July 2009


I was fortunate to be invited to Peterbilt’s 70th anniversary celebration at the Denton, Texas, headquarters this week. As part of a presentation to dealers and customers, the company presented this cool little video that shows many of the truck models morphing into each other, reflecting the changes over seven decades.

Also, note the top two photos on the right for a glimpse at a few trucks that stand out in Peterbilt’s history.

And if you haven’t already seen our story, check it for more detail about the company’s history and anniversary celebration.

 — Max Heine

Faithful watchers of “Ice Road Truckers” this season know that there ain’t much between Fairbanks and Prudhoe Bay. There’s a few state highway facilities for maintenance of the Haul Road, a few resort facilities (closed in winter) when you cross the Yukon River, and then Coldfoot Camp at roughly the halfway mark. (See the top four photos on the right.)

It’s considered the world’s northernmost truck stop. There’s food, fuel, lodging and other amenities. When I rode the Haul Road with George Spears, now one of the stars on “Ice Road Truckers,” in 2006, we stopped there. We had a fine meal and chewed the fat with other drivers before traversing the remaining 239 miles of wilderness that ended at Prudhoe Bay.

Coldfoot began around 1898, earning its name when thousands of gold-hungry settlers arrived, then quickly got cold feet about the prospect of wintering there, according to the settlement’s website. Many made like birds and headed south.

“At its height, Coldfoot had one gambling hall, two roadhouses, seven saloons and 10 ‘working girls’ (many of the local creeks are named for these friendly women),” says the website. By 1912 the miners relocated to richer ground 13 miles away in Wiseman, and Coldfoot became a ghost town.

Coldfoot revived in the 1970s when a camp was established during construction of the Trans-Alaska Pipeline. “In 1981 Alaskan dog musher Dick Mackey set up an old school bus here and began selling hamburgers to the truck drivers,” says the website. Truckers, using crates that had held pipeline insulation, began hammering together what grew into what is now Coldfoot Camp.

— Max Heine

Anyone who thinks the owner-operator business model can’t rebound from the prolonged downturn, rising costs and other factors should take note of Landstar System. The nation’s largest owner-operator carrier reported its second-quarter earnings Wednesday.

Of course, business was down, as it has been everywhere. Revenue dropped 30 percent from a year ago, and earnings dropped from 56 cents per share to 35 cents per share.

But this isn’t a business model that compels its owners to fly to Washington, D.C., and beg for a few billion or so to tide them over. That 35 cents per share translates to an $18 million profit for the quarter. Furthermore, Landstar’s board declared a 13 percent increase (4.5 cents) in the company’s quarterly dividend.

Shareholders aren’t the only ones profiting. Its 8,000-plus owner-operators are among the highest-earning and safest leased operators in the business. If Landstar wasn’t treating them right, they’d leave in a heartbeat.

And if you want a deeper explanation of the fiscal side, here’s what Landstar President and Chief Executive Officer Henry Gerkens had to say in the company’s prepared statement:

“Irrespective of the current economic environment, Landstar continues to generate outstanding returns. Trailing twelve month return on average shareholders’ equity remained high at 35 percent and trailing 12-month return on invested capital (net income divided by the sum of average equity plus average debt) was 24 percent.

“Landstar’s net revenue margin, defined as revenue less purchased transportation and commissions to agents divided by revenue, was 17.2 percent, up from 15.3 percent in the 2008 second quarter. And, as a direct result of Landstar’s variable cost business model and other cost reduction actions taken in 2009, Landstar was able to generate an operating profit margin of 6.1 percent, despite the revenue decline.”

— Max Heine

 The good report last week on 2008’s highway fatality numbers, including truck-related deaths, was a bit incomplete because of the highly unusual drop in vehicle miles traveled (VMT, in government-speak). Of course, that decline was due to months of outrageous fuel prices during late 2008.

The press release from the American Trucking Associations conveniently failed to mention that factor, even though it did cite increased use of safety belts and the hours of service regs that took effect in 2005. Instead, it trumpeted only total truck-involved fatalities dropping 12 percent in 2008 from the year before, from 4,822 deaths to 4,229.

Granted, the heavy-truck VMT hasn’t been determined yet and the overall VMT number is preliminary, says Duane DeBruyne of the Federal Motor Carrier Safety Administration. Still, that overall VMT and its change from 2007 was included in the primary announcement from the National Highway Transportation Safety Administration. And Rose A. McMurray, acting deputy administrator for FMCSA, made the point that “the downturn in the economy clearly impacted freight volumes and the overall number of miles logged by truck drivers.”

NHTSA calculates a 3.4 percent decrease in VMT for all drivers over the year. Even if trucking’s rate were double that (6.8 percent), it would mean truck-related fatalities still dropped dramatically (12 percent) – hardly anything to be ashamed of.

 — Max Heine

If you’re looking for good news, this morning’s report from the Institute for Supply Management has some: The overall economy grew in June. Warehouses are emptying out, which is good for trucking.

Manufacturing failed to grow last month, though its rate of contraction is slowing. And seven of 18 industries did report growth to ISM: petroleum and coal products; printing and related support activities; wood products; nonmetallic mineral products; miscellaneous manufacturing; chemical products; and primary metals. 

“Most encouraging is the gain in the Production Index, which is up 12.1 percentage points in the last two months to 52.5 percent,” says ISM’s Norbert J. Ore. “Aggressive inventory reduction continues and indications are that the de-stocking cycle is at or near the end in most industries, as the Customers’ Inventories Index remained below 50 percent for the third consecutive month. The Prices Index was unchanged from May, indicating that the supply/demand balance is improving. Overall, a slow recovery for manufacturing is forming.”

— Max Heine