fossil car in Europe uses 80 kWh per 100 km.”

The issue here, though – and I want to make this very clear – isn’t that we should give up on pursuing alternative energy options. I for one firmly believe we need to vastly reduce our petroleum use, even if it costs us a lot of money and effort in the process, for reasons of energy SECURITY. We rely far too much on supplies from unstable areas of the world – in many cases, our petroleum comes from nations that would like nothing better than to destroy us. Taking America out of this loop to me is vital to our safety.

That being said, though, we must also realize the total costs and pay them: we can’t shade the truth. If we’re serious about doing this, as Professor MacKay said, we must commit to it 100% and make the changes necessary – redirecting federal spending on a massive scale, making big changes to our everyday lives.

In particular, such an effort poses a major problem for President Obama, as Time magazine reports in a recent story that members of his own party are already watering down many of his current initiatives left and right. Trying to shift our nation’s energy matrix on the scale required to make alternatives truly work might prove too much given the realities of the current political process.

“I hope the numbers above have shown, supplying energy to match our demand is not going to be easy,” said MacKay. “The public discussion of energy options tends to be emotional, polarized, mistrustful and destructive. I hope that focusing attention on the numbers may make it possible to develop honest and constructive conversations about energy.”

That hope might be far-fetched, but it’s possible. We’ll see what happens.

“The administration now has an opportunity to name someone committed to both the safety and fuel economy programs that they run.” –Dan Becker, director of the Safe Climate Campaign, as told to the Detroit News on the withdrawal of Chuck Hurley’s nomination to lead NHTSA

It’s a shame that the nomination of Chuck Hurley to be the next chief administrator for the National Highway Traffic Safety Administration came and went so fast.

Late yesterday, word got out that Hurley withdrew his name from consideration due to growing opposition from environmental groups over his interactions with the automotive industry. The Detroit News reported that much of the flak Hurley got came in part for his work at the Insurance Institute for Highway Safety (IIHS) in the early 1990s, when he sided with automakers over the safety impacts of downsizing vehicles to increase fuel efficiency.

For starters, it’s surprising to see the opposition to Hurley’s nomination revolves around actions he took almost two decades ago – actions, I might add, that were about improving vehicle SAFETY of all things. His concern at the time – and it’s rightly placed – seems to have centered on the potential safety risks of smaller cars. That’s a good discussion to have, mind you.

He also seemed to be a good fit for NHTSA, based on his record. As I noted in an earlier post on Hurley’s nomination, he’s a former naval intelligence officer that went on to hold senior leadership positions with the National Safety Council (NSC) and IIHS over the last thirty years – working extensively with law enforcement on air bag and seat belt issues, teen driving, and child passenger safety – before going on to become CEO of Mothers Against Drunk Driving in 2005.

Yet from what I’ve seen of his record, he’s a guy that tends to stick to the facts, not the politics. While he supported the auto industry’s arguments against raising automobile fuel economy standards back in the 1990 – again, contending that such a move would result in smaller and more dangerous cars – he also suggested that automakers were exaggerating the safety benefits of antilock brakes back then as well, according to the Wall Street Journal. In a 1994 IIHS study comparing accident and insurance loss data for cars equipped with antilock brake systems to the same models with standard brakes, it found that claim frequency and the average insurance payments were roughly the same.

That doesn’t matter now, unfortunately, as Hurley withdrew his name from consideration before even getting a hearing in the Senate. Now we’ll just have to see who steps into the batter’s box next to take a swing for the top spot at NHTSA.