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"Supersizing" and the Need for a North American Policy on Truck, Rail and Shi...
27 Aug 2010 at 3:33pmOne of the anomalies of the current freight transportation system in North America is that while we have standardized on certain lengths of trailers (e.g. 53 foot), containers (e.g. 20/40/53 feet) and rail cars (e.g. 50/60 foot), there are no North American standards for truck, train and ship lengths. The provincial, state and federal governments in Canada and the United States have an inconsistent set of rules and regulations that create a lack of uniformity. This results in inefficiencies and adversely affects the economies of the two countries. Lobbying efforts have been made periodically to encourage governments to harmonize vehicle lengths and weights. As reported in the August 15th issue of the Wall Street Journal, a group of 19 Western governors in the U.S. are lobbying Congress to allow for more LCV's (long combination vehicles) on western USA highways. These LCV's consist of "doubles" (e.g. two trailers pulled by one tractor) and "triples" (e.g. three trailers pulled by one tractor) ' that can span up to 120 feet. Currently, most interstates allow trucks no longer than 53 feet. To make matters more complex, the term Long Combination Vehicles (LCVs) is not used in a consistent manner. In Canada, LCVs are defined in general as truck/trailer combinations consisting of a tractor and two or three semitrailers or trailers where the total length of the vehicle exceeds the normal limit of 25 metres (82 feet). In the United States, LCVs are usually considered to be multi-trailer combinations having any trailer longer than 28 feet, having more than two trailers, or weighing more than the Federal gross weight limit of 80,000 lbs. There are Rocky Mountain Doubles, Turnpike Doubles and Triple Trailer Combinations. In the spring, there are restrictions on trailer weights in certain Canadian provinces. Some in the Canadian trucking industry would like the opportunity to extend the operation of LCVs into other areas of the country. But all provinces will be affected, even those that currently allow LCVs. Because LCVs are allowed in less than one half of the U.S. States, north-south traffic to Canada often has to move in single semi-trailers. If longer trucks are allowed on north-south highways, the number of longer trucks in provinces that already allow them would increase. When the trucking industry first proposed to operate longer trucks, it talked about using divided highways and the best drivers. Over time, however, shippers off the designated corridors lobby for extensions. Experience in the U.S., based on a report published in 2003, suggested that longer trucks eventually wind up off the main Interstates. At that time, Rocky Mountain doubles operated on 51,000 kilometres of non-Interstate highway, Turnpike doubles on 17,000 kilometres, and triples on 12,000 kilometres. In general, states and provinces can individually set limits on truck size and weight on state and provincially roads, but not for federal highways. The Western Governors' Association says longer trucks would make it easier to haul goods across vast distances in the West, which could benefit the region economically. Doubles and triples typically have to bypass federal roads and stick to state roads, sometimes forcing them to take longer routes to their destination. The governors' group estimates that miles traveled by heavy trucks could be cut by 25% with the use of more combos. As reported in the Wall Street Journal article, when Kraft Foods Inc. packs trucks with heavy items such as jars of Miracle Whip and fruit juice, 40% of the units must leave the loading dock partly empty to avoid exceeding federal truck weight limits. Kraft says those rules force it and others to make extra trips and spend more on fuel. Now, the Illinois food giant is part of a coalition of 150 companies lobbying Congress to allow trucks that are 20% heavier on U.S. highways. Supporters of the idea say truckers could pay an extra fee to offset road repairs. The ongoing recession, the need to reduce carbon emissions and limit capital spending, are creating 'an arms race' of sorts in the shipping industry. Efforts are under way to 'supersize' trucks, trains, and cargo ships as freight haulers seek to move more goods in fewer trips. Congress this fall may consider changing the law that since 1974 has limited trucks to 80,000 pounds on interstate highways. A bill proposed by Rep. Michael Michaud (D., Maine) would allow states to raise that limit to 97,000 pounds on interstates for trucks that have a sixth axle to compensate for the extra weight. The measure, which has an identical bill in the Senate, may be considered as part of Congress's reauthorization of the multiyear, $286.5 billion surface transportation law whose funding ends Dec. 31. Under the higher weight limits, Kraft could load trucks more fully, reducing trucks used by 6%, saving 6.6 million gallons of fuel and eliminating 73,000 tons of carbon dioxide emissions annually, said Harry Haney, Kraft's associate director of transportation planning. Miller Coors says it could transport 1.31 million barrels of beer weekly on 7,420 trucks, a 25% reduction in rigs. Supporters say Canada, Mexico and countries in Europe adopted higher weight limits without ill effects. Earlier this year, Union Pacific Corp. tested what witnesses dubbed "the monster train" --- a 3.4 mile train in southern California, ' two to three times the length of a typical freight train. The U.P. increased the length of its intermodal trains 15% in the first quarter, and was experimenting with an even longer train. The company said the ultra-long train was a one-time test. But in an April earnings conference call, a company official said Union Pacific believes it can increase its average train length by another 10% to 15% in an effort to reduce fuel use and emissions as well as wear and tear on its tracks. Other railroads, including CSX Corp., and BNSF Railway Co., have also been running longer trains to improve efficiencies, these companies said. Meanwhile, new cargo vessels as long as three football fields now ply the oceans and are expected to be frequent visitors to Eastern U.S. ports starting in 2014, with the completion of the widening of the Panama Canal, the primary shipping conduit between Asia and the East Coast. They are almost 25% longer and 35% wider than today's ships. In preparation, eastern ports from Savannah, Ga., to Norfolk, Va., are starting to deepen channels. As always, these initiatives prompt a wave of pushback on multiple fronts. There are concerns about road safety, the damage these rigs will do to highways and bridges, who will bear the costs of the road/rail upgrades and repairs, the cost of fleet upgrades if longer and heavier vehicle specifications are approved and reservations about the potential for blocked rail crossing during emergencies. These are legitimate issues that warrant consideration. On the other hand, there is a requirement for the governments of North America to craft a coherent and thoughtful blueprint that will help take our economies to a higher level of efficiency and a more cost effective carbon footprint. Back in 2003, in a report prepared by Consulting Economist Joseph F. Schulman, M.A., Ph.D., he recommended 'that before permitting any further increase or liberalization in truck weight or size, governments must ' review and determine the full implications for safety and accident costs; ' review and determine the full implications for infrastructure costs and use; ' review and determine the implications for modal competition and alternative freight options including intermodality; ' review and determine the implications for the environment, including greenhouse gas emissions; and ' . . . ' review and determine the full costs of the use of the different modes of transport and develop user pricing that better reflects full costs. Beyond this, federal, provincial and territorial governments must, under federal leadership, commence initiatives to standardize truck size and weights across Canada.' This should be a NAFTA initiative, fully endorsed by the state, provincial and federal leaders of the three countries and a priority project in each country. As this study is being completed, it would be desirable to select certain highways and rail corridors (e.g. Trans-Canada Highway, the North American Super Corridor) and standardize on the 'supersized' trailer/train lengths and weights. This would allow for the fluid and cost effective movement of goods between the three NAFTA countries on some key high traffic lanes and allow North America to move up to a new plateau in transportation efficiency. Time for a Heart to Heart Talk with your Core Carriers
21 Aug 2010 at 10:10amAs manufacturers, distributors and retailers move into the fall shipping period, the sands are shifting in the freight industry. Motor carriers have made a number of adjustments to their operations that are now being reflected in their operating results. Looking at the second quarter financial results reported by the publicly traded transport companies, many companies, including financially troubled YRC, reported vastly superior financial performance. With so much economic uncertainty at the present time, many carriers are not making additions to their fleets. They are only replacing equipment that reaches the end of its service life. Rate increases are being sought, even by carriers in the LTL sector, where there is still significant excess capacity. Carriers are scrutinizing their accounts and evaluating how they can maximize the yields on their fleets. They are looking at their long time customers that conducted multiple bids, that pushed them aside so they could save a few cents a mile, that promised them freight but did not honour their commitments, and/or that have reduced their rates to levels that are so low, the freight is no longer worth having. Now is the time for shippers to conduct face to face meeting with their core carriers. Are the core carriers providing the required level of service' Are the rates that have been secured sustainable' Are the current carriers financially solid or on life support' What are the carriers' plans with respect to capacity growth, capacity utilization and capacity allocation' On the flip side, where does the shipper rank on the core carriers' list of customers' Is the account profitable to these carriers' To whom will these carriers supply their equipment if there is a surge in demand (in the market as a whole)' What level of rate increases are the core carriers seeking' Conducting face to face meetings with senior representatives in your core carriers should provide answers to these questions. They should offer shippers a level of assurance that as the economy improves, and it surely will, these companies will honour their commitments. If clear answers are not provided by certain carriers, there is a message that is being communicated. The message is that it is time to be proactive and move more freight to lower ranked (backup) carriers in the routing guide. For many companies, this is the time that 2011 budgets are being prepared, including transportation expense budgets. The level of accuracy of these projections can only be improved by conducting senior level, focused, frank and honest discussions with some of your most important business partners. A 'do nothing' strategy could lead to nasty surprises as carriers come in with what could be very aggressive rate increases or make their precious capacity available to their more high yielding clients. Some carriers may exit the industry as the banks finally foreclose on these weak performers as the market for used trucking equipment shows some signs of life. For shippers that do not have solid carriers in place, remember that a company's supply chain is only as strong as its weakest link. Remember that your job may be on the line if your core carriers let your company down. The choice is yours. Now is the time. In Memorium: Don Bernardo This week a friend and colleague, Don Bernardo, passed away at age 58. I met Don a few years ago when he was President of Nulogx. I was immediately struck by his charm, likeability and intelligence. Don was a creative and visionary fellow. He and his team were well on their way to creating the next great Canadian 3PL/4PL, Freight Intelligence. I offer my heartfelt condolences to his family and friends. Don was a wonderful fellow who will be greatly missed by those who had the pleasure of knowing him. Intermodal Tsunami Coming to North American Transportation
14 Aug 2010 at 10:36amThe North American intermodal freight system is being transformed. The class 1 railways are in the process of making significant investments that will reshape and revitalize this important mode of transport. These changes are designed to achieve a set of important objectives: ' Speed up cross country transit times by bypassing the congested Chicago container sorting facilities for significant blocks of traffic ' Improve the functioning of Chicago's intermodal operations, one of the most important rail hubs in the world ' Evolve rail networks so they can ultimately handle double stacked containers across their entire systems ' Take market share from truckers by offering shippers a greener option that reduces emissions, reduces highway congestion and cuts shipping costs ' Enhance the ability of the North American intermodal network to move international ocean cargo arriving via east and west coast ports In previous blogs, we have reported on some of the major rail corridors under development. Here is an update on current developments. The CSX National Gateway CSX has plans to open a 185 acre facility in North Baltimore, Ohio in early 2011. This terminal will become the 'nerve centre' for stacktrains coming from the west coast so they can bypass Chicago. Their Columbus, Ohio terminal is being expanded to become a major consumer and freight centre. A planned terminal in Pittsburgh will link this heavy manufacturing area with the interstate highways that traverse this area. As CSX raises clearances, the Chambersburg, Pennsylvania terminal will become the eastern terminus for double stack traffic. From there the loads can move by truck to the major centres in eastern Pennsylvania, Baltimore, Washington, D.C. and the New York/New Jersey region. A new terminal in Baltimore, Maryland will process north-south and east-west trains to/from the seaport. The Charlotte, North Carolina facility will be expanded to increase container traffic. The Norfolk Southern Heartland Corridor The Heartland Corridor project is a three-year engineering effort to increase intermodal freight capacity by raising vertical clearances in 28 tunnels on a Norfolk Southern rail line between the port of Hampton Roads, Va., and Chicago. To be completed in September, 2010, containerized freight moving in double-stack trains will be able to shave about 200 miles and up to a day's transit time between the East Coast and the Midwest. Previously double-stack trains had to take longer routes by way of Harrisburg, Pa., or Knoxville, Tenn. The Heartland Corridor goes across Virginia, through southern West Virginia and north through Columbus, Ohio. For the past three years, work crews have been raising the roofs on tunnels in West Virginia, Virginia and Kentucky, enabling them to handle the 20-foot, 3 -inch-high container trains that have had to go around the mountains, through Pennsylvania and Tennessee, because the tunnels were too small. The tunnels, built around 1905, have stood at 19.5 feet from track to ceiling. They needed to be an average of 1.5 feet taller, including a 9-inch cushion, to accommodate the double-stack trains. The Norfolk Southern Crescent Corridor The Crescent Corridor is a railroad corridor expansion program that will run from the Mississippi Delta, up Interstate 81 through Virginia and eventually into New York and will be a major intermodal corridor linking Louisiana and the northeast. NS is planning new terminal facilities for Charlotte, North Carolina, Memphis, Tennessee, Birmingham, Alabama and Greencastle, Pennsylvania. Upgrades are planned for terminals in Harrisburg and Bethlehem, Pennsylvania. Chicago Region Environmental and Transportation Efficiency Program (CREATE) CREATE is a first-of-its-kind partnership between U.S. Department of Transportation, the State of Illinois, City of Chicago, Metra, Amtrak, and America's freight railroads. CREATE will invest $1.5 billion in critically needed capital improvements to increase the efficiency of the region's rail infrastructure by focusing rail traffic on five rail corridors. The work includes: ' 25 new roadway overpasses or underpasses at locations where auto and pedestrian traffic currently crosses railroad tracks at grade level ' 6 new rail overpasses or underpasses to separate passenger and freight train tracks ' Viaduct improvements ' Grade crossing safety enhancements ' Extensive upgrades of tracks, switches and signal systems It should be noted that this Program has not been fully funded. To see the full list of the rail improvement projects and the current status of each project, visit the CREATE website (http://www.createprogram.org/index.html) for monthly project status updates. Clearly this group of initiatives will take North American intermodal transportation to a new level. Auburn University to Study LTL Pricing
7 Aug 2010 at 12:28pmAs reported in this blog and in other sources, the LTL (less than truckload) segment of the freight transportation industry has been one of the hardest hit by the economic downturn. According to an estimate prepared by the SJ Consulting Group, revenue at the top 25 LTL carriers dipped by twenty-five percent in 2009 from $33 billion to $25 billion. Almost all of the U.S. publicly traded LTL carriers lost money on their LTL operations during the latter part of 2009. The significant decline in revenues and profits has been precipitated by several factors. The terminal infrastructure and geographical footprint required to compete in this sector represent a high fixed cost. As business drops, it is difficult to reduce fixed costs without having a negative impact on service. Aggressive price competition, some of it targeted at YRCW, the large financially troubled LTL carrier reduced margins to unprofitable levels. In addition, the pricing model that has been in use for decades, namely discounting a rate base that is tied to various classes of goods, is cumbersome and rigid. The high and low ends of the LTL business have both come under attack. The parcel carriers have targeted the low end with their hundredweight programs while the high end (e.g. up to 10,000 pounds) has been attractive to truckload carriers seeking to fill their empty trucks. The rise of 3PL's over the past decade has encouraged many shippers to migrate to them for LTL service. These companies can mix and match LTL carriers to come up with a freight program that is often more cost effective than what individual LTL carriers can devise on their own. SMC3, a rate bureau that dates back to the days of a regulated trucking industry, is sponsoring the study to be conducted by a team of researchers at Auburn University. The research will be performed in two phases. As part of the research, 12-to-15 in-depth interviews will be conducted with shippers, carriers and 3PL's. Feedback from the initial round of interviews will be used to frame questions for phase 2. This is not the first time that LTL pricing has been studied. Previous research efforts were undertaken in 1993 and 2002. Nevertheless, despite the fact that trucking deregulation has been around for thirty years, the classification system tariff has been the basis for pricing and discounting through this period and subsequent to the two previous research efforts. During the apex of the recession, discount levels reached as high as 90%. In some of my previous blogs I have provided overviews of some new LTL pricing tools (e.g. Cube Based Pricing, Density Based Pricing) that have been developed in recent years. They have gained limited traction. 'One thing we want to determine is whether there is a stomach out there within the industry to maybe look at a new pricing mechanism or process,' commented Joe Hanna professor of supply chain management at Auburn University . SMC3 vice president of business development Danny Slaton, who is sponsoring the research, stated that 'We have done these studies before and want to understand how things have shifted over a period of time. We are not really looking at a shift in levels of price; we are looking at the mechanics of the business process and how much more has technology changed what is applied to pricing and how pricing is integrated into the overall business process at the enterprise level.' The results of this research will be closely monitored by the key players in this industry. Any revisions to current processes will need support from shippers, carriers and 3PL's and will require a change management procedure to make sure they are implemented in a methodical way. Video: Ayrton Senna: The Movie (The Trailer)
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More Meat on a Big Fish
26 Aug 2010 at 11:10amFound "a great article in USA today's ask the expert column: By Steve Strauss for USA TODAY Q: Do you think there is something a small business can do right now to make more money' We seem to be stuck in a rut that we can't get out of. ' Sammy A: What I would suggest is that when you go fishing, you go to an area where you are more assured of catching bigger fish. Here is what I mean: I have a friend who sells real estate for a living. Back in the day, before the real estate market crashed, he made a great, and fairly easy, living selling small investment properties. Duplexes, four-plexes and mini malls were his specialty. He loved those sorts of properties because they were easy to sell, easy to fund, appreciated well, and offered a quick, decent commission. But then the bottom fell out of the market and suddenly he was faced with a list of clients who were 1) stuck with properties they could not sell, and 2) not looking to expand their portfolio. As a result, his business was suddenly in real trouble. But rather than stay stuck on a sinking ship, my friend decided to take action. He called up all of the best, most experienced real estate agents he knew and picked their brains. This was not the first down-turn in the real estate market ' how had they survived similar problems in earlier times' My friend was willing to listen to all new ideas. He received a lot of good advice, albeit some of it conflicting, but one thing an old hand in the real estate market told him made the most sense. "It takes as much effort to sell a small duplex as it does to sell a 100 unit apartment house, you know," the gentleman explained to my friend, adding, "but the large apartment complex will net you a heck of a lot more money." Touché. Sure deals were harder to get and close, but the point was that my friend could continue to do what he had always done and get the results he had grown accustomed to, or he could hustle for bigger deals, do just about the same amount of work, and possibly get much better results. If he wanted to keep fishing, he needed to catch bigger fish. And so that is what he began to do, almost immediately. He put out feelers to investors who had larger portfolios. He made presentations. He advertised in more high-end publications. And he entered into a continuing education crash course on how to sell large, multi-unit buildings. Before long, his new ideas and hard work began to pay off. He got some new clients, and listings for two big buildings, both of which eventually sold. My friend learned a valuable lesson ' although it took a lot of time and effort to sell those buildings, it was no more than he would have spent selling two small duplexes. The essential effort was the same ' getting the places ready to be shown, marketing them, showing potential buyers around, and then closing the deal. But the payoff was much, much bigger. My friend now says he does not need to work the rest of the year, but he is going to anyway because he is so excited about the potential of his new business model. I suggest that this is a good lesson for any small business that is struggling to make it through these tough times. Seek out and fish for bigger fish. Undoubtedly, there are potential customers out there in your industry who have larger budgets and bigger needs than some of your current customers. Find out who they are. Do some research, learn their needs, get some names, and prepare a presentation. Happy fishing! Moving forward, Jeff Roach www.transportationtraining.com www.brooketraining.com www.pajamalearning.biz P.S. While you fish for the whopper be sure and have your back end ready. I landed a big one then had to scurry to cover all the loads. A good problem but I had to take care of it soon or I'd loose the big fish quicker than I caught it.  Carrier Cash
18 Aug 2010 at 2:57pmCalling all carriers who could use some help with your cash flow. I am now offering freight factoring. 1.5% same day funding. My new division, Brooke Financial Services offers freight bill factoring. Similar to a loan from a bank, I give you the money needed today to pay your drivers, fuel and other expenses. I then wait 30 days to collect from your shipper. Reduce the stress of money shuffling. Make your drivers happy by paying them quickly. A critical issue in any successful business is maintaining the cash flow you need to run the business efficiently while keeping all your creditors happy. I can also teach you how to get in the freight factoring business, run a trucking company and lease you some trailers. Give me a call and I can explain more thoroughly. I've been told I'm a funny guy, so if you need freight factoring or a good laugh give me a ring. Moving forward, Jeff Roach www.brooketraining.com www.transportationtraining.com www.pajamalearning.biz 214-206-1169  Freight Consulting
13 Aug 2010 at 1:56pmI have learned some things along the way in the transportation industry. I continue to learn. As an educator once I learn something new I have a need to pass on to others the tips I've learned. So I offer consulting services. If you own a small trucking company I can get you a great deal on freight factoring and on trailer leases. I can train you to open your own freight factoring company as well. I also offer consulting on how to open a trucking company and general consulting regarding the traffic industry. As you know if you follow my blog, I also have an on-line freight broker training school and a live school in five states. I work as a non-exclusive freight agent as well. I keep busy. Besides Fuel and Drivers, I can supply almost anything to the carrier. They will get a great deal working with the top companies in the business. Moving forward, Jeff Roach www.brooketraining.com www.transportationtraining.com www.pajamalearning.biz  Learn from Home
12 Aug 2010 at 12:16pmInterested in learning a new skill or start a new business' Pajama learning may be just the ticket for the information you need. We have thousands of courses from which to choose. To take an online course you often need to go through a university or community college but not with Pajama Learning. Years back I convinced the coordinators of these online courses to let me offer them direct from my website. Many of the courses can earn you credit for a degree. Many of the courses are career training'similar to going to a trade school but you can do all your work online. Compared to the cost of a college education these career-training courses are very affordable. Most courses are written by the facilitator of that course. My wife Janis Roach wrote the course on freight brokering. We are the instructors. So as you take the course if you need to contact the instructor, you'd be calling us. We not only facilitate the course we are in the business. We know first hand what you do as a freight broker or freight broker agent. We have probably encountered any snag possible in the business. We recognize freight brokering may not be the right business for everyone so we decided to offer other online courses as well. New classes are added often so check back and see what else is available. Dream a little, learn something new, stretch yourself and you will feel empowered. Success is yours for the taking. Learn on, Jeff Roach www.pajamalearning.biz www.brooketraining.com www.transportationtraining.com  |
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