In covering trucking, I’ve always tended to focus on the “big stuff,” such as equipment (tractors and trailers), drivers, fuel, even freight itself. However, dealing with the technology that manages all this “big stuff” in the most efficient and profitable way hasn’t been my strong suit. Thing is, it’s this very area – the technological arena – that’s become both trucking’s greatest asset and biggest Achilles heel in the last few years.

Infect a computer system with a “virus,” a “worm,” or some other sort of villainous software bug could literally cripple any business enterprise, much less trucking. So much of the business world today (and that goes double for journalistic hacks like myself) rely on computers tethered to the Internet to get things done.

For me, it’s all about filing stories, editing and producing video reports, while zipping digital photos hither and yon literally sometimes seconds after taking them. For truckers, the stakes are much higher – delivering freight to the right location, keeping in touch with dispatch and home alike, even performing diagnostics on problems with the “big stuff” such as engine or transmission issues. Take trucking’s computers down, and Houston, we’ll REALLY have a problem.

And I’m not just talking about the big enterprise systems here, either: even stuff as “basic” as laptops (if you can describe them as such) play a critical role in trucking’s world today, for drivers and carriers alike, so a computer virus or worm that disables or destroys their inner workings can be as devastating as losing a big mainframe.

That’s why information from sources such as Microsoft Corp.’s seventh volume of the Microsoft Security Intelligence Report (SIRv7) can be enlightening in terms of learning about what threats are stalking the cyber world. On the worrisome side, the company’s latest report finds that worm infections among its customer base rose by nearly 100% during the first half of 2009 over the preceding six months. Yet while what Microsoft calls “rogue security software” remains a major threat to customers, 20% fewer of them were affected by rogue infections during the past six months.

The reporting mechanisms for Microsoft’s SIRv7 report are really broad, as well, including: Microsoft’s Malicious Software Removal Tool (MSRT) on 450 million computers worldwide; Bing, which performed billions of Web page scans during the past six months; Windows Live OneCare and Windows Defender, operating on more than 100 million computers worldwide; Forefront Online Protection for Exchange and Forefront Client Security, scanning billions of e-mail messages yearly; and Windows Live Hotmail, operating in more than 30 countries with hundreds of millions of active e-mail users.

Data from all of those sources gives a fairly thorough “big picture” view of the biggest worries out there in computer-land, along with some insight into emerging threats. Here’s some of what Microsoft’s research found:

• Ten years after the Melissa worm appeared and defined mass-mailing worms as a class of malicious threats, worm infections have resurged to become the second most prevalent threat for enterprises in the first half of 2009. Worms rely heavily on access to unsecured file shares and removable storage volumes, both of which are plentiful in enterprise environments

• Conficker was the top worm threat detected for the enterprise, because its method of propagation works more effectively within a firewalled network environment. Conficker is not in the top 10 for consumers, because home computers are more likely to have automatic updating enabled. This further reiterates the need for enterprises to have a robust security update management program in place.

• The Taterf worm, with detections up 156% since the second half of 2008, targets massively multiplayer online role-playing games. These attacks rely less on social engineering to spread, and more on access to unsecured file shares and removable storage volumes – both of which are often plentiful in the enterprise. Taterf’s impressive growth underscores the need for organizations to develop guidelines for removable drives (such as thumb drives) and evaluate how connections are made to outside machines.

• Rogue security software remained the single largest threat category for the first half of 2009. In addition, while there has been progress combating rogues, this threat remained a major pain point for computer users during the same period. Also known as scareware, rogue security software takes advantage of customers’ desire to keep their computer protected. Microsoft products and services removed malware from more than 13 million computers worldwide, down from 16.8 million in the second half of 2008. Computer users are advised to use an anti-malware solution from a company they trust and to keep its threat definitions up to date.

In contrast, the report highlights the significant decrease in Zlob disinfections (by the way, I LOVE these names – Zlob, Taterf – as they seem to come straight out from old Robert Heinlein sci-fi novels) from 21.1 million at its peak in 2007 to 2.3 million in the first half of 2009 – a remarkable tenfold decrease, Microsoft said.

So how do companies and individual computer users stay ahead of such “infections”? Microsoft’s researchers culled the best practices they found from around the world and shared some insights in their latest security update:

• Japan has seen its infection rates remain relatively low. One of the reasons is due in large part to collaborations such as the Cyber Clean Center, a cooperative project between Internet service providers (ISPs), major security vendors and Japanese government agencies to educate users.

• Austria has implemented strict information technology (IT) enforcement guidelines to lower piracy rates, and this – along with strong ISP relationships and fast Internet lines, which aid in security update deployment – has helped ensure its generally low infection rate.

• Germany has also leveraged collaboration efforts with its computer emergency response team (CERT) and ISP communities to help identify and raise awareness of “botnet” infections and, in some cases, quarantined infected computers.

Central to the success in each of these regions is the growing trend of community-based defense, said Microsoft, in which the broader industry combines its collective strengths and intelligence to help defend computer users.

“Attackers have increasingly redirected their exploitation effort toward third-party applications and customer-developed internal applications,” noted Vinny Gullotto, general manager of Microsoft’s Malware Protection Center. “Ensure that policies are in place to help secure all file shares and regulate the use of removable media. Install AutoPlay update to help regulate automatic initiation of potentially dangerous removable media.”

In the end, I think, it also comes down to recognizing how critical computers and related technology are to keeping a trucking company’s enterprise up and running – for appreciating the significant role they play is the first step in establishing the proper mindset concerning computer security.

I’m certainly preaching to the choir here when discussing the vital importance of transportation funding – not just in the U.S. but globally as well. Yet now there’s a study out that shows transportation investment is critical not just in the macro-economic scheme of things but down on the day-to-day business level, where the quality of transport infrastructure in a city or region is front of mind in four out of five business location decision-makers.

Now, a point of full disclosure: this report,Smart connections: The essential role of transport for borderless business , written by Professor Austin Smyth, head of the department of transport studies at the Westminster University in London, received its funding from the Invest Thames Gateway, the lead international inward investment agency for the Thames Gateway region in England.

[If you don’t know, the Thames is the largest river in England, and the ‘Thames Gateway’ refers to the river’s tidal basin and estuary area to the east of London.]

Obviously, they’ve got a vested interest in securing more transportation funding – and this report plays nicely into that need. However, Professor Smyth is a solid academic: formerly professor of transport economics at the Transport Research Institute at Napier University in Edinburgh, Scotland from 2003 to 2006, during which he also held an appointment as director of the National Institute for Transport and Logistics (NITL) in Dublin, Ireland, Smyth came to Westminster University to promote an integrated portfolio of research, teaching and learning activities. So I think, anyways, his findings in this study are based on solid analysis of transportation issues.

Smyth’s report found that the ability to deliver integrated transport systems – covering road, rail, air, and water ports – is what will distinguish the regional economic successes of the future, as that “integration” is critical to a city or region’s ability to provide fast, easy access to world markets, skilled workers and to bring businesses together quicker.

The study also polled a wide slice of business executives in the Greater London area and found that:

• 81% of senior business people rate transport as more important than ever for business on national, local and international levels;

• 63% said that transport was essential to attracting an increasingly mobile and demanding workforce;

• 52% of respondents cited the globalization of business as increasing the demand for efficient and integrated transport networks;

• 46% responded that virtual business is no substitute for real time face-to-face contact and that “holistic” transport systems are essential to bringing businesses together;

• Half of respondents cited committed government support to transport infrastructure as essential to their future investment decisions.

According to Smyth’s research, the essential benefits for business of being able to access integrated transport networks were cited as: access to potential customers (56%); access to labor pools (41%); ability to drive efficient operations (39%); providing a high quality of life for employees (28%).

When considering the make-up of transport networks, respondents defined the ideal investment location of the future as having the following attributes:

• Access to integrated transport networks—that combination of road, rail, ports and air (62%)

• Proximity to international markets (34%)

• Access to international airports (31%)

• Proximity to a major city (31%)

• Access to sophisticated road and rail networks (29%)

• Commitment to sustainability (17%)

I think it’s very interesting that the access to integrated transportation networks is the top concern among the business executives polled in this research, far outweighing access to any single mode (air transport) or even two modes (rail and roadways).

That shows, I think, that business is really looking at transportation from a multi-modal perspective – a perspective that doesn’t necessarily detract from trucking, mind you, especially if truckers lead the way in offering such combined modal services to businesses.

“Transport infrastructure represents the future for both business locations and business. Sophisticated and effective transport networks translate as accessibility and connectivity, making borderless business possible,” Smyth noted in his report. “In the future, access to integrated transport networks and proximity to international markets, will, undoubtedly, be among the most influential factors for investors.”

One of the interesting paths being followed in vehicle research and development these days is how to figure out ways to operate a variety of systems without tapping into the car or truck’s engine.

For example, General Motors is starting work on a prototype system to capture the heat from vehicle engine exhaust and then convert to mechanical energy capable of powering a car or truck stereo, power seats and air conditioning system.

Shape Memory Alloy (SMA) is the critical component here, for generating electricity from the heat in automotive exhaust, explained Jan Aase, director of GM’s Vehicle Development Research Laboratory.

“When you heat up a stretched SMA wire, it shrinks back to its pre-stretched length, and when it cools back down it becomes less stiff and can revert to the original shape,” he said. “A loop of this wire could be used to drive an electric generator to charge a battery. In a conventional engine, this could perhaps even replace the alternator without any load on the engine.”

GM received a $2.7 million federal government grant to help build an SMA prototype, awarded from the Department of Energy’s Advanced Research Program Agency. GM is working with several firms to try and make SMA technology a reality: HRL Laboratories; Dynalloy, Inc., a Tustin, CA manufacturer of shape memory alloys specially made to be used as actuators,;and the Smart Materials Collaborative Research Lab at the University of Michigan.

“The idea of an SMA heat engine has been around for 30 years,” Aase said. “But the few devices that have been built were too large and too inefficient to make it worthwhile. Even now, the technology is in the very early stages, so over the next two years, [we] will work to create a working prototype.”

Toyota offers another example of tapping into external power sources to reduce the engine load on its vehicles – and in its case, this is technology already rolling off the production line.

On its third generation Prius hybrid sedan (the 2010 models), the vehicle’s sliding glass moon-roof is packaged with solar panels, located over the rear seating area, to power a new ventilation system.

Toyota said this solar powered ventilation system helps keep the interior air temperature near the outside ambient temperature when the vehicle is parked directly in the sun, so cool-down time is shorter when the driver returns to the vehicle – thus reducing the use of air conditioning.

[A short video clip about the Prius’ “solar roof” is below, but I warn you – it doesn’t contain much on the technical details of the system.]

Though these technologies are currently in high development gear in the automotive world, they’ve got plenty of potential for the trucking industry.

Take the solar cell concept for starters: I talked with David Kiefer, director of marketing and product management for Carrier Transicold not too long ago and we discussed the possibility of using a similar type of system on refrigeration units in the not-so-distant future.

While Kiefer stressed bringing solar-generated electricity into the reefer – either when connect to solar-equipped buildings or possibly from roof-mounted panels on trailers and truck dry van boxes – is about five years away at the earliest, it holds a lot of promise for fleets operating in parts of the country (think Arizona) where sunshine is abundant and thus the power load on reefers is heavy.

“You couldn’t power the entire hybrid reefer off solar power … but maybe you could get half of the electricity you need from the sun – and that would allow you to reduce the load on the system’s batteries, diesel engine, etc.,” he explained to me.

“Right now, though, solar cells are still not practical – they cost about $3 a cell and you need to get down to around $1 per cell to make it work. Plus there are reliability and durability issues to look at,” Kiefer cautioned. “Yet just five years ago, such cells cost $7 per unit, so the price of the technology is dropping. In another five years, some of these ideas could become reality – but we’re still several years away from this.”

Still, grabbing power little by little from external sources to vehicles – and in comes cases, commercial freight trailers – seems to hold a lot of promise in terms of helping reduce overall fuel consumption as well as individual system power needs.

Though hours of service (HOS) reform is bound to be the hot topic around water coolers across the U.S. trucking industry in the weeks and months ahead, another trend is happening up that could lead to even bigger changes and on a global scale for the trucking business – the movement of U.S.-European-Japanese level truck technology into burgeoning foreign markets such as Russia, India … and China.

This is a trend I reported on a while back, based on an analysis of China’s truck market by research firm Frost & Sullivan entitled Strategic Analysis of the Chinese Commercial Vehicle Market.

Sandeep Kar, program manager & senior industry analyst with Frost & Sullivan’s North American automotive & transportation practice, told me at the time that China’s truck manufacturers are increasingly looking to forge partnerships with U.S. and European truck OEMs to gain design expertise in fuel economy and emission control systems in order to meet a rapid series of changes to their business.

Kar said Chinese demand for new heavy trucks – those with gross vehicle weights of 14 tons or more – will climb due to several factors. The first is new “charge-by-weight” laws that severely penalized overloaded vehicles; rules that should force many Chinese truck owners to upgrade from medium trucks (with GVWs of six to 14 tons) to heavier models capable of legally hauling heavier loads.

The second is a boost in diesel fuel taxes from 1 cent to 11 cents per liter, he said. That move will drive demand for more fuel -efficient engines, Kar said. Finally, the harmonization of Chinese truck emission rules with those of the U.S. and Europe – expected to occur in stages between 2010 and 2012 – will boost demand for emission control systems.

All of this will help drive yearly heavy truck sales to levels far in excess of North America volumes, Kar (at left) explained to me. “Right now, the North American Class 8 market is hovering between sales of 100,000 and 150,000 annually,” he said. “Chinese heavy-truck demand will be in the range of 500,000 units annually; more than five times the volumes currently seen in North America.”

Those kinds of numbers are getting the attention of North American OEMs, for sure. While engine makers such as Cummins Inc. established joint ventures in China some time ago, Navistar is now jumping into the game with both feet, announcing that they are in talks with Anhui Jianghuai Automobile Co. Ltd. (known by the acronym JAC) to explore a potential engine joint venture to develop, build and market advanced diesel engines for commercial vehicles in China.

The potential joint venture, if formed, would have a 50/50 ownership between Navistar and JAC, with a shared research and design center in China’s Anhui province for application engineering development, product design and technology advancements. Diesel engines produced by the new venture would primarily be used in China, as well as certain export markets, Navistar added.

The lure of China, of course, is high production volumes – the kinds that could end up helping lowering the costs of emission control system components back on this side of the big Pacific “pond.” China’s commercial truck production is projected to expand from 1.92 million annual units in 2008 to over 2.68 million units by 2015 – resulting in a compound annual growth rate of 4.9%.

Frost & Sullivan’s Kar told me that these numbers are critical in that economies of scale gained from such joint ventures could lower the global cost of producing emission control system components – possibly leading to price reductions for such system from U.S. and European truck markets.

“How do OEMs get economies of scale today? They can’t in their local markets – truck [sales] volumes are low in Europe and the U.S.,” he explained. “So you must take your technology abroad to markets that are growing. That not only gives you economies of scale but a way to test out technology as well; all while helping top and bottom line revenue look better and better.”

That’s a huge deal to U.S.-based OEMs such as Paccar, which builds Peterbilt and Kenworth branded trucks fmainly for the North American market and owns European truck maker DAF – and Paccar’s outlook for the European and North American truck market is tepid, to say the least.

“The estimate for 2009 industry sales in the above 15-tonne truck market in Europe is 170,000-180,000 units, reflecting ongoing challenging economic conditions throughout Europe,” noted Aad Goudriaan, DAF’s president, in Paccar’s third quarter earnings statement. “As expected, economic recovery in Europe is lagging North America with truck sales in 2010 anticipated to be in a range of 150,000-180,000 units, similar to industry sales in 1992.”

“Class 8 industry retail sales in the U.S. and Canada are expected to be in the range of 100,000-110,000 vehicles in 2009, reflecting continued economic weakness, particularly in lower housing starts and auto production,” added Dan Sobic, Paccar’s executive vice president. “There are some mildly encouraging signs as freight tonnage has recently started to increase and the ISM Manufacturing Index has exceeded 52.0 in each of the last two months, the highest readings since July 2007. Our customers are also benefiting from lower fuel prices and good availability of drivers; though freight rates and tonnage are lower than last year.”

However, Sobic noted that U.S. and Canadian retail sales for Class 8 trucks in 2010 are expected to improve only slightly, due to the aging of the fleet and general economic growth, to a range of 110,000-140,000 units. “That’s still below normal replacement demand of 225,000-250,000 units,” he said.

And that kind of dramatic cratering of new truck demand is hitting truck OEMs hard. Paccar, for example, earned just $13.0 million on revenues of $2 billion for the third quarter this year – compared to net income of (get this!) $299 million in the third quarter last year. That’s a falloff in profit of almost 96% if I’ve done the math right. For the first nine months of 2009, Paccar earned $65.8 million on revenues of $5.83 billion – a VERY far cry for the $904.8 million in profits the OEM book in the first nine months of 2008.

Cummins is in the same boat, with net income in the third quarter falling 59% to $95 million on 31% lower sales of $2.53 billion, respectively, compared to the third quarter in 2008. While the company attributed much of its improved profitability and cash position from the second quarter to lower spending, better utilization of manufacturing capacity and reduced inventory, a 4% increase in sales to China, India, and Brazil helped out as well.

That’s critical going forward, for while Cummins reported an increase in engine and components sales to the medium- and heavy-duty truck engines markets in the U.S. in the third quarter compared to the second quarter in 2009, based on current orders and market intelligence, the company expects very low demand in these markets during the first half of 2010.

“While we saw improvement in some markets in the third quarter, we expect the economic climate to remain challenging until late 2010 – especially in the U.S. and Europe,” said Tim Solso, Cummins’ chairman and CEO, in the company’s third quarter report. Even though he noted Engine joint venture revenue and profits in China declined due to lower demand compared to year ago, things may be starting to trend back up due to that nation’s own aggressive “stimulus” spending.

Buoyed by nearly $1.3 trillion of stimulus money, the Chinese economy is starting to recover, and recover quickly, from the global recession. GDP for the country jumped 7.9% year over year, far outpacing what analysts expected, according to a story filed about a month ago by my editorial compatriot Brian Straight.

He noted a new report by ACT Research in combination with China’s State Information Center indicates second quarter medium- and heavy-duty truck sales climbing 67% in 2009 over the second quarter of 2008.

“A lot of it had to do with China having a massive stimulus program, much like ours, but much larger,” said Ken Vieth Jr. (at left), ACT partner and senior analyst. Vieth added that the dump truck market is doing particularly well, with recent reports indicating a rise in retail sales in China also. [You can find more data in the firm’s China Commercial Vehicle Demand Outlook.]

In the second quarter of 2008, China implemented more stringent emissions requirements, spurring a pre-buy in the first half of the year, Vieth said. In the second quarter of 2008, China saw sales of 288,100 vehicles before the economy’s troubles worsened. In the third quarter, the number dropped to 140,000 and even further to 113,000 in the fourth quarter before rebounding slightly in the first quarter of this year to 143,000.

Still, with sales of 239,000 in the second quarter, it appears the market is booming. “China has become the colossal commercial vehicle market today,” Vieth said. “China has slowly worked its way into a 600-pound gorilla. There used to be three 600-pound gorillas: North America, Europe and Japan. Now, China is bigger than them all.”

Change is definitely in the air these days in trucking – more so than usual. In the near-term, we’ll be dealing with a revision of hours of service (HOS) regulations by the Federal Motor Carrier Safety Administration (FMCSA) – an overhaul we’ll get into with tomorrow’s post.

Right now, though, let’s look at longer term issue that’s re-shaping this industry – how the truck itself, the very platform for the bulk of freight movements in the U.S. and indeed the world, is undergoing rapid change. Of course, one of the most visible (and expensive) of those changes deals with technology designed to reduce – if not eliminate – truck exhaust pollution.

But there are other factors, too, such as globalization of the truck manufacturing base, the rise of hybrid powertrains, and the integration of telematics into almost every system on a commercial vehicle.

“The trucking industry faces the dawn of a new era [and] the changes surrounding it are daunting, the need for transformation immediate and the challenges multidimensional,” explained Sanjay Rishi, vice president and global automotive/truck industry leader for IBM’s Global Business Services division.

In a new report, entitled The Global Truck 2020 Study: Transcending Turbulence, Rishi and co-authors Kalman Gyimesi, the industrial practice leader within IBM’s Institute for Business Value, and Connie Burek, and IBM business solutions executive specializing in heavy equipment and heavy trucks, say that truck brands known the world over (think Volvo, Peterbilt, DAF, as examples) face the risk of a slow death due to globalization.

[You can view a short video presentation about this report below.]

They also argue that sustainability concerns are bringing “hybridization” to the front and center of truck engineering work, while increased urban development is driving ever-increasing regulation of trucking by government.

“The industry is at a crossroads, unsure of its next steps toward globalization,” Rishi (seen below at left) explains. “Tomorrow’s winners must take decisive actions today in the areas of globalization, brand development, technology integration, partnerships and workforce transformation.”

The authors surveyed both fleet and truck OEM executives across the world and compiled some interesting data on what those worthies see as the major trends affecting the trucking industry.

Globalization is a big one, with 54% of the executives surveyed saying that globalization will be one of the most important external forces impacting the truck industry in 2020, up from 48% today. Truck manufacturers in particular are just beginning to establish their global footprint, according to the survey responses, while light vehicle manufacturers have already fought the hard battles of platform creation, process standardization and the development of global supply chains.

Another big issue that should come to no one’s surprise is this whole concept of “sustainability,” with 48% of respondents saying that sustainability will be one of the most important external forces in 2020, up from 32% today. Environmental and fuel efficiency standards along with new safety capabilities mandated by government regulations will force the trucking industry to change aggressively over the next decade.

Finally, there’s technology; something 71% of respondents said would be one of the most important external forces impacting the industry in 2020, up from 61% today. Technology will not be limited to the trucks themselves, either, but will be embedded in roads and traffic signals to increase the interaction and predictive analytical safety capabilities of these transport carriers.

[To download IBM’s entire Transcending Turbulence report – with all the nice charts and graphs – click here.]

One technology IBM’s experts believe will really re-shape trucking is telematics, which will in their estimation impact everything about commercial vehicles. “Truck manufacturers that effectively employ telematics to build solutions for their customers stand to successfully differentiate and redefine their brands,” Rishi said. “Telematics will reduce service time by allowing remote and faster diagnostics and also will enable prognostic capabilities and proactive servicing.”

IBM’s researchers note that today’s vehicle diagnostic techniques typically require the technician to physically connect to the vehicle. However, it won’t be long before telematics capabilities enable remote diagnostics of a vehicle’s issues – even providing remote “fixes” when possible as well.

They add that truck OEMs are starting to use telematics to provide a real-time remote read of a vehicle’s parameters, allowing for proactive service or other action based on the reading – allowing fleets to pull trucks off the road and into the shop before it ends up on the side of the road with a problem. I’ve written on this topic before and it’s a capability OEMs are trying to broaden more and more with their products.

IBM’s researchers also believe telematics should enable stronger solutions for vehicle safety that have traditionally been addressed through manual methods and training. For example, automated speed controls linked to the navigation system could slow a truck down when its driver approaches blind curves, or automated braking could be applied if a truck approached an exit with too much speed.

The big benefit in accident situations is the use of telematics not only to help avoid them but to record data that will be essential in protecting companies. This is one of the key benefits of “event data recorders” or “EDRs” – a type of “black box” used for accident reconstruction. Right now, such devices are in limited use and fleets and drivers alike deal with concerns over data privacy and how such information can be used in court, but it’s a technology I think will get more widely deployed simply to help fleets and drivers deal with litigation resulting from accidents.

But make no mistake – none of this will be easy. IBM’s Rishi in particular noted that the truck industry, burdened with heavy regulation and excessively cyclical market demands, has found it difficult to embrace major transformation. However, that is exactly what must happen to achieve a healthy, prosperous truck landscape by 2020, he contends.

“The truck industry is in for an interesting ride over the next ten years,” Rishi says. “Macroeconomic factors, such as globalization and economic stability, are forcing nations, industries and enterprises to reexamine policies and business practices to survive. The global labor force is changing profoundly in age, location and the way people work.”

He notes that truck companies face changes in the very environments in which their products function. Urban centers are developing rapidly, and space – or lack thereof – is a considerable concern. At the same time, government entities are exerting more and more controls over the movement of people and goods, Rishi explains. “Trucking companies must tread carefully in this ever-evolving ecosystem, all the while keeping in mind the growing focus on corporate social responsibility,” he notes.

In addition, technology continues to progress at breakneck speeds, with the truck of 2020 functioning in ways vastly different than today’s vehicle – with telematics and hybridization at the heart of these new functions. “Furthermore, technology progress is not limited to the vehicles themselves but extends to capabilities that will increasingly be embedded in roads, traffic signals, etc., allowing them to interact with trucks,” Rishi says.

As a result, the challenges facing the trucking industry – manufacturers and fleets alike – are complex, and overcoming them will take a significant transformation; one that will require strong leadership and decisive actions, he stresses.

“There is little time to waste,” Rishi warns. “The impact of the recent economic crisis will subside, but it could have longer-term implications for those who fail to invest in the future.”

OK – it’s no secret that the Japanese (specifically Toyota) beat U.S. automakers to the punch with hybrid vehicles. However, that situation is changing – and changing fast – as Ford Motor Co. and General Motors are now quickly deploying more fuel efficient hybrid vehicles across a range of models.

And that could be very important as fuel prices still demonstrate extreme volatility, even as the global recession continues to tamp down petroleum demand.

For starters, Ford and the University of Michigan are working together to speed up “virtual testing” of hybrid components; conducting as many as 175,000 design simulations of hybrid control systems a week to further improve fuel efficiency and drivability.

Researchers at both Ford and the university are also analyzing data from 2,500 road trips to determine how internal electronic vehicle controls could be tweaked to further improve fuel efficiency and fun-to-drive attributes.

So far, Ford and the university have tested nearly 1 million design simulations of hybrid vehicle control systems to date, focusing on marrying fuel economy and drivability.

Though this “virtual research” of hybrid technology is still in its infancy, the automaker says initial results are promising.

“Working together with the University of Michigan research team, we are testing the boundaries of hybrid vehicle technology, exploring innovative ways to raise the bar on fuel economy and drivability,” said Dr. Gerhard Schmidt, chief technical officer for Ford’s Research and Advanced Engineering group.

[Here’s a look at Ford’s 2010 Fusion Hybrid sedan and how new designs seek to improve driver understanding of fuel saving options.]

Through September, Ford has sold 26,016 hybrid vehicles, up 73% versus the same period in 2008, according to figures from Autodata Inc. Moving forward, Ford said it also plans to produce a pure battery electric version of its new Transit Connect commercial van in 2010, a battery electric Focus compact car in 2011, and a plug-in hybrid electric vehicle and next-generation hybrid electric vehicle in 2012.

GM is following a similar path, using new math and simulation-based tools from private sector firm MathWorks to speed up its hybrid development process. GM noted it developed the next-generation prototype of its “Two-Mode” hybrid powertrain control system in 9 months using these “virtual testing” tools – shaving 24 months off the expected development time.

Also, by verifying the control system before hardware prototyping and by using production code generated from the controller models, GM said it rolled out production vehicles featuring the hybrid powertrain within four years of starting the control system design process. To date, its complex two-mode hybrid system is currently available with the GMC Sierra Hybrid, GMC Yukon Hybrid, Chevy Tahoe Hybrid, Chevy Silverado Hybrid, and Cadillac Escalade Hybrid vehicles.

The ability to reuse design information has helped GM’s global development teams foster more efficient communication and reduced response time, eliminating integration issues, said Larry Nitz, GM executive director of hybrid and electric powertrains.

“It helps us work at a higher level of abstraction, allowing us to verify designs early,” he noted “This ability to simulate and correct systems before committing to hardware allows us to try new control strategies virtually, while the use of production code generation accelerates design iterations and eliminates translation errors common in hand coding.”

In the end, it all boils down to one thing – delivering more fuel efficient hybrid vehicles to the market faster and with (hopefully) higher initial quality. That in turn will hopefully encourage wider sales of hybrids by consumers and thus lead to a reduction in U.S. petroleum consumption. That’s the hope hybrid technology offers — at least from where I sit.

Professor Jerry Osteryoung from the college of business at Florida State University penned an interesting column the other day about why businesses must stop focus on “training” their employees and instead find ways to help them “learn.” It’s a philosophy that has a lot to do with the business side of trucking these days, too, especially for smaller carriers and owner-operators, for only by “learning” how to adapt to all the changes going on in this industry can they not only survive but prosper.

“Most businesses these days talk about training, and many have entire departments dedicated to training their workers. However, I think the emphasis on training is misplaced,” explained Osteryoung. “Rather, the focus should be on learning, and many larger companies are now changing their training departments to learning departments. While this might just seem like a subtle change in wording, I can tell you that it is much bigger.”

The professor noted that, with most training programs, the emphasis is on the trainer disseminating information to participants. “It is the trainer’s responsibility to get the material across; training simply becomes an event that occurs when staff members attend a training session,” Osteryoung pointed out. “Learning, on the other hand, is an internal event. It transfers the responsibility to the participant. It is now up to them to understand and master the material. Between training and learning, the focus shifts from teacher to student.”

The professor, by the way, travels all over the place conducting seminars on a variety of business topics, and he always tells his participants that he’s not there to train them; rather, he’s there to facilitate the learning process.

[I for one can attest to this, being fortunate enough to hear Professor Osteryoung conduct such seminars a time or two.]

“Thus, the outcome of the seminar rests on them learning the necessary material. It is their responsibility to master the material, and not mine to train them,” he stressed. “This is a big shift in orientation, but it is one that is vital in business.”

This new philosophy, Osteryoung believes, requires that each participant comes into the learning environment with a clear understanding that the responsibility for mastering the material is his or hers and not the instructor’s. In addition, the manager plays a key role in ensuring that the learning is transferred into the employee’s work environment. The manager is then responsible for providing the encouragement, tools and support that will enable the employee to successfully apply the new skills and knowledge to his or her day-to-day activities, the professor explained

“Some people might say that the distinction between learning and training is minor, but in my mind it is quite large. It changes the entire way we approach new material,” Osteryoung noted. “With learning, you begin at a higher motivation point, allowing the students to become active participants in the learning process as opposed to having an instructor force-feed them the material.”

If you think none of this applies to trucking, think again, for this focus on “learning” is something my editorial compatriot, Tim Brady, stresses over and over again in his work. As the business editor of American Trucker magazine and veteran owner-operator with over two decades of experience out on the road, Brady believes “learning” is the key for helping smaller operators to develop the products and services that’ll win them freight on the market.

“If you describe an independent trucker as a true entrepreneur who has done his research, sees a niche the big carriers either can’t or are unwilling to fill, and has spent the time developing a business plan: his company and others like it will grow into the medium and large carriers of the future,” he said in a recent post on his Blog4Truckers site.

“I work with trucking entrepreneurs on a daily basis. The successful ones (and there are many) are providing logistic services with which the big companies can’t even begin to compete,” he noted. “The entrepreneurial truckers with their skill, knowledge and determination have the big carriers beat hands down when it comes to quality of service.”

Brady’s point is that if a trucking company doesn’t know what it costs to provide a service, have a plan on how the company is going to grow, understand the market they service and know how to set a hauling rate range that is competitive in the market they choose – if they haven’t learned how to do all this correctly, as it were – then they will fail.

“But listening and researching how to improve your operation will increase efficiency,” he stressed. “Succeeding in trucking isn’t only what your credit rating is or what your company’s Dunn & Bradstreet Report looks like. 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 the quality and diversity of your customers must be considered. “

Being successful, Brady said, is not robbing Peter to pay Paul, but managing your assets: cash, equipment, property, accounts receivable, customers, employees and contractors, with a plan – a plan developed from all a trucker has learned about the business environment, the freight market, the needs of customers, etc.

“We all know this establishes the foundation of your business, but a foundation is nothing more than a base from which to build,” he added. “You must continue placing stone after stone on this foundation, thus building the walls of success for your trucking business.”

Something to think about, as my friend Brady always says.

We all know cargo shipments of all stripes need tighter security, against theft, terrorist infiltration, and to illicitly move drugs and other narcotics around the globe. The speed bump in all this, however, is the impact on transport efficiency – something that directly impacts logistics costs.

For global and domestic supply chains built up “just-in-time” deliveries of any number of goods, delays for anything are an anathema to be avoided rigorously. Yet that of course is precisely what tighter security translates into: delays in transport until documentation is checked, cargoes inspected, etc.

But is this necessarily so? Can tighter security and transport efficiency successfully co-exist? Stephen Russell, chairman, CEO and founder of truckload carrier Celadon Group believes they certainly can – if approached in the proper manner.

In testimony this week before the subcommittee on border, maritime and global counterterrorism –

part of the homeland security committee within the U.S. House of Representatives – thinks current cargo security programs such as the Customs–Trade Partnership Against Terrorism (C-TPAT) program, the Free and Secure Trade (FAST) program for cross-border shipments, plus the wider use of the Automated Commercial Environment’s (ACE) electronic manifest system, all work very well in terms of “segregating” freight for federal agencies.

“Segregation” in this context is a good thing, because it allows federal agencies to get freight manifests ahead of time from carriers they know are following tight security rules.

Yet it also comes as no surprise, either, that there are glitches as well – the biggest being the way the physical infrastructure at border crossings, in particular, are just not designed to handle such “segregation.” Often times, commercial trucks are jammed cheek-by-jowl with everyday motorists, creeping slowly up to the border crossing point despite having CTPAT status, electronic manifests already processed, etc.

“Manufacturers, retailers, warehouses and, most importantly, consumers, continue to count on trucks to get the goods and products they need and use each and every day, transporting almost 70% of the value of freight between the U.S. and Canada, and about 80% of the value of U.S.-Mexico freight,” Russell said.

“The biggest challenge trucking companies continue to face with the C-TPAT/FAST program is the lack of ‘true’ FAST lanes – in essence, lanes that extend far back from the port of entry, instead of FAST lanes that begin only a few yards prior to arrival at the primary inspection booth,” he explained. “This results in low-risk C-TPAT carriers being stuck in the same traffic as non-C-TPAT certified carriers. Thus, C-TPAT certified motor carriers with drivers who have undergone FAST background checks are not getting the benefits that were promised for investing to comply with the program.”

“The big benefit touted by these programs was that, once approved, carriers could more quickly pass through border checkpoints,” Martin Rojas, director of international affairs for the American Trucking Associations (ATA) told me. “At most border crossing points, you don’t get that ‘segregation’ until literally a few yards before the inspection station. We think that process should begin farther back – maybe 500 yards; maybe a mile. The thing is to keep low-risk, approved cargoes moving – and not have them mixed in with everything else.”

“Though it is impossible to achieve absolute security without bringing trade to a standstill, we can greatly reduce the potential of being targeted by our enemies by managing risk, increasing security awareness among company personnel, and implementing simple cost-effective security measures,” added Celadon’s Russell.

“Establishing the necessary infrastructure, both physical – i.e. ‘bricks and mortar’ – and implementing technologies helps improve the clearance and throughput of trade with the highest standards of security,” he noted. “For example, through the use of non-intrusive inspection (NII) systems, x-rays and gamma rays are used to capture images of any anomalies within our commercial vehicles. Such technological advances and tools have improved CBP [Customs & Border Patrol] officers’ enforcement capabilities while improving the efficiency and throughput of commercial vehicles across our borders.”

Russell also said that new addendums to the ACE manifest program, such as CBP’s International Trade Data System (ITDS) program, will help streamline to documentation process for cross-border cargo further while improving security.

The ITDS concept is simple, he pointed out: Traders and carriers submit commercially based, standard electronic data records through a single federal gateway for the import or export of goods. As a single information gateway, ITDS distributes these records to the interested federal trade agencies, such as CBP, the Food and Drug Administration (FDA), DOT and others, for their selectivity and risk assessment.

In standardizing the process, ITDS reduces the confusion and complexity of international trade, and speeds the processing of goods, equipment and crews across borders, while giving the government more current and accurate information for revenue, public health, statistical analyses, safety and security activities, as well as significantly reducing data processing development and maintenance costs.

“The development and implementation of the ACE/ITDS is an essential component in accelerating the flow of commerce while also improving the ability of CBP to analyze and target data entries,” Russell said.

These are all good points, highlighting initiatives that could turn the age-old “cargo security versus efficiency” conflict safely and securely on its head.

The days of electronic stability systems being merely optional technology for tractor-trailer fleets might well be numbered following a new study released today by the National Highway Traffic Safety Administration (NHTSA).

Conducted by the University of Michigan Transportation Research Institute (UMTRI) under a cooperative agreement between NHTSA and Meritor WABCO, the study examines the performance of electronic stability control (ESC) systems and roll stability control (RSC) systems for tractor-trailers.

Despite its clunky title (Safety Benefits of Stability Control Systems For Tractor-Semitrailers), this report contains some powerful data – the kind of information that can set the wheels in motion on a regulatory or even legislative level in order to improve highway safety.

Now, NHTSA admits its study of electronic stability systems on tractor-trailers comes with a few major caveats – the largest being that it’s a largely “theoretical” analysis done with post-crash data. In short, they didn’t measure the impact of stability control technology in actual crashes; instead, they looked at how such systems MIGHT have performed has they been installed on tractor-trailers involved in major accidents. Still, even with that being said, the findings are extremely interesting:

• Assuming that all existing 5-axle tractor-trailers operating on U.S. roads were fitted with RSC, the expected annual rollover relevant safety benefit is a reduction of 3,489 crashes, 106 fatalities, and 4,384 injuries.

• Alternatively, assuming that all existing 5-axle tractor-trailers operating on U.S. roads were fitted with ESC, the expected annual combined rollover and directional (yaw) instability relevant safety benefit is a reduction of 4,659 crashes, 126 fatalities, and 5,909 injuries.

• Because ESC addresses both rollover and yaw instability crashes and it is more effective in mitigating rollover crashes (through additional braking capabilities over RSC), the net annual expected benefit for an ESC system was found to be greater than for RSC.

• The study found that ESC provided more overall safety benefit than RSC, though the difference between the estimated effectiveness of RSC and ESC varied among crash scenarios.

• Assuming ESC was fitted to all tractor-trailers, savings from rollovers prevented by ESC are estimated at $1.527 billion annually, and from LOC [loss-of-control] crashes prevented at $210 million annually, for a total of $1.738 billion annually.

• Assuming RSC was fitted to all tractor-semitrailers, savings from rollovers prevented at estimated at $1.409 billion annually, and from LOC crashes prevented at $47 million annually, for a total estimated benefit of $1.456 billion annually.

Again, though, despite these impressive findings, I still feel the study remains limited to a degree in terms of applying all of this to the real world because of its “theoretical” nature.

“The analysis of crash datasets proved challenging [as] identifying relevant LOC and rollover crashes within the national datasets proved a formidable task because the databases are developed for general use and this project required very precise definitions of LOC and rollover,” NHTSA noted in its report. “Relying on the general LOC or rollover categories captures a wide range of crashes, many of which have no relevance to the technology.”

Still, this study remains an important step forward in figuring out how technology can significantly boost highway safety. Just look at these numbers and you’ll know why that’s true: Although rollovers occur in only about 13% of heavy-truck fatal crashes, rollovers account for 50% of truck occupant fatalities, notes NHTSA.

Also, LOC and rollover crashes remain a major cause of fatalities and traffic tie-ups, resulting in millions of dollars of lost productivity and excess energy consumption each year – not to mention the emotional toll traffic injuries and deaths take as well, although you can’t put a dollar figure on them.

I listened to great presentation yesterday from Chuck Forsaith (quoted above) yesterday at the 2009 National Cargo Theft Summit about why transportation – and trucking in particular – is so vulnerable to cargo theft these days and what shippers and carriers alike can do about it.

For starters, I’ve been pondering his quote at the start of this post for a while and determined that it really crystallizes a lot of things that are going wrong with trucking today – neither solely in terms of cargo theft, mind you, nor solely the fault of carriers and drivers, either.

Now, for some perspective, Forsaith – a 21 year veteran of the New Hampshire State police department – deals probably with some seriously high value freight. His company, Purdue Pharma Technologies, makes OxyContin – a powerful opiate-based pain killer that’s been in the news steadily over the years due to the illegal street sale and abuse of this narcotic. (You can read all about it on the Department of Justice’s website)

On the street, one milligram of OxyContin is worth between 50 cents to $1, with single pill containing 80 milligrams. That means the street value of just ONE OxyContin tablet is between $40 and $80 – and Purdue Pharma typically ships 50 to 100 DRUMS worth in a single tractor-trailer load. Now you know why cargo thieves stalk the pharmaceutical industry like so many hungry wolves circling a herd of fat deer.

While pharmaceuticals remain a relatively small part of the goods stolen by cargo thieves – making up just 6% of the total cargo theft “pie” as it were – the average value of a pharmaceutical cargo theft is very high, Forsaith explained; roughly $1.4 million per shipment. Overall pharmaceutical truckload shipments themselves can rnage anywhere from $10,000 per load (for over the counter or “OTC” products) to several million dollars (for the expsnive bio-tech drugs).

And that’s not the total picture, either, he stressed, for cargo thieves have exactly zero overhead – meaning the entire shipment is 100% profit to them, no matter what they sell if for. And when it comes to potentially addictive medicines such as OxyContin, the sky’s the limit.

Now here’s the thing about trucking in all of this. Forsaith talked about all the safety and security measures most pharmaceutical take to protect their products. They operate super clean, temperature controlled facilities surrounded by perimeter fencing, and closed-circuit cable television systems. Sometimes guards are used, along with barbed wire, but that’s a rarity — largely because they have a tendancy to draw unusual and undesirable attention, he explained.

On the inside, the latest in biometric technology is used to verify employee identification – employees that undergo extensive background checks and that are monitored around the clock to make sure they don’t pilfer anything.

Yet all of those measures – everything, from the guards to the biometric scanners and TV cameras – disappear when such medicinal products are loaded for shipment from the plant to a distribution center, and then over that “last mile” from the D.C. to the local pharmacy.

For starters, most shippers – and that includeds pharamceutical firms — map out their logistics scheme on a “just in time” basis. And as a result many commodities — not just medicines — get shipped over the weekend, being sent out on a Friday afternoon so they are outside the doors on distribution centers Monday morning. But guess what? That means a shipment – no matter how valuable – is going to sit somewhere, parked in a truckstop or alongside a highway on/off ramp, completely exposed. Why? Because most DCs – like most of the manufacturing world – are shut down on weekends; there’s no one to accept delivery.

“After looking at the pharma supply chain more closely, our group identified that as an issue and have taken recent steps to modify those practices,” said Forsaith. “Shipping over weekends is really an issue that affects those selling all commodities – not just pharmaceutical ones.”

Think about this, too, he stressed: if a trucker gets in trouble along the way on a weekend haul – if his or her vehicle breaks down or is stolen – who do they call? Trying to get roadside assistance on a weekend, as all truckers know, can be something of a nightmare. If their load is stolen on top of that, who do they call? Other than their dispatcher – usually at home, maybe with a pager or cell phone or maybe not – do they have the numbers of local police or even cargo task forces? Most likely, they don’t.

On top of this, pharmaceutical firms – like many companies these days – still seem to treat trucking like a commodity, as if trucks and truckers are a dime a dozen. Forsaith recalled talking to one of his peers about how they transported drugs and found their loads we’re being subcontracted out – that the shipper didn’t even know WHO was hauling their products; all for the sake of wringing a few dollars more out of the freight bill.

[You can view some of Forsaith’s presentation in the second half of the video below.]

Carriers, however, don’t get off scot free either to Forsaith’s mind. Many times the lawyers at a pharmaceutical company and carrier hammer out a long, detailed contract regarding transport security policies. Yet nothing is communicated to the driver – not the importance of the load, the requirement not to stop during the first 200 to 300 miles of the run (the prime target time for cargo thieves), nothing. All the legal mumbo jumbo in the world won’t protect a load if the driver doesn’t know the load needs protecting in the first place.

In the end, however, it all comes back to a very simple mantra: you get what you pay for. Forsaith talked in detail about the kinds of carriers he hires – going so far as to hire armored tractors staffed with two drivers carrying firearms. “That right there stops cargo thieves in their tracks,” he explained. “They don’t want confrontation, because they don’t need it. They’ll just move on to another load.”

Reading between the lines, you can tell Forsaith doesn’t skimp when it comes to transportation his company’s goods (you think an armored tractor-trailer and pistol-toting drivers come cheap?) He makes sure his carriers run well-maintained equipment, that offer tracking/tracing capability, that are willing to go the extra mile to secure a load start to finish – and I am sure he pays very well for that service.

That’s what I think it’s going to boil down to when it comes to helping the trucking industry defeat cargo thieves – making sure they are profitable enough to afford the necessary investments. You simply can’t expect companies barely surviving on 3% and 4% profit margins to invest in new equipment, maintenance, driver training, etc., when the rates they get barely afford them money to buy fuel.

Now, if carriers are paid well yet still fail to provide proper security, that’s one thing – expecting the gold standard of protection while bidding freight rates down to rock bottom basement pricing is something else entirely. That’s one of the lessons that’s got to be absorbed as the battle against cargo theft goes forward.