How's Business? Better, But Reefer Execs Cautious

July 26, 2010

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Executives who run temperature-controlled fleets have "much to be optimistic about," said Corey England, chief operating officer of C.R. England Inc., in remarks to colleagues at the Truckload Carriers Association Refrigerated Division's annual meeting last week.
While there are some positive signs, executives at refrigerated fleets are cautious about mixed signals in the economy that threaten to seriously interrupt the recovery.
While there are some positive signs, executives at refrigerated fleets are cautious about mixed signals in the economy that threaten to seriously interrupt the recovery.
"Demand in our industry is up, in many cases outstripping capacity," he noted.

But the group's outgoing chairman was also cautious about mixed signals in the economy that threaten to seriously interrupt the recovery. And resuming driver shortages and moves to make unionizing easier will be among challenges facing trucking in the future.

Hard times continue to cause bankruptcies, with 760 trucking companies succumbing in 2010's first quarter and a similar number probably went out of business in the second quarter, said TCA's chairman, John Kaburik, president of Earl L. Henderson Trucking Co.

Bankruptcies this year took about 200,000 vehicles out of service, helping to "right-size the industry" by reducing supply at a time when demand was rising, and resulting in some modest rate increases, he said. Fleets have been able to push back at shippers who are still demanding rate reductions.

Still, there are "zombie fleets" out there, Kaburik said, quoting a radio talk-show host. A zombie "is a fleet that thinks it's alive but is technically bankrupt," he quipped.

Other industry issues

Kaburick also commented on other developments in the industry:

* TCA recently had "a good meeting" with FMCSA Administrator Anne Ferro and her staff. "They listened, and they heard," he said. He hopes the department's new hours of service rules, which will probably be made public by the end of October, will include a return to a split sleeper-berth provision that's badly needed by the industry. "Many shippers won't let us on their properties except an hour ahead of loading" for fear of being implicated in HOS violations while drivers wait.

* Electronic logs are being tested by many fleets, and 75 to 80 percent of Henderson Trucking's drivers now use them "because we didn't want to get caught in an audit and then be forced to convert in 60 to 90 days," Kuburik said.

* Trucking safety has greatly improved in the last 30 years, going from 5.5 fatalities per 100 million miles in 1979 to 1.64 in the latest reports, he noted. It will get better under federal authorities' CSA 2010 initiative. Although it will cause some initial "heartburn" among fleet people, the initiative "will hold drivers and companies accountable. That and pressure from insurance companies will help us manage our companies and take those (unsafe) drivers out of there." However, it will worsen the driver shortage and won't help profit margins, which for many companies is only 1 to 2 percent.

* "Every state in the union is bankrupt today, and they're going to use our fleets as a bankroll," Kuburik warned. Equipment inspections will become more picky and result in revenue-raising citations based on technical violations that have no safety impact.

* The push for heavier rigs by ATA and many shippers is something not embraced by TCA, because the conversion to 53-foot trailers from 48-footers in the 1990s only resulted in expense but few if any rate increases. TCA fears the same things will happen in the 97,000 pounds-on-six axles scenario, so has proposed a compromise - 85,000 to 87,000 pounds on the existing five-axle tractor-trailer.

You might be in a recession if...

Borrowing comedian Jeff Foxworthy's format of "you just might be a redneck if... ," England suggested some humorous warnings to fleet managers.

"You might be in a recession if...

* "Your executive retreat is in an office down the hall.

* "Your Christmas bonus is food products from the claims trailer.

* "A 'new truck' means one with under 500,000 miles, a good wash job and an air freshener.

* "Your customers have replaced the concept of 'partnership' with an online auction for their loads.

* "Your workers comp department is sending the injured to the airport for X-rays."

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