Category: "economy"

05/06/09

  09:55:09 am, Categories: economy , Tags: clean truck, emission levels, freight volume

Freight volume is down. Business is slow around the world. The Port of Los Angeles instituted the Clean Truck program. The Ninth Circuit Court of Appeals overturned a portion of the Clean Truck program. The EPA is requiring new emission levels on 2010 equipment. OEMs have developed two different methods to achieve the emission standards. Carriers are filing bankruptcy. These are just a few of the headlines in the transportation industry since the first of the year. With all the changes happening in transportation today, how can you afford to plan ahead or can you afford not to plan ahead?

First you must look at your current operation and find things you can do today to ensure that your company survives these tough times. Strip out all unnecessary expense and unprofitable lanes. Build customer loyalty with you profitable customers. Search for addition customers in industries outside your normal business model. Look outside the box.

Once you have determined that you are lean and competitive, sit down and contemplate the future. When freight volumes rise (which they will eventually), will you be ready to capitalize at that time? Now is the time to plan.

Will you need to purchase new equipment? If so, will you purchase the SCR or enhanced ERG motors? It appears, at this time, that both methods will be certified by the EPA 2010 emissions standards. You need to research both methods and determine which will work best in your fleet. The enhanced ERG motors require only minor modification to maintenance schedules, but there are concerns that the fuel efficiency will suffer slightly and there will be more heat to dissipate. The SCR motors require an additional DEF (Diesel Exhaust Fluid) tank. DEF is a 32.5% urea (ammonia) solution in a purified water base. The OEMs estimate that you will use 1 gallon of DEF for every 300 miles of travel. They also claim that you will increase you fuel efficiency by 2 to 3% which should offset the price of the DEF. Many truck stops are already getting ready to sell DEF, so it should be readily available, but the price has yet to be determined. You need to research and decide now which equipment you will purchase next year.

With the Port of Los Angeles implementing the Clean Truck program, other ports will likely follow. If you go to any port to drop or pickup containers, you will need to start planning now. With the appeals court in the middle of this, no one is sure what the final program will be, but cleaner truck programs of some type will become more prevalent in the coming years. If you plan now, you can be on the forefront of this movement.

These are just two areas that require immediate attention. We have all heard the expression, “Failing to plan is planning to fail.” Start now and plan your survival in the changing transportation industry.

Craig Sorensen
TruckMaster Solution Provider
TruckMaster Your Trucking Company

04/27/09

  10:52:00 am, Categories: economy , Tags: economy, tough times, trucking industry history

Is Today’s Economic Market Good For Me?

In today’s economic markets, are we being forced to find ways to grow our trucking companies? Or, are we progressively developing strategies that will take us past yet unseen economic fluctuations? I offer two statements to consider. In his epic work The Republic, Plato stated, “Necessity is the mother of invention.” In a satirical comment Thorstein Veblen stated, “Invention is the mother of necessity.” As we look at the advances in the transportation industry I leave it to you to decide which of these is true and how we may interpret today’s economy and its effects on us.

As the world slipped from the 19th to the 20th Century, the railroad industry controlled all freight movement across the United States and Canada. The highway system we now enjoy wasn’t even a dream then. Farmers wishing to send produce from California to the Mid-West or East Coast (not entirely sure why they would want to) would transport their very under-ripe products from their fields to the rail station via a horse-drawn cart. Once at the rail station, the produce would be loaded into iced cars that would need to be re-iced 3-10 times before arriving at the destination rail station. Produce laden trains made multiple stops along the way to pick up additional items, drop items off, switch train assignments and even allow the product on board to be trans-loaded from one car to another. Temperature fluctuation was nearly impossible to control. The produce buyer would then go to the rail station, in a horse-drawn cart, and pick up the now over-ripe and badly abused produce and take to market – transit time from field to table – anywhere from a week to three weeks depending on the train schedule. Farmers said, “We’ve got to decrease the transit time. We’ve got to control the temperatures better.”

In the early 20th Century, gasoline and diesel powered farm trucks, took over the role of the horse drawn carts. This allowed for more volume in less time at the start and end of the trip but had little effect on the ‘over-all’ transit time and therefore, declining quality.

In the 1950s, President Eisenhower envisioned an interstate highway system that would link the country together with roads that were capable of handling extremely heavy equipment, had limited access so higher speeds could be maintained, was built of materials that didn’t break down quickly under the elements of nature, and made travel enjoyable. (Remember, he was a military man and was designing a system that could be used for military transport and, where necessary, make-shift airfields.) At the same time, truck and trailer manufacturers were working to meet the increasing demand for bigger, better and more efficient equipment. Some of us may even remember that first Mack truck we learned to drive with dual sticks, a brownie, and no sleeper. Empty, they had rock-hard leaf springs that would bounce your insides out in just a few miles. Loaded, they groaned slowly up hill and raced wildly down hill. And don’t forget, no air conditioning.

What was the advantage to these ‘innovations?’ Now produce could be loaded at the farm and delivered to market usually on the same trailer – no railroad middle man, no extra hands to slow down delivery or damage fragile products. Transit times drop to 7-10 days across country. This led to better quality on the receiving end, which led to better prices, which led to more orders. But we still had the issue of temperature control for that transit time.

As we continue down the time line, we see the development of reliable mechanically refrigerated trailers and more powerful, safer and easier to drive tractors. By the 1980’s we had better control of the temperature and transit time – which led to near fresh-picked quality, which led to better prices, which led to more orders, etc. It’s not uncommon for team drivers to leave the Salinas Valley in California Friday afternoon and be at market in New York City on Monday morning – that’s three days. In fact, it is expected.

At the beginning of this article I offered you two statements. So the question is, “Is ‘necessity the mother of invention’ or is ‘invention the mother of necessity’?” Did a need to expand produce markets create more efficient ways to get product to market? Or did the advances of technology give rise to expanded produce markets?

Where do we go from here? What does the future hold for the transportation industry? In these economically challenging times we must look for opportunities to create new necessities or new inventions. You pick which statement is true.

Dale Clark
TruckMaster Solution Provider
TruckMaster Your Trucking Company

04/09/09

  02:40:58 pm, Categories: economy , Tags: business credit, credit worthiness

Credit Worthiness

During economic hard times, it’s time to get back to basics. Look at the things you did when you were growing your business and do them again, but more efficiently. When you study business history, many of the most successful business were started in hard economic times and the owner did the things that made it possible to grow then and also be prepared for better times later. Several things to consider in your business is cutting costs, improving efficiency, generating new business and monitoring credit worthiness of your customers.

Today let’s discuss the credit worthiness issues. This single thing may be the deciding factor on whether your business survives and prospers or does not. If one of your customers goes bankrupt and you are left with some outstanding debt, can you continue? What can you do to try to avoid this?

First review (or create) your company’s credit policy, considering the following:

  • How is a new customer approved for credit?
  • Are they required to fill out a credit application?
  • Are references checked prior to issuing credit?
  • Who can approve credit?
  • Are credit limits set and enforced?
  • What are your terms?
  • Do you charge interest or late fees?
  • What are the consequences of late payments?
  • What are your collection policies?

Once you have determined your credit policy, include this policy in any contract or acceptance letter you send to your customer. Your customer needs to know your policy prior to doing business with you.

Monitor your accounts receivable (by customer) regularly. Compare their outstanding debt now with a month or a year earlier. If a customer is getting behind on payments, contact them immediately and try to resolve the issue. If you do not get this resolved, follow through on your credit policies for late payments. You cannot afford a "wait and see" attitude hoping your customer will come around.

Establish a method to monitor the financial information of your customers. Read trade journals, talk to other companies, network and use credit monitoring services to keep track of the credit worthiness of your customers. Remember if you are averaging 5% net after expenses, one load that is not paid, means the next 20 loads are ‘not for profit’ loads. You can’t be too careful. Your business depends on credit, but you must continuously monitor all your credit accounts.

Craig Sorensen
TruckMaster Solution Provider
TruckMaster Your Trucking Company

02/20/09

My job allows me the opportunity each week to talk with hundreds of people in the trucking industry. They represent a broad spectrum of companies from single truck owner operators, mid-sized trucking companies, large contract carriers, private fleets, and non-asset based operations. Some of the people are just venturing out into the trucking industry for the first time, but the majority of them have been in the trucking business for at least a decade or more. With few exceptions despite the negative news reports, and mountains of statistical data declaring how horrible the economy is these people are tenaciously optimistic. While acutely aware of their business challenges, they are creative, and motivated to overcome them.

Times like these always bring about new opportunities. Manufacturers and distributors are constantly evaluating their supply chains in search of increased efficiencies. Where a larger carrier may have had a dedicated fleet, decreased demand may open up an opportunity for a smaller carrier, or a brokerage firm with the right mix of capacity to fill the gap. Staying in contact with your customers, networking, and being prepared for opportunities has never been more important. New business are sprouting up where larger and/or less efficient companies have failed. New opportunities are all around us. If we're too busy complaining or watching the news we will miss them. History has many stories of people that have made their success during the worst economic times. These successful people were not sitting around complaining with the masses.

Customers do not want to hear gloom and doom from their vendors, they want to know they are financially viable, and have an efficient operation that provides excellent customer service. As a service provider this is your opportunity to not just survive but thrive. Your attitude with your co-workers, employees, vendors, and customers will directly affect your success with them. Where others may be constantly complaining about the economy and barely making it, be optimistic and let them know how well you are doing. Share your successes with them. Is a customer going to remember another person sharing how horrible things are, or will they remember the person who was optimistic and positive.

Finally, we need to continue to invest. Invest in our people, our equipment, and our systems. This may not be in just dollars, but in time. Staff need to know we are optimistic about the future so they can help look for opportunities, and stay productive. Most trucking companies already know the importance of maintaining their equipment. Almost nothing is more expensive then an equipment failure. It is also true for the often over looked office equipment. Empowering your people with a positive environment and efficient systems is more important now than it has ever been.

Please provide us feedback on how your company is staying positive and thriving in this time of opportunity. Attitudes are contagious, and you never know who your positive attitude is going to infect.

TruckMaster is where positive attitude can be found. Call or write us today and find out for yourself.

Kurtis Brown
TruckMaster Solution Provider
TruckMaster Your Trucking Operation

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