Despite all the talk about regulatory reform, the role of the federal government -- and increasingly the state governments -- has never been bigger. The cost of compliance runs more than $15,000 a year for every truck, not including taxes.
The last Congress made a run at regulatory reform that would have subjected all regulations to more rigorous cost-benefit analysis and periodic review. Although the effort fell short, it reverberated through the bureaucratic corridors of Washington, D.C. In agency after agency, staffers "got the message" and initiated their own internal controls.
The result moves the regulatory process in line with President Clinton's desire to reinvent government. How the process plays out remains to be seen.
Take a look at the Dept. of Transportation (DOT), the agency with the biggest day-to-day hand in trucking affairs. As a first step in its efforts to base enforcement on performance, DOT instituted a pilot program to exempt some light- and medium-duty operations from certain safety regulations.
A second step came earlier this year when the agency dropped the three-tiered motor-carrier safety rating system (satisfactory, conditional, and unsatisfactory). In its place, DOT has developed a rolling score based on a carrier's inspection, violation, and accident history that it will use to target the worst offenders for follow-up inspections.
The main course on trucking's legislative plate is the reauthorization of the highway bill, perhaps too cutely titled the National Economic Crossroads Transportation Efficiency Act, or NEXTEA. That bill could include everything from truck sizes and weights to hours of service.
Whether we like it or not, the government is helping to influence the business environment. To better prepare fleets for the status of major initiatives, FLEET OWNER offers the following digest of pending regulations.
NOTE: For more information on regulations, see chart that appears on page 10 and 12 of FLEET OWNER's May 1997 issue.
FLEET OWNER online from ITS Starting on May 14, FLEET OWNER will put its third Internet Show Daily online from the International Trucking Show in Las Vegas. Called @ITS, the electronic show daily will feature news and new product introductions posted by FLEET OWNER editors throughout the three-day event and it will remain online until August 16. It can be accessed at the FLEET OWNER home page (www.fleetowner.com).
ITS coverage will include reports on significant new products debuting at what has become one of trucking's premier events, as well as news and analysis from FLEET OWNER editors on the show floor.
The magazine's previous Internet Show Daily from the Mid-America Trucking Show went online in March with over 60 stories and has been experiencing record traffic. For those fleet managers who missed Mid-America, @Mid-America will remain up on FLEET OWNER's Web site until June 20.
Logistics stock up Senior management increasingly considers logistics to be critical to a company's ability to compete and win, according to Anthony M. Burns, chairman, president, and CEO of Ryder System.
"Logistics is now becoming a boardroom function, as opposed to a loading dock function," Burns told a meeting of the Detroit Economic Club last month. "Logistics can be a prime creator of competitive advantage today." According to Burns, logistics information technology can play a role in enhancing corporate shareholder value, customer focus, and global market opportunities.
He pointed out that today's global economy demands more sophisticated, information-based logistics and transportation solutions to get products to market when and where they are needed, but at an acceptable cost. Burns said that as a result, integrated logistics will be "the next major battleground in achieving economic competitiveness on a global scale."
A matter of choice Mack chief believes that fleets will outsource maintenance only to vendors they trust.
Fleets may wish to outsource maintenance, but only "if they trust the people they're turning it over to," said Michel Gigou, president & CEO of Mack Trucks.
Speaking at last month's American Truck Dealers (ATD) convention, Gigou said that trust must rest on a thorough understanding of fleet needs -- and the willingness of parts and service vendors "to align themselves with their customers."
While truck dealers seeking parts and service business have focused primarily on over-the-road fleets, he said that eventually more vocational customers will consider outsourcing, too.
"As OEMs work to meet government mandates on clean air and vehicle safety," Gigou pointed out, "vocational customers will be forced to work with technology they're not familiar with," including electronic engines and antilock brakes. "I think this will give dealers an opportunity to show their expertise and establish important relationships," he said.
"Greasing and preventive maintenance are revenue-generating processes," Gigou elaborated, "but even more importantly they're relationship-building processes." And if others take over that work, dealers and OEMs will "lose out on heavy-duty repairs and, ultimately, on truck sales."
He said another key to capitalizing on this relationship-building is recognizing that trucking's technological leaps are "limited solely by the ability to support" those advances consistently.
Pointing out that "you can't steal second base without taking your foot off first," Gigou noted that truck dealers also face risks in this lucrative market. "There are probably too many independent, full-line dealers in North America chasing too little business and supporting too much overhead," he stated.
"It is unreasonable to expect consolidation won't affect the dealer networks," Gigou added. "I wouldn't be surprised if we ultimately see an environment in which dealers are fewer in number but larger in size."
ATD chairman Ed Donahue agreed. The ranks of franchised truck dealerships have fallen steadily to 2,550 in 1995 from 3,600 in 1975, and the number of dealer principals even more so," he said. "Public ownership of franchised dealer networks, which arguably brings with it efficiencies of scale, the ability to attract and retain more professional employees, volume purchasing discounts, and lower interest costs for capital investments, has stuck a toe into our business."
As the strong dealers get stronger, Donahue argued, the trend of manufacturers selling direct to larger fleets "virtually guarantees those fleets a monthly fixed equipment cost that is unavailable to small fleets and owner-operators." Donahue added, "The big fleets then fight the pricing battle for market share in the shipping business based upon a significantly lower equipment cost than the smaller trucker. And, as a result, the small operator who buys his trucks from us is squeezed or just driven out of business."
Donahue also questioned the pressure to add parts and service capabilities. "Today's trucks require only one-third the major maintenance of a similar truck 10 years ago," he said. And the parts business has been flat for the past three years. The only way to expand this is for component and driveline suppliers to expand parts distribution through the OE level.
NAFTA inspections Nearly half of all Mexican trucks that cross the U.S. border fail safety inspections, according to a GAO report submitted last month to Congress. The report, which covers inspections for about 25,000 trucks, comes as the pressure increases to deny Mexican trucks greater access to American roadways.
In fact, opponents of NAFTA expansion released a letter signed by 226 Republican and Democratic House members urging President Clinton not to expand trucking access for Mexican haulers. ATA president Thomas J. Donohue condemned opponents of the border opening for "unduly scaring American motorists and unfairly maligning our trucking counterparts to the south simply because they're from Mexico."
The push is on The effort to get Congress to spend down the accumulated balance in the highway trust fund picked up some valuable support last month with the addition of a coalition of governors, business, and labor groups all starting to lean on Congress. At the same time, the rail and trucking industries remain at loggerheads over how to resolve differences over increased sizes and weights.
New driver fatigue deadline The FHWA has set June 30 as a revised deadline for comments on new hours-of-service regulations. At presstime, the agency's "Driver Fatigue and Alertness" study was scheduled to be released by the end of April -- some five months late. In addition to allowing time to review the full report, the comment extension will give drivers time to look at transcripts of sessions they participated in with FHWA.
No delay for tractor tape The rule requiring retroreflective tape on new truck tractors will go into effect July 1 of this year in spite of petitions made to NHTSA for a delay.
Private fueling gets upgrade First Data Corp./NTS has developed a new way to automate private fueling facilities that provides many of the same management controls currently available at commercial fueling stations.
The automated terminal is a module-based platform that captures fueling transactions by using an MS Windows environment and an off-the-shelf PC. Data can be integrated with other account information, including over-the-road purchases, billing, and reporting.
This system helps fleets avoid buying and maintaining proprietary technology and can be tailored with on-site hardware. Fleets can customize the system through simple configuration techniques without the need for any proprietary chips.
Through the system, transaction events for every employee and owner-operator can be customized, and terminal fuel purchases can be applied toward card- or trip-limit controls. Finally, the terminal fuel system can be used with fuel storage tanks to include probe information with optional fuel ordering.
First Data Corp. is already working on upgrades that will incorporate other operations such as gate control, truck washes, maintenance tracking, and fuel inventory.
TRALA sets agenda in era of change The Truck Renting and Leasing Assn. (TRALA) announced it will continue to oppose initiatives that discriminate against leasing in relation to ownership as part of a four-pronged initiative for the coming year. TRALA will also focus on eliminating vicarious liability laws that remain on the books in several states; eliminating barriers to the growth of dedicated contract carriage; and the highway reauthorization legislation.
As leasing executives come to grips with the political challenges, they confront a business world turned upside down. To help sort it all out, they heard from five executives of some of the industry's leading suppliers.
James Hebe, chairman, president, and CEO of Freightliner Corp., who used the forum to announce that Freightliner will not move into full-service leasing, pointed out that leasing has failed to participate in the growth of trucking to the extent it could have."Leasing was expected to garner 40% of the market," he said. "That didn't happen. The infrastructure investment that made you strong in the '80s could undermine you in the years ahead." Hebe urged leasing firms to find new ways to differentiate their service and to look to markets such as municipal governments and the military as new business niches.
Companies need to investigate expanding global markets, said Marc Gustafson, president and CEO of Volvo GM Heavy Truck Corp. "The advantages of a global company include lower cost for the customer because of a shared investment in research and development, better parts management, and the elimination of redundancy," he said.
The shift towards a more interdependent global economy provides opportunities in the new business reality of "deflation," said Alexander Cutler, president and COO of Eaton Corp. "One possibility for our industry is fighting over the pieces of the pie and warring over market share. Or we can enter new fields of play and make the pie bigger."
Opening new market opportunities means finding the right partners. Gone are the days of going it alone, said Tim Solso, president and COO of Cummins Engine Co. "The most effective way of managing cost control is through strategic partnerships."
Technology can help in the transition, said Larry Yost, president of Rockwell Automotive. But Yost warned against the proliferation of unshared and unconnected data. "We need to integrate technology in a way that keeps the customer in focus." Today's "hot buttons" are the need to handle maintenance records and to collect on-board data to understand what a vehicle needs to do in any given application so a fleet can make the best decisions in the least amount of time. -- Tom Moore