TBA Freight Articles
We have published several hundred articles involving the transport and energy sectors. We are making some of them available online, segregated by topic and date (most recent first). Feel free to review our hits and misses in the detail – and we welcome the opportunity to help you with any of these topics in your business.
Higher GVW – Working Smarter / Not Harder & A BIG Opportunity
Author: Jay Thompson First Published: August 2, 2006
Global freight movements today exceed infrastructure capacity and the available driver pool. Not only are there differences within different countries, but also the world is dealing with increased (and heavy) container traffic. Projected growth and congestion are significant.
There are things that make technical sense, but invoke emotion. Throw in dozens of studies, some politicians and some worst-case scenarios – and all logic gets trumped “big-time.” Our Australian friends raise a fresh question regarding a long-discussed approach. Taking a multifaceted technological approach with some consistent application of regulations, along with a well-communicated story, can work – again.
In the midst of the 1970’s energy crisis, there were two major US Federal mandates. One was lowering of the speed limit to 55 mph and the other was the raising of weight limits for trucks – 73,280 to 80,000 pounds. Many will recall the industry addressing even longer lengths / heavier weights, multiple big trailers, big engines, etc. In fact, Pete Schutz – an old Cummins boss and eventual leader of Porsche – led the Cummins (and industry) effort with the K 600 HP engine to pull multiple trailers. He was a fellow mechanical engineering graduate who tried to take logical approaches. Safety concerns, an effective railroad lobby, and numerous other issues (including a lot of emotion regarding “killer trucks”) stopped that move.
Over the last 20+ years, US Federal truck size and weights haven’t changed much, except for the freezing of Long-Combination-Vehicle rules in 1991. Almost everything else that affects the industry has changed, including freight flow (doubling of traffic, NAFTA, overseas containers and Just-In-Time), rail partnerships (and good relationships), safety programs (CVSA, FHWA, brake improvements, etc.), deregulation, better equipment (trucks, radial tires / super singles, air ride suspensions, steerable drag axles and 53’ trailers) and more. Logic would say perhaps there should be another logical look at that here.
Compared to the rest of the world, the United States have the lowest per axle weights allowed on the major highways. The number of State regulations are mind-numbing, along with the ability for different States to allow grand-fathered higher weight limits (which throws all logic out the window). We can also get permits to exceed many limits. Then we have bridge laws, which set axle spacing for trucks. There are exceptions for these too with short wheel base trucks with multiple axles (e.g. Michigan) and exceptions for coal haulers (e.g. Kentucky / West Virginia). There is no consistency, but if States can do IFTA (International Fuel Tax Agreement – and trade money), they surely can address size and weight issues.
Roadway engineering 101 says that highway wear increases with the cube of weight at a minimum (up to the 5 power on certain asphalts). Suppose one allows up to 12,000 pounds on a steer axle (6,000# per tire), 20,000 pounds on each of single / spread axles (5,000# per tire) versus 34,000 on tandems (4,250# per tire). Therefore an obvious conclusion is that a given truck wears the roads at drastically different rates just from tire position (not including effects of scrubbing, pressures, etc.). If an 18-wheeler grosses 80,000 pounds, the average weight per tire is 4,444#. An 11-axle (42-wheeler) grossing 144,000# (like in Utah / Nevada) that hauls double the freight has an average weight of 3,428# per tire (25% less). Interestingly, nobody really knows the origins of the US limits, but the European limit is over 96,000#, Mexico is 146,000#, Canada is 137,500# and again some US States have higher limits grandfathered in.
Since average trailer weight utilization is about 50%, planning technology could be used to improve trailer utilization and loading – but the facts remain that loaded TL vans generally run light. This issue coupled with longer trailers (53’) minimizes any bridge law issues. Intermodal standardization is also an open issue and one that is washing out at the 53’ length, but weight is still not well addressed in the US.
In going from 80,000# to 144,000# GVW, truck fuel mileage drops about a mile and a half per gallon, costing about $0.16 per mile (at $3.00 per gallon fuel) – compared to about $0.50 per mile for a 80K# rig. This raises questions regarding who sees such savings, which is an opportunity to raise operator pay, offer better rates to customers and improve company profitability. There are questions about long trailers “off-tracking” resulting in truck-trailer maneuverability (swinging out) at slow speeds, highway-speed trailer tracking (crowding), passing long trucks on two-lane roads, intersection flow, kingpin length (half of states have it set at 41 feet), multiple trailer connection approaches, etc. A performance approach could include having an overhang swing specification (like in Canada), a sweep specification (like in Europe), a weight per axle incentive (like in Northwest US), a braking specification (adjustment is biggest problem today) and such. There are track-able axles for trailers in use today to address sweep and anti-lock brakes to spread out braking performance. Safety data is interesting, as US Long-Combination-Vehicle data from fleets operating on toll roads and in Western States is no different than the rest of the industry. Merging and lane change problems concerns show similar data, in part due to truck driver skill and added personal responsibility.
Being one who is from a Western State and familiar with those operating up to 11-axles, I’m an advocate of these-type heavier-longer trucks on remote Interstate highways. I’d have the highest horsepower engines for pulling hills, speed limiters for road speed, rear axle retarders for descending hills, proximity sensors to sense vehicles in the vicinity, roll-sensors for tipping over, video cameras to view traffic, air ride suspensions to better spread weight / eliminate tire bounce, ensure heavier trailer is first for stability (weight sensors), have wheel temperature technology (tire and brake problems), have brushes to minimize road spray in rain (like some do today), better aerodynamics to address truck / trailer gaps, pay higher road use taxes and pay drivers more to operate these. This also reduces the number of truck trips.
The Aussies are smart in looking at longer / smarter vehicles in addressing congestion, driver shortages and the pending industry growth. In addition to technology, other opportunities include Federal oversight of policy versus just size, weight and enforcement mandates, fostering “uniform” performancerelated regulations, and addressing infrastructure (ramps, extra lanes, etc.) needs. There are other issues (including cost) and a lot of emotion (public perception) involved in this subject. I hope they do it, and we look at the same – again.
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Rail Is Always An Answer To Congestion – But Then There Is Reality
Author: Jay Thompson First Published: July 27, 2006
Our cities continue to grow and spread out. Urban planners continue to balance the desire to get more businesses and residents closer in, while real estate costs drive people (and warehousing) to suburbia. Most freight is local / regional, it goes by truck, and the majority of businesses who ship and receive stuff are small. Most shipping and receiving occurs in normal daytime business hours. For long-haul freight, trains have trouble addressing demand today – let alone in the future. In addition, one must still get the freight to and from the rail terminals and ports.
Truckers hate city traffic more than the four-wheelers. The new hour-of-service regulations can really mess-up a trucker’s day when it is spent going nowhere. If the general public knew all the trucking industry does today to avoid heavy traffic, they would be impressed. There is a problem however – customers want their products delivered when they are at work, but there are a number of approaches that can help.
Traffic has increased for a variety of reasons, which we all know. On the personal side, we don’t necessarily live where we work, we take our kids to everything by car, and we want our flexibility. For all cities, growth means added goods and services businesses. Additionally, there is a desire to have industrial jobs that are better paying than in the service sector. For those cities around ocean ports, there is the flow of that freight into the country and that conflicts with people wanting that same or nearby property for “seaside” homes.
The issues surrounding cities, ports, rail, and trucking are similar. While most port work has been directed toward seaside flow, there is recent work on the landside. To get the most economical flow from boat to rail, one needs a lot of real estate to handle trains – and it is expensive, if available at all. Other interesting numbers are that about half of the freight moved regionally has to do with local industrial jobs. Also the majority of jobs are small businesses who do not have the size to be that flexible in shipping / receiving hours. Most container freight gets loaded / unloaded regionally (e.g. to Mexico from LA / Long Beach). The bottom line is that freight traffic will grow.
Responsible metro planners first recognize that movement of freight locally, regionally and beyond are vital to their economies. Next they know that expansion opportunities are very limited, so they engage with local and regional businesses and trucking folks to address infrastructure and land issues, including public-private buy-in and investment. Shifting truck freight movements to less congested times (late evenings / night) is another approach, but requires ports, rail yards, warehouses, distribution centers and other industrial facilities to change their operations. Some are looking at truck-only lanes / bypasses for slower moving trucks. Another approach is to get regional distribution facilities to move back to populated areas, which requires an understanding by the local population through education. Rail does need expansion, but this takes even more education on what the effects are within and out of the region.
To put a face on the issues, one must deal with specifics – not platitudes, as each major city has both similar but different unique challenges. Seattle is a beautiful city and many understandably desire to live there. Like Portland Oregon, it is a city full of bridges. Bridges are expensive to build (e.g. new Tacoma Narrows bridge approaching $1B), so therein lies a very large issue for them. This is one reason Boeing has problems in getting parts for assembly around town, along with getting people to move there to work. A Kenworth truck plant is next to another Boeing plant in Renton, and traffic there is bad. The double edge issue is that they each have manufacturing in other smaller cities and that is where the growth may go.
My Denver home area matches Seattle’s time in traffic. We have an I-25 (the main North-South corridor) project going on called T-Rex (fondly referred to as The Wrecks). We were told to try to find alternative routes for the next seven years to avoid congestion when that started. Interestingly, one reliever was a light rail line down a parallel road from the south suburbs to downtown. The rider-ship is so high that they have put on bigger trains and will do more – yes, fewer cars on the roads. T-Rex includes more light rail, too. Also notable, the toll road around the East and North sides of the metro area runs very light at the same time. We recently changed a 7-mile HOV reversible lane from downtown to the Boulder turnpike to a toll road, costing auto users from $0.50 off-peak to $3.25 during rush hours. Trucks are $18 (ouch!), but we do allow trucks pulling two-53’ trailers or triple 28’ trailers through town – and they do just fine. Additionally, we’re moving the freight rail away from town.
Moving freight from BIG trucks to trains is not the silver bullet that rational people understand – but it is a piece of a much larger picture. It does make for good headlines.
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The Evolution of Intermodal Continues (with a look to the past)
Author: Jay Thompson First Published: July 10, 2006
Ports, rail and trucking in North Americaare capacity constrained, driven by increased commerce. When capacity is constrained, freight prices go up.
The cost to transport via water is a percent of rail, which is a percent of truck. Keys to profitability are the number of miles involved and equipment utilization.
The face of Intermodal transportation has begun another makeover that will take what has been pioneered in theUnited States and will improve and reinstitute it around the world. What some see as a crisis is another step in the evolution of Intermodal.
Over the last several decades, the container has done more to revolutionize overseas shipping than anything else – when one reviews the big advancements in rail (e.g. double-stack), large ships and interfaces among ports, rail and trucking. The United Statesis somewhat unique in the world with such a heavy reliance on truck (highway systems) and rail for longer moves, both of which are operating at high utilization – especially with the freight flow from Asia.
We are also unique in that the majority of West Coast container freight is transloaded onto van trailers and trucked across the country. Regardless, containers will always require a truck move at the either end of their journey. In addition to increasing international container moves, major “trucking” companies are trying to grow and loosen up truckload capacity by increasing domestic freight traffic on containers over rail (Schneider, JB Hunt, Hub, CH Robinson, etc.) in addition to TOFC (trailer-on-flat-car / piggyback) by many majors.
A look historically also gives a glimpse of the future. Waterborne freight has been around forever, but in the US railroads were the first major milestone followed by the Interstate highway system. Around 30 years ago we saw dramatic growth of trade coupled with containerization. This was also a time when all modes of transportation were being deregulated. There were dozens of major rail companies with plenty of capacity available looking for business. Today there are only a handful of major rail lines which have streamlined operations, and like trucks and major ports, are capacity constrained.
Of all the worldwide trade partners, the US has the most developed Intermodal infrastructure (ports / truck / rail). Most others around the globe are on water with short truck moves. Most other countries are not as geographically and volume challenged as the US (and Canada), but that is changing with the economic growth in China and India. What will be interesting is how they address their moves across large geographical areas with a mix of modes.
Recognizing that water costs are less than all other modes, part of that answer most probably will be similar to a US long-term answer with more focus on direct water service and a reemergence of “new” rail partnerships. While there will be a glut of water capacity coming on board soon with all of the new ships being built, there will obviously be drastically lower steamship line rates like before – but their pricing has always been wacky.
A major issue for port capacity has to do with acreage, so the approach to utilize ports all around the US (and world) makes sense. The major investments in the Panama Canal will help with the Eastern half of the US. When one looks at the “old” approach of train-port partnerships – like what is being done in Western Canada (to the Midwest) and Western Mexico (to the MidSouth) – one readily sees that there are more options. What that does too is to keep trucks doing the regional / local moves, which is a much more attractive job than driving over-the-road and done by smaller operators / Independent Contractors.
To summarize, there will continue to be growth in the flow of freight through the West Coast with limits due to port, rail and truck capacity issues. Because of the higher costs, other options are viable and we will see more direct water service, new train-port services and trucks to complement all approaches.
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A Food & Drink Hedge Against Economic Slowdown
Author: Jay Thompson First Published: June 13, 2006
If you are big in trucking, it’s about growth; if small, it’s niche markets (and even bigger potential profits). There are major trucking companies – and then the majority of the marketplace.
Large carriers continue to consolidate, streamline operations, get more into “logistics,” implement numerous IT improvements, collect fuel surcharge (today), broker out excess freight and show good profits (today).
At the same time, many shippers feel they are getting cherry-picked, experiencing substantial rate hikes, sometimes being dropped and looking for options.
Most of the industry information we see, other than from a macro view, comes from major trucking firms, industry groups representing the same and a variety of sources that one must dig through. Mega-carriers also represent a small percentage of the overall marketplace.
There are plenty of opportunities for smaller fleets and specialized carriers, who have some advantages over their bigger siblings including flexibility, a more personal atmosphere and considerably lower driver turnover rates / costs (100% plus for the big guys down to 30% for those with hundreds of trucks). While big carriers generally address bigger shippers, pricing pressures are always present (eventually lower rates). Brokers fill a void – and that is not necessarily a good thing for the shippers, truckers or us who pay the ultimate bill in our retail prices.
Success comes from the simple approaches of “doing what they do best” and “customer relationships.” The number of smaller companies comes from the unique characteristics of private / for-hire segments further divided into LTL / TL / long haul / short haul and then dry van / refrigerated / flat / tank / dump / auto / grain / containers, etc.
When looking at the perishable food segment (refrigerated / reefer), one must first recognize that over 90% of those products goes on truck. In looking at the largest fleets, reefer operations make up about 5% of their freight, but 15%+ of the overall market. The reefer segment is the 2nd largest and is primarily made up of smaller operators. Numbers are difficult to tie down as they include private fleets, food-service and even some big dry van carriers who do Walmart reefer distribution work (Schneider, Swift,Crete and others).
It is also a segment that takes more personal interaction and patience (loading and unloading) than other segments. When the economy cycles, people continue to eat (and drink) with some discretionary changes in types of consumables, but not quantity. Therefore, other segments swing while reefer operations stay more level. Because up to half of the loads hauled in reefers don’t require refrigeration (backhauls), they can suffer on the dry side, too. Because refrigerated freight often runs counter to good dry van traffic lanes, this issue is mitigated.
There are numerous niche opportunities going unaddressed that are consistently very profitable – e.g. running beef from Plains States to Canadian Maritimes or ethnic food for distribution across the nation. Many are also getting more proficient at doing LTL in TL trucks. While the big guys struggle to maintain a operating ratio of 95, niche markets are seeing 75 (with more average miles per week). Fuel surcharges are fueling much of the profitability, but those are variable and will soften. Keys to success are to be fair and flexible.
Reefer business not only requires different equipment, etc. but it also requires an understanding of and attention to customer (and governmental) requirements. A brief overview of products versus sample temperatures can be seen in the following: ice cream minus 20; Hot Pockets / frozen ham / pizza / boxed cheese / dog food livers minus 10; bagels minus 5; Asian foods zero; fresh beef 28; fresh flowers 30-35; peaches / corn / prepared salads 34; lettuce / milk / cookies / butter 35; candy / cheese 36; eggs 38; Coors beer 40; onions 40/60; potatoes 45; chili peppers 50 and Ensure 60. Setting an incorrect temperature, having an equipment problem or mixing different type products can result in a cargo claim or a USDA visit.
Trailer ratios (number of trailers per truck) are lower than with dry van operations, resulting in better utilization per trailer. This is important due to the trailer / reefer unit cost being over double that of a dry van trailer. Utilization adds more to operational profitability than any other aspect. In addition, a reefer unit burns about one gallon fuel every 35 miles (long-haul operating at zero degrees in warm temperatures).
While the mega-carriers continue to see productivity gains from logistics and IT, smaller carriers are just beginning to experience such and are a major opportunity. Food supply chain security is another opportunity for everyone. Shippers are actively looking for lower rates and are getting more proficient with Internet usage, shopping rates, load consolidation, going paperless, etc.
For us consumers, fuel costs today are taking overall costs up to where it is a notable percentage of the product price. High gasoline pump prices are also taking more out of our discretionary spending budgets. In the mean time, we will continue to eat and drink – and a truck will most probably have brought it.
