Long-Term Highway Bill Has Mostly Good News for Shippers
By Ben Gann, NASSTRAC Director of Government Affairs
On December 4 2015, President Obama signed into law the Fixing America’s Surface Transportation Act, or FAST Act, which will provide predictable funding for the nation’s transportation network until September 30, 2020. The action by the president followed strong support both in the House of Representatives and Senate. The House approved the legislation by a vote of 359 to 65 and the Senate approved it by a vote of 65 to 34.
The FAST Act provides $305 billion in surface transportation funding over the next five years, which $205 billion going to highways. The bill is financed by reauthorizing collection of the 18.4-cents-per-gallon gas tax and the 24.4-cents-per-gallon diesel tax, and also includes $70 billion in “pay-fors” to close a $16 billion deficit in annual transportation funding that has developed as vehicles have become more fuel-efficient.
Among the highlights are reforms to Federal Motor Carrier Safety Administration (FMCSA) rulemakings and its Compliance, Safety, Accountability program; the establishment of a port performance statistics program; faster permitting and approval projects; and the establishment of a pilot program to study lowering the minimum driver age from 21 to 18.
There is some bad news for shippers in the FAST Act. The bill does not include a national standard for hiring motor carriers. It also does not include provisions that would increase the weight of vehicles to 91,000 pounds if equipped with a sixth axle or allow the use of 33-foot twin trailer combinations.
FAST Act Highlights
The FAST Act requires FMCSA to reform the rulemaking process by requiring greater transparency. Specifically, the agency must do more advance rulemakings for major rules and review all major rules every five years.
In addition, there is a big change to the CSA program by requiring the removal of the carrier safety scores from public display and the development of a crash accountability component. FMCSA has responded by already pulling the Safety Measurement System (SMS) and BASIC categories of carrier safety analysis and evaluation from public view. FMCSA has stated that the information will not be made publicly available while changes are made to the program.
Complete SMS results are available to enforcement users and motor carriers that are logged into the SMS. Logged-in enforcement users can view all carrier safety data, while logged-in motor carriers can only view their own data. The only data that remain publicly available are inspection data, violations, out-of-service orders and absolute measures.
There is also new transparency coming with respect to the nation’s busiest ports. The legislation establishes a Port Performance Statistics Program under the Department of Transportation’s Bureau of Transportation Statistics (BTS).
The provision requires BTS to form a working group to include private and public sector participants in developing an agreed-upon set of metrics on the nation’s 25 busiest ports that will be released annually. BTS has 60 days to establish the group and develop the metrics. NASSTRAC plans to weigh in with BTS regarding what metrics should be included in the annual report.
Two other provisions in the highway bill benefitting shippers will allow for faster permitting of highway construction projects and a pilot program studying the use of commercial drivers between the ages of 18 and 21. The hope is a more streamlined permitting process will allow projects to be completed faster. And although the pilot program is limited to retired military members between the ages of 18 and 21, it gives FMCSA more data on younger drivers operating trucks at a time with the industry is experiencing a driver shortage.
FAST Act Lowlights
Despite the good views contained in the highway bill, there is some disappointing news regarding what was left out. Most notably, a provision creating a national carrier hiring standard was stripped from the final agreement. NASSTRAC supports a national hiring standard to clarify and standardize industry best practices for hiring safe motor carriers.
Codifying the responsibilities of a shipper, broker or other intermediary in hiring a carrier would protect them from negligent hiring lawsuits when a truck is involved in an accident. Despite the setback, NASSTRAC continues its work on a legislative solution to reduce negligent selection lawsuits.
There is also bad news regarding the use of heavier trucks on federal interstates. First, lobbying efforts were unsuccessful in allowing trucks equipped with a sixth axle to carry up to 91,000 pounds – up from the current limit of fixe axles and 80,000 pounds. In addition, efforts allowing for twin 33-foot trailer combinations, or Twin 33s, also fell short.
Overall, NASSTRAC is pleased with the highway bill but knows passage of the legislation would not have been possible without our shipper members contacting their lawmakers and reminding them about the need for a long-term agreement that supports the efficient and cost-effective movement of freight.
Changes to Canada Customs Regulations of Which You May Not Be Aware (BOL preparation)
As of January 11, 2016, the adherence to the eManifest requirements of the Canada Border Services Agency (CBSA) became mandatory. Failure to comply with these requirements can result in service delays and monetary penalties under CBSA’s Administrative Monetary Penalty System (AMPS), which would be passed on to you as the customer. For example, one of the penalty areas relates to “failing to provide true/ accurate/complete information.” This primarily relates to bill of lading preparation; for example accurate description of packaging and handling units (1 skid is not acceptable; 1 skid /30 cartons is acceptable) and descriptive cargo information (apparel not acceptable; men’s shirts acceptable).
While we cannot summarize the many various effects of the change, we at least wanted to make you aware of it and recommend that you refer to the attached links and other information on the CBSA website for the complete and detailed information.
Dayton Freight Opens New Service Center in Memphis, TN
DAYTON OH ….To provide a higher level of service to our Tennessee, Mississippi and Arkansas customers, Dayton Freight is pleased to announce the opening of its newest Service Center in Memphis – the Company’s first facility in the state of Tennessee. This strategically located, 32-door Center, set on seven acres, allows us to offer on-time, intact service to thousands of cities in the Midwest region.
Service Center Manager Jody Street says, “This facility’s location is in response to current customer demand, and the potential to serve many more customers in the southern U.S. And, being centrally-located, we’ll be even closer to our customer base. With our $1 million investment, we have a workplace to be proud of and one that offers customers our signature brand of fast, flexible and focused service.”
Celebrating its 35th anniversary in 2016, Dayton Freight Lines, Inc. is a private, union-free, less than truckload (LTL) freight carrier headquartered in Dayton, Ohio. With 48 Service Centers in the Midwest region, Dayton Freight offers shippers 1 or 2 day service to thousands of points throughout a 13 state area. With their Strategic Partners, they serve all of North America. The Journal of Commerce has ranked Dayton Freight, founded in 1981, as the 16th largest LTL carrier in the country.
Memphis Service Center
5564 Universal Dr.
Memphis TN 38118
Curtis Stoelting named President and COO at Roadrunner Transportation Systems
In a move that seems to have re-energized Roadrunner Transportation Systems, Mr. Curtis Stoelting was announced as the new President and Chief Operating Officer on January 18th of this year. Mr. Stoelting’s impressive resume includes serving as the Chief Executive Officer and a director at TOMY International/RC2 Corporation from January 2003 to March 2013. Among his many accomplishments, maybe most impressive that during his tenure at RC2, they grew from $20 million in revenue to $430 million in revenue.
Regarding the addition of Mr. Stoelting, Mark DiBlasi, CEO of Roadrunner, commented with the following: “Curt brings a significant amount of financial, operational and business experience to Roadrunner. As President and COO, he will assume management and oversight of all three company operating segments: Truckload Logistics, Less-than-Truckload and Global Solutions.” We look forward to seeing just what Mr. Stoelting has in store for Roadrunner.
“Roadrunner Names Curtis Stoelting President and COO.” Roadrunner. 18 Jan. 2016. Web https://www.rrts.com/about-us/in-the-news/pages/newsarticle.aspx?newsID=64
Trucking Companies Throttle Back Expansion Plans
With uneven demand squeezing profits, truckers are focusing on efficiency and conserving cash rather than bulking up fleets
By BRIAN BASKIN Jan. 28, 2016 3:46 p.m. ET
Large U.S. trucking companies are ratcheting back expansion plans after declining freight volumes cut into fourth-quarter profits. The lower earnings reported by half a dozen carriers this week confirmed that companies were weighed down late last year by uneven retail sales, high inventory levels and a manufacturing slowdown. Based on their 2016 guidance, they expect more of the same over the next few months.
Trucking companies say they’re preparing for a prolonged downturn by reducing investments in their fleets. Their goal is to avoid creating a glut of trucking capacity, which would give shippers more power to negotiate lower prices for moving their goods, further squeezing carriers’ profits.
That is a dramatic shift from even a few months ago, when many carriers were set on bulking up, and swapping out older vehicles for new, more fuel-efficient models. But with freight volumes and pricing falling, trucking companies need to conserve cash.
“The large carriers…one thing we see in common is that fleet additions in that group have ended, and the outlook is basically to be flat,” said David Jackson, chief executive at Knight Transportation Inc., in a conference call with analysts after releasing earnings Wednesday. “Even the best operators have gone backwards a little bit. And I would add us to that group.”
Knight reported a 11% drop in net income from trucking last quarter, though earnings of $0.36 a share were above most forecasts. The company said it would stop expanding its fleet, and cut its 2016 earnings guidance.
Also Wednesday, Celadon Group Inc. reported a 22% drop in fourth-quarter net profit from a year earlier. Heartland Express Inc. said Tuesday net profit fell 21% over the same period. Swift Transportation Co., which halted fleet expansion last fall, earlier than many of its competitors, said profits rose slightly in the fourth quarter. Many Wall Street analysts had anticipated larger profit declines, and trucking shares rallied on hopes that the industry’s biggest players will be able to weather a downturn without being forced to sell off assets or take other drastic steps. That contrasts with freight railroads, which have slashed thousands of jobs after profits were hit by a steep drop in coal and oil shipments.
Industry figures show businesses started dialing back fleet expansion last fall as retailers reported they were overstocked and the freight market weakened. In December, trucking companies ordered 27,800 big rigs, down 37% from a year earlier, though up from November, according to research group FTR. Truck orders had surged in late 2014 and early 2015. The trucking companies said they have focused on making their operations more efficient.
Knight’s operating ratio for its trucking business—the percentage of trucking revenue needed to cover expenses—rose to 80.7% in the fourth quarter, from 77.5% a year ago, as the company’s trucks drove fewer miles. At Celadon, each truck drove an average 1,704 miles a week in the fourth quarter, down from 1,971 miles a year earlier. However, revenue per mile rose to $1.917, from $1.798.
“Most of these [trucking] companies are in a decent position,” said Jason Seidl, a transportation analyst with Cowen & Co. “Most larger companies have extremely young fleets and decent balance sheets.”
On Thursday, shares in Knight shares were down 4% and Celadon’s stock was off 1%. Swift shares are up 22% in the past week after the company said it could buy back stock. Shares in Covenant Transportation Group Inc., a trucker with many fast-growing e-commerce customers, are up 15% over the same period, despite reporting a slight decline in fourth-quarter profits.
FMCSA Issues Proposed Rule on Safety Fitness Determination
On January 15, the Federal Motor Carrier Safety Administration (FMCSA) issued a proposed safety fitness determination rule that would use data from agency and roadside inspections and investigations, or both, in evaluating on a monthly basis whether a carrier is fit to operate. The proposed rule would replace the current three-tier federal SafeStat rating system of “satisfactory, conditional or unsatisfactory” for carriers used since 1982 with a single determination of “unfit,” which would require the carrier to either improve or cease operations.
A carrier could be proposed unfit by failing two or more Behavior Analysis and Safety Improvement Categories (BASICs) through inspections or investigation results, or a combination of both. According to FMCSA, once in place, the rule will permit the agency to assess the safety fitness of approximately 75,000 companies a month using the agency’s Compliance, Safety, Accountability (CSA) program’s safety measurement system methodology. FMCSA said it currently is only able to investigate 15,000 motor carriers annually.
Report on 2015 Cargo Theft Trends Shows Top Days, Top States for Cargo Theft Occurrence
By Matt Cole, January 21, 2016 www.ccjdigital.com
Out of a total of 881 incidents of cargo theft in 2015, the estimated total value of stolen cargo was more than $175 million, according to CargoNet’s annual theft trend analysis.
CargoNet said it received loss value on 53 percent of reported cargo thefts, and based on that total, estimated the overall value of stolen cargo in 2015 to have been $175,303,399. A total of 10 thefts were recorded by CargoNet worth more than $1 million.
California reported the most cargo thefts during the year with 158 incidents and a total loss value of $18.7 million. Texas wasn’t far behind with 130 recorded thefts and $12.2 million in value stolen. Florida (98 thefts), Georgia (97) and New Jersey (80) rounded out the top five states for cargo thefts.
Of note from CargoNet’s report, 49 percent of reported cargo theft incidents occurred between Friday and Sunday, with Friday being the most common day. Wednesday was the least common day for cargo theft occurrences.
Food and beverage items were the most stolen commodity, totaling 28 percent of all stolen cargo. Electronics and household items each accounted for 13 percent of all stolen items.
Carrier Service Metrics
Carrier Profile - "Ward Canada"