April 2009


Reports on trucking and swine flu have proliferated this week. Many media outlets picked up the Knoxville, Tenn., newspaper interview with Professional Drivers Medical Depots (cited here earlier), but other angles have followed.

First, two on the lighter side:

Everitt Mickey, one of the writers who contributes to International Trucks’ Life on the Road blog, cautions readers to take the alarmist news accounts with a grain of salt: “The business of the news media, as they practice it, is to spread panic, hate, discontent and unease, while at the same time claiming otherwise.”

This one doesn’t involve trucking, but it does a thorough job of expanding Mickey’s criticism. My colleague Carolyn Magner showed me this on humor site The Gawker, with a label we both wish we’d coined: Aporkalypse now. The story itself, “Five Ways the Swine Flu Story Is Dumb,” takes the media to task.

The Fox affiliate in Memphis, Tenn., interviewed drivers across the Mississippi River in West Memphis, Ark., and found the flu was on the minds of many.  One was Veronica Martinez, who’s based in border city Laredo, Texas.  “You see this napkin here?” she said. “I don’t even touch the door.” The station’s website also has video of the West Memphis interviews.

 The City Wire of Fort Smith, Ark., is among sources reporting a statement from the American Trucking Associations: “ATA is aware that, depending on how aggressively the Swine Flu continues to spread, certain government actions might be taken which could impact trucking operations, especially cross-border operations with Mexico and Canada, and potentially at a domestic level.”

 The Journal of Commerce notes that work toward a new cross-border trucking program will apparently take a back seat to working on the flu.

— Max Heine

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News coverage of the spreading swine flu has pointed out the role of air travelers in spreading contagious disease. If you’re thinking that truckers, likewise being a highly mobile group, could help the swine flu bugs get around, you’re thinking like Dr. John McElligot, CEO of Professional Drivers Medical Depots.
     He has put his truck stop-based clinics on “high alert” regarding the spread of swine flu.
Two of the Knoxville, Tenn.-based company’s five clinics are in El Paso and Laredo, which is notable because both cities are on the Mexican border.  
     Dr. McElligot was interviewed by the Knoxville News-Sentinel. Though I doubt he meant to single out truckers in a negative way, he was a bit blunt in describing the role they play in situations such as this because of their transience: “It’s truckers that spread things when there’s something of pandemic or epidemic proportions.”

No news reports have linked specific swine flu cases to truckers or truck stops.

— Max Heine

Well over 100 owner-operators turned out Wednesday evening for Overdrive’s first webinar. Kevin Rutherford, our Dollars & Sense columnist and the host of ATBS Trucking Business & Beyond on Sirius XM, had a lot to say about “Surviving a difficult economy.” The overall reviews were overwhelmingly positive, and that’s saying a lot, coming from a group that doesn’t mind sounding off about anything that rubs them the wrong way.

 

Listeners viewing the free web presentation also had a lot to say – both in questions submitted while Kevin was speaking and in responses to a survey we sent out afterward. Some of the topics you’d like to see covered are negotiating with brokers, maintenance issues and nitty-gritty business matters, such as follow-up on the profit and loss statement Kevin reviewed in his presentation.

 

We’re putting those suggestions in high priority as we plan webinars for the rest of the year. I’d also like to hear any other ideas, so comment on this blog. Chances are the next ones will be more narrowly focused than this first one. Keep checking the home page of eTrucker.com and the pages of Overdrive  for notice of the next one.

 

If you’d like to see and hear what you missed, visit our Trucker Webinars site next week. By then we should have the recorded program ready for free download. And you can also learn more about Kevin at his website.

 

— Max Heine

When the economy’s in a tailspin, some observers like to speculate that the owner-operator is about to become an endangered species. Indeed, many contractors have fallen out in recent months, but there’s no doubt about the potential for good operators to make money.

The biggest owner-operator fleet, Landstar Systems, recently announced it earned $14 million in the first quarter. Granted, that’s 41 percent less than a year ago, due to decreased revenue in a serious downturn, but it’s still profit in a period when some corporations are losing billions.

One reason for Landstar’s success is it’s very picky about accepting leased operators, or business capacity owners, as it calls them. Its cream-of-the-crop owner-operators reflect that, bringing in an average net income that’s in the industry’s top tier.

Landstar’s success was recognized by outsiders last month when the company was ranked first in the trucking category in Fortune magazine’s 2009 list of America’s Most Admired Companies. That was the sixth time the company was ranked in the list.

The recent quarterly earnings report was guarded about a second-quarter projection due to the uncertainty of the economy. Still, management appears to feel good about its business model and its owner-operators and how together they can handle whatever comes next: The company bought about $12 million worth of its own shares in the first quarter.

— Max Heine

If you’re still smarting over last year’s outrageous diesel prices, you can take a little comfort in a prediction from the U.S. Department of Energy. The feds forecast diesel will average $2.19 over 2009, and $2.51 in 2010.

“The expected continuing decline in diesel fuel consumption in the United States this year as well as the growing weakness in distillate fuel usage outside the United States are projected to result in a narrowing of refining margins for distillate throughout the forecast period,” says DOE’s Energy Information Administration. “Because of the global weakness in industrial output, it is possible that we will see diesel prices fall below gasoline prices this summer.”

That forecast, as well as the rest of agency’s analysis, for the most part links the price of diesel and other fuels to the timing of an economic rebound. So watch the news, which you’ve probably noted of late has had reports of indicators showing that the downturn perhaps has hit bottom.

And particularly watch the stock market. If it rises faster than expected, don’t be surprised if the DOE forecast goes up in ultra-low-NOx smoke.

— Max Heine

I doubt there are many Americans who haven’t been stung by greedy credit card companies’ sneaky tricks of raising interest rates for lame reasons to levels well over 20 percent in some cases.

Owner-operators have more than their share of whelps. You often having to rely on credit while far from home. When the economy’s tough, it’s easy to fall behind on bills, a sure trigger for higher interest rates.

A tremendous consumer backlash over the issue continues in Washington, D.C. While consumer-friendly credit card changes are to take effect in July 2010, legislation moving through Congress now would accelerate that and bring more protection. Among other things, it would prohibit credit issuers from suddenly jacking up interest rates and fees, and it would prevent young adults from getting credit cards without parental permission.

Last week, the Credit Card Accountability Responsibility and Disclosure Act of 2009 moved further than it ever has, getting Senate committee approval. Bankers are the main opposition. Consumer groups and others are for it. Let those who represent you in Washington know you support it.

— Max Heine

Daniel Ustian and Mark Piggott were among a handful of trucking-related CEOs included in the annual Wall Street Journal CEO compensation survey released today.

 

A photo of Ustian, head of Navistar International, made a front-page graphic due to his compensation rising almost five-fold, to $6.5 million, in 2008 – a year when average top CEO compensation fell. One of the stories, quoting a Navistar spokesman, attributed the large hike to Ustian’s “relatively low 2007 compensation and the company’s success reaching its performance targets.”

 

Pigott, head of Kenworth and Peterbilt parent Paccar, had 2008 compensation of $10.8 million, a 15 percent increase from 2007.

 

Having seen their compensation rise in 2008, Ustian and Pigott stood out from the others in the survey of chief executives of the nation’s 200 biggest companies. The Journal found the group’s total direct compensation for the year fell 3.4 percent to a median of $7.6 million.

 

Other leading Class 8 truck makers, having foreign ownership, are not eligible for the survey.

 

— Max Heine