Just How Bad is the Economy? 

Fuel prices are increasing rapidly, grocery prices are increasing, mortgage foreclosures are escalating, the news reports we're in a recession – just how bad-off am I?  I feel okay. 

In a recent poll, 54 percent of Americans said we are in a recession - although 76 percent said their own situation was fine.  How can that be?   

Wal-Mart turned a profit as both sales and revenue grew and JC Penney only made $120 million  which is reported as doom and gloom because it is only half of the profit they made in the last quarter.  I looked at the numbers and they earned $4.95 per share on shares trading at $44.25.  Thats an 11% return.  Is that bad?  Wish I could get that on my bank account.  Heck I could earn almost $11 next year. 

USA Today reported that mortgage foreclosures are up 65% from a year ago.  Wow – that's bad – or is it?  The report said that 1 in 519 homes received a foreclosure notice last month.  That's a whopping 2/10 of one percent.  That translates to about the 2% of homes that have been reported in the process of foreclosure during the past year.  My own home has dropped in value by about 20%  - should I be concerned?  Maybe I should try to sell it now, before it is worth nothing. The real estate agents would love that. 

The news is full of stories about how bad times are.  I think that it's tight economically right now, but certainly it is not dire.  I'm just not ready to buy into that thinking right now – of course I'm an optimist.  When I start missing meals and only after I lose that extra 20 pounds am I ready to declare an emergency.  But hey – that's me and I've always made it a point to look out for rainy days.  Perhaps my world is different – what's your world like?

I just read the Florida Kid's blog.  Wow, he had a mouthful to say!  For the most part he's probably right on target, but I think he missed the point on one issue.   

An owner/operator is a business person.  I know many are struggling.  At the same time many are continuing to operate in a profitable manner, perhaps not as profitable as the would like, but they are able to make ends meet.  In our great country there is no guarantee of success – just the guarantee that you can try, which is more than is available in a lot of nations.  I think he was pandering to an audience that is unwilling to admit they couldn't make the cut.  

I'm reminded of my nephew.  He's 19 with a 6'2” frame, a neck as big as a normal thigh and has muscles jumping out of his arms and legs.  He's a football player that has spent his youthful life playing and training and he's had some great success in high school.  He's now in college and worked his ass off to make the team.  I've watched him work out at home dragging 150 pound weights while running 40 yard wind sprints and doing all kinds of exercises to include throwing bales of hay on the wagon that his father drove at breakneck speed through the field.  (if you've never thrown a couple of thousand bales on a hay wagon – you're missing a thrill – and a bad back too!)       

Anyway after two months of sweat, the coach announced who made the team – he didn't.  All that effort, all that sweat, all those dreams – hell, he told me he would be happy to make it, even if he didn't play on Saturday. All disappeared. He'll rebound – he's got too.  What good is it to bitch and complain?  I remember some episodes in my own life when I should have been selected, but missed the cut.  America offers the opportunity to succeed and the freedom to fail as well.  I think the point is to answer the question – what are you gonna do now?  I read a blog from another O/O trucker that says it's tough, but he's making it and turning a pretty nice profit too!   

Speaking about freedom to fail -  In that testimony about the TRUCC Act given by Todd Spencer of OOIDA, he said a couple of things that were not widely reported.  He said that 935 companies with 5 or more trucks had gone out of business this year.  If that's true there should be thousands less trucks available to carry goods.  He provided a number that exceeded 20,000.  He also said that in the year 2000 when a trucking crisis was occurring that over 250,000 trucks were repossessed.  Now, I'm not certain as to the accuracy of his numbers, but the one bit which is important is that the weak are leaving, which means that the vacuum needs to be filled by others.  Like my nephew that didn't make it – someone else did.  His door closed – temporarily, but the door opened for others. 

If you're still in the game, there are some folks that are working on your behalf. Dan Little at Owner-Operators United is working hard for some necessary changes.  Speaking of Dan – it's worth a read to peruse the blog about brokers on his site. 

Anyway, I hope the Florida Kid doesn't get offended by my remarks. I know there are tons of good truckers out there that do all kinds of good things for others as well as for their own families. I wish them the very best and pray for their success – but there are just no guarantees.  As much as my nephew deserved to make the cut – he didn't.

Idling Guide Available 

The American Transportation Research Institute recently published a free quick reference card that can be used to remain knowledgeable about idling restrictions in various states and cities.  It can be quickly downloaded and kept in the cab for a quick reference.  It is is available here.   

Interestingly, among those on the Board of Directors of ATRI is Mike Card who recently represented ATA and testified before the House Subcommittee on Highways and Transit which was addressing fuel surcharges and other topics of concern to the trucking industry.  Card is an officer of Combined Transport Inc., a family owned trucking business located in Oregon.   

Representative Peter De Fazio (D), Oregon who chaired the Subcommittee represents the 4^th Congressional District which is home to Combined Transport Inc.

Diesel Fuel Prices Subcommittee Hearing 

TruckerToTrucker watched every minute of the 4 hour Subcommittee Meeting Chaired by Rep. Peter DeFazio, D-OR.  One had to be impressed by DeFazio's sharp questioning of witnesses and one can surmise that the committee will favor passage of the TRUCC Act known as  H.R.5934 in the House and S 2910 in the Senate.     

Mr. Todd Spencer representing OOIDA was impressive and members can be assured that with a individual of this caliber representing them, that they are getting great value.  His anecdotal story about a trucker receiving only $600 from a broker when the load paid over $1400 was impressive and should be instructive to all truckers to let others know about their difficulties as it can change the way business in conducted.  Spencer used a number of statistics to illustrate the plight of the independent trucker.  Among those were; 

935 companies with 5 or more trucks have gone out of business this year..

96% of trucking companies have 20 or less trucks and 86% have 6 or less trucks.   

Spencer was asked a variety of questions and was authoritative and knowledgeable.  He said that the average trucker has about as much leverage with a broker as a “guy at a payday loan shop.”   

Opposing the TRUCC Act was Robert Voltmann, President of the Transportation Intermediaries Association (TIA) which represents brokers.  He stated that all fuel surcharges are being passed on to truckers and that the TRUCC Act was not necessary.  He suggested that a “freight recession” was responsible for the demise of so many small truck companies.  Clearly he was unable to articulate a rational position to oppose the TRUCC Act.   

Another witness at the hearing was Michael Card representing the ATA.  He also owns a family trucking company that controls approximately 500 trucks.  He supported the TRUCC Act and presented several other suggestions to the committee to save fuel.  He supported the use of APU's to reduce idling time and suggested the 12% federal excise tax on the APU's be eliminated in an attempt to reduce the cost for the small independent company or owner/operator.  He also suggested that the speed limit should be reduced to 55mph (note 1:this may have been 65 mph- see comments below- the tape will be viewed again to ascertain the exact speed that was quoted and the context of the remarks) (Note 2: I regret the error - he said 65 mph - he did refer to the earlier fuel crisis in the 70's when the speed was reduced at that time to 55 mph).  Finally, he stressed that the EPA Smartway program could be improved.   

TruckerToTrucker urges all to contact their Senator or Representative and request their support for the TRUCC Act.  This is vital legislation that will help all.

Diesel Fuel Legislative Happenings 

The Subcommittee on Highways and Transit is scheduled to meet on Tuesday, May 6, 2008, at 10:00 AM to receive testimony on the causes of rising diesel fuel costs and the impact of this trend on the trucking industry.  The Subcommittee will also examine the relationship among motor carriers, brokers, shippers, and independent drivers with respect to setting and collecting fuel surcharges. 

This hearing will be conducted live on C-SPAN 3 at 10 am and is scheduled to be rebroadcast at 2 pm today. 

The summary of the subject matter to be discussed can be found here. 

A few highlights that all are familiar with from that summary include the following statements;  

Trucking fuel surcharges are not fixed and not regulated by any Federal entity.  In contrast the Surface Transportation Board determines the reasonableness of fuel surcharges assessed in the rail industry.  (Note: OOIDA does provide guidance on how owners-operators can apply the fuel surcharge.  It can be found here. )

Independent truck drivers contend that they do not control whether a broker is charging for the rising cost of fuel; the amount of the surcharge; or whether the surcharge is specifically itemized in the rate agreed to by the shipper (as opposed to just a flat increase of the charge for the load).  These drivers argue that lack of disclosure requirements makes it difficult to verify whether the fuel surcharge is being passed on to those that are paying the higher price at the pump. 

This hearing is the result of action to implement the TRUCC Act.  TruckerToTrucker will be monitoring and reporting on the activities of this Subcommittee.  Stay tuned for details and let us know your thinking.

Do People Care About You? 

I like to think that we care about each other, but sometimes I'm not sure.  I know when disaster strikes, Americans send money to others, sometimes millions of dollars.  The 9-11 disaster, Hurricane Katrina, the Virginia Tech killings immediately come to mind.  Millions of dollars are donated to churches every week, ostensibly to help others.  But what about day-to-day activities?   

If I lose my job, will my neighbors give me money?  I know they will say they are sorry it happened, but what else can I expect?  I will get advice, some sympathy, perhaps a job reference, but not much else.  Should I expect help?   

The trucking industry, particularly small operators and independents are experiencing economic difficulty to say the least.  So who cares?  There are some initiatives that will help – the possible fuel tax holiday,  the TRUCC Act, the OOU, and the OOIDA will push for changes to provide a level playing field for competition, but I can't see much else happening.  The truck shutdown and a number of stories on television and in the press have focused some attention on the issue, but the average American outside of the trucking industry is largely unaffected and unaware of any difficulties and even if they were – what can we expect them to do?   

An illustration about Wal-Mart might shed some light on the issue.  Americans are concerned about job losses, but Wal-Mart makes millions of dollars by offering inexpensive goods made overseas and Americans flock to their doors.  So the short answer to what can be expected in the trucking industry is not much.   Perhaps the question that needs to be addressed is what can we do? 

The answer is not particularly appealing.  Try to survive by actively supporting organizations that have your interests in mind, support legislative initiatives on the local and national level that will help, look for innovative ways to provide services, cut your costs wherever you can and stay actively abreast of industry news that might provide a worthwhile suggestion or idea.      

This article is really a follow-on to a previous comment here.  In looking about for what is possible, I read some articles by Walter Williams, an economist at George Mason University.  He writes in a manner that is easy to understand and presents the economic picture in realistic terms.  He wrote an article titled “Do People Care” which was the basis for my ramblings.  His article ends, “how you make it in this world, for the most part, depends more on what you do as opposed to whether people like or dislike you. In order to produce a successful life, one must find ways to please his fellow man. That is, find out what goods and services his fellow man values, and is willing to pay for, and then acquire the necessary skills and education to provide it. Whether your fellow man cares about you or not is largely irrelevant.” 

Those are some tough words.  I fear they may be true.