Trucks at Work Blog

“Panelists do remain confident about the [current global economic] expansion’s durability, but are concerned about high levels of government deficits and debt, excessive unemployment, and rising commodity prices.” –Richard Wobbekind, associate dean of the Leeds School of Business at the University of Colorado and president of the National Association for Business Economics

In a lot of ways, it feels like 2008 all over again – and that wasn’t a very good year for anyone, much less those in the trucking business.

As we all so painfully remember, oil shot up well over $100 a barrel, reaching almost $150 by the summer before crashing – along with most of the world’s economies – down to $33 or so a barrel.

Now, suddenly here we are again, staring at $112 and up for a barrel of crude, with the average price of diesel fuel in the U.S. sitting a mere 25 cents below $4 a gallon – and that’s not a number any trucking operator wants to see these days.

Predictions so far indicate we’re going to be experiencing high oil and fuel prices for a while, too – not because supplies of oil are short, mind you, but because oil traders are worried about all the civil unrest (dare we use the word ‘revolution’ here?) going on in North Africa and the Middle East these days.

Tunisia and Egypt saw their in-all-but-name dictators suddenly swept from power, and 14 days of civil war in Libya has brought the regime of Col. Moammar Gadhafi – in power for over 40 years – to the brink of ruin. more

“We need to solve the problem of improving our transportation system. Highway congestion is hurting our economy – to the tune of an estimated 4 billion wasted hours and 5 billion gallons of wasted fuel every year.” –Steve Russell, chairman and CEO, Celadon Group Inc., from testimony before Congress last week

So many different factors are now intersecting, often unpleasantly, within the highway infrastructure debate these days.

For starters, we’ve all long known that the U.S. highway network – roads and bridges alike – is crumbling due to its age plus heavier amounts of car and truck traffic considered within its original design parameters.

Next up: congestion. Traffic volumes, especially in and around major urban centers, is leading to wasted time and fuel, and freight delays are definitely a key part of this issue.

The latest accelerant to the problem – one we’ve unfortunately faced previously, just over two years ago – deals with a sudden spike in the cost of oil, and thus transportation fuels. The unrest in Libyan is being blamed for a steep rise in oil prices to over $103 per barrel at one point this week, despite enough oil production capacity available to cover the gap created by Libya’s troubles. more

“The findings from our latest Business Barometer show that companies are turning a corner in their hiring and investment plans amidst renewed confidence in the health of consumers and an improved outlook for industrialized economies such as the U.S. and Europe.” –Michael Griffin, executive director-global research for the finance, strategy and legal practice at the Corporate Executive Board

Though the specter of $5 diesel is again raising its ugly head as oil prices head above $100 a barrel, overall business confidence seems to keep building in the ongoing global economic recovery. That confidence, I think, will be critical in the days ahead as hysteria over oil continues to build.

I say “hysteria” because the Saudi Arabian oil ministry has already told the Organization of Petroleum Exporting Countries [OPEC] that it’ll step in to replace any petroleum production lost to the civil unrest that continues to spread across Libya.

Though Libya is the 12th largest oil exporting country in the world, it only exported some 1.49 million barrels per day (b/d) in January, with Europe receiving more than 85%t of Libya’s crude exports, while about 13% heads east of the Suez Canal, according to data tracked by the International Energy Agency (IEA).

The long and short of all that is quite simple: if Libya’s oil production exits the global crude market completely, there’s already capacity in line to replace it. That factoid alone has helped lower the price of Brent oil futures back down today, from north of $119 to $114. Hopefully, that will calm crude oil markets and allow the struggle within Libya to oust that nation’s dictator of over 40 years, Col. Moammar Gadhafi to reach a conclusion without negative international interference. more

“We don’t take unnecessary risks. We’re not speculators on absolute price movements. It may surprise some of you to learn that we actually prefer lower, rather than higher prices. High and rising prices increase dramatically our working capital requirements and result in ever greater margin calls, both of which are not good for your cash flow.” –Ian Taylor, group president and CEO, Vitol Group

Truckers are beholden to petroleum and the fuel distilled from it like few other businesses in the world, so it wouldn’t surprise me in the least if they regarded oil traders with thinly veiled contempt.

After all, these are the folks buy and selling oil futures, hammering out contracts for moving it around the world into various markets, in many cases distilling and selling off the precious products produced from “black gold.”

In the end, they ultimately function as one of the biggest siphons attached to trucking’s cash flow, for the cost of fuel remains among the top three — if not top two — expenses on any fleet’s bottom line.

Yet in some respects, truckers and others might be laboring under some misconceptions here. The growth of the “oil trading” industry may, in many respects, be at least partially responsible for keeping up a steady supply of oil despite burgeoning demand from many heretofore dormant corners of the globe, China’s rip-roaring economic revolution being one of the biggest.

With that in mind, I’d to share with you parts of a speech Ian Taylor (at right), group president and CEO for the Vitol Group, delivered in London during the International Petroleum Week Conference.

You may not agree with many of his views, but I think you’ll find his perspective on the world’s oil markets interesting, to say the very least – markets that are at the moment quite shaky due to all the unrest swirling through the Middle East and North Africa at the moment, home to nations that control a good bit of the globe’s oil supply. more

“It’s very frustrating and it’s why I personally don’t try to forecast diesel fuel price; you simply cannot build a model to handle situations like this.” –Bob Costello, chief economist with the American Trucking Associations (ATA), referring to how the ongoing unrest in Libya is pushing oil prices higher

You really can’t ask for a better summation than Bob Costello’s for the high fuel price scenario trucking is now facing as unrest continues to stay at a fever pitch in Libya.

Costello, chief economist for the American Trucking Associations (ATA), told me it’s really very simple: as oil prices go, so go diesel fuel prices, for 60% of the price of diesel fuel is based entirely on the price of oil.

And – no surprise here – oil prices are up sharply following what is now eight days of massive civil protests against that country’s dictator of over 40 years, Col. Moammar Gadhafi.

Brent oil futures increased $1.53 to $107.27 per barrel today, following a 6% spike on Monday that lifted that benchmark to a peak of $108.7 – it’s highest price since September 2008. Oil is up some $8 since Friday, Denton Cinquegrana, editor-west coast spots for the Oil Price Information Service (OPIS) told me last night, and there is no doubt that spike is going to be felt at the diesel pump all too soon. more

“The ones planning the loads get to go home every night and sleep. They don’t stay up all night to get those loads to where they need to go.” –An 8-year veteran truck driver commenting on the Federal Motor Carrier Safety Administration’s proposed changes of hours of service (HOS) regulations

Sitting through yet another “listening session” on the hours of service (HOS) reforms being proposed by the Federal Motor Carrier Safety Administration (FMCSA) reinforced a maxim well understood by those inside and outside the trucking business: what works out on paper rarely works out in reality.

[Watch the clip below for a quick summation of the reasoning behind FMCSA’s current HOS reform effort as well as the seven changes the agency is proposing.]

On top of that, trying to governing the many different styles of truck operations in existence today is almost impossible with a single, rigid set of rules. more

“We are encouraged by the continuing improvement in Class 8 and medium-duty truck orders during the past several months.” –W. M. “Rusty” Rush, president and CEO, Rush Enterprises, Inc.

One of the hardest things to do in the truck making and selling business is to predict future sales volume – a task only made harder by a growing plethora of government regulations that continues to escalate the sticker prices of new heavy- and medium-duty commercial trucks.

Yet predictions need to be made, for without them, plans can’t be laid. more

“If we are to reduce the number of road-traffic accidents related to fatigue and lack of sleep, motorists must be advised to take breaks and avoiding driving while tired.” –Ole Norregaard, sleep scientist and consultant, ASP Technology, Ltd.

So here’s a concept: We know driving while fatigued is a major bugaboo for consumer and commercial vehicle operators alike. We know both groups, in a reflection of trend lines among the general population, are using all kinds of “smart phones” these days.

So why not use one to combat the other by developing a smart phone application or “app” that helps drivers more accurately gauge their level of fatigue, helping them make better decisions regarding rest breaks and whether to keep driving or not? more

“It’s just amazing how aerodynamic options are flourishing now for trailers.” –Sean Graham, president, Freight Wing

Had a chance to catch up with Sean Graham (below at right), the aforementioned president of aerodynamic device maker Freight Wing, at the 2011 Technology & Maintenance Council’s (TMC) annual meeting this week in Tampa, FL, to talk about the wholesale turnaround in how fleets view the topic of “trailer aerodynamics.”

Graham got into the business of designing and building devices to improve the aerodynamics of dry van trailers back in 2004, believing – quietly rightly, as it turns out – that “smoothing” the airflow around those big boxy shapes would reduce overall fuel consumption for big rigs, thus saving fleets and owner-operators money.

Over the years, I’d bump into him and his product display tucked away in the back corner of any number of trade shows and conferences, set way out on the periphery, far from what are considered the “serious” products in the trucking business.

(At the Mid American Trucking Show one year, I found him bookended by folks peddling trucker BBQ sauces and toy truck models – not a glorious moment in history for trailer aerodynamics, to say the very least.)

Today, however, it’s a very different story. At TMC this year, three 53-foot trailers highlighting several different aerodynamic options were prominently displayed, with at least six (by my count) trailer side skirt makers touting their products from booths located front and center on the show floor. more

“The customer is always looking for more ways to save money.” –Tom DeHaven, senior manager of driveshaft products, Dana Holding Corp.

If there’s been any one repeating theme this week at the 2011 Technology & Maintenance Council’s annual meeting in Tampa, FL (which proved to be more grey, rainy and cold more time than I would’ve thought for the Sunshine state), it’s the everyone continues to look for “just a little bit more” in terms of saving money in the trucking business.

In terms of trucking products, that “little bit” is being found in myriad ways: eliminating a maintenance procedure here, shaving a few pounds off a component there, even introducing new technologies to help save more of the technician’s ever more precious time. more