Dec 272011

Final Hours-of-Service rules flawed but will not impact 2012

Posted By: Tom Sanderson
Date Posted:  Tuesday, December 27, 2011  10:52 AM

There are two good pieces of news in the final hours-of-service rules. First, daily driving hours were not reduced from 11 to 10. That would have meant a significant hit to productivity for no improvement in safety. Second, the compliance date for the new rules is July 2013, or about 18 months. So there is no impact for 2012, and there is plenty of time to challenge the new rules which I expect the ATA will do. The ATA and the Owner Operator Independent Drivers Association (OOIDA) both oppose the final rules.

The 34-hour restart provision was changed requiring two consecutive rest periods between 1 AM and 5 AM for the restart. This makes no sense and has no scientific backing. If not overturned estimates of lost productivity range from 1 to 3 percent. That means more trucks and more drivers and more dollars to move the same amount of freight and almost certainly results in less highway safety, not more. It also means more drivers on the road after 5 AM during peak highway congestions periods, which is less safe and increases highway congestions, thus increasing emissions. For example, if a driver logs off at 2 AM on Saturday, under the old rules the 34 hours would be up at noon on Sunday and the driver could get under way any time that evening or night to meet a delivery appointment without concern about the morning rush hour. Under the new rules, the driver could not begin driving until 5 AM Monday (a 51 hour break) and would only have a short time to drive before hitting heavy traffic. It makes a Monday AM delivery more challenging so harms service in addition to increasing costs and doing nothing for safety. The original proposal had been midnight to 6 AM so the final rule was at least a little more lenient.

The overall workweek is reduced from 82 hours to 70 hours in a 7-day period, but most industry experts do not believe this will have a significant impact on productivity because most drivers are not working over 70 hours anyway.

If you want to read the whole 212 page “final rule” here is the link. Here is a brief summary from FMCSA.

 

Final HOS rules


Comments:  (2)
Categories: Hours of Service
Dec 192011

Senate pushes for EOBR mandate

Posted By: Tom Sanderson
Date Posted:  Monday, December 19, 2011  9:24 AM

While it is by no means a done deal, the Senate is moving towards a federal mandate for EOBRs for all trucks and buses. The Senate Commerce Committee approved four bills on December 14 as part of the larger two-year transportation reauthorization measure. One of the bills calls for mandatory EOBRs and has the support of the ATA but is opposed by the Owner Operator Independent Driver Association.

The FMCSA mandate for EOBRs was thrown out by the U. S. Court of Appeals in the summer.

Although I am not a big fan of federal mandates, EOBRs are an affordable and effective technology to keep our highways safer and level the playing field between carriers who play by the rules and those who are not appropriately focuses on safe driving.


Comments:  (0)
Categories: On-board trip recorders
Dec 152011

Auto sales top 13 million pace for third straight month

Posted By: Tom Sanderson
Date Posted:  Thursday, December 15, 2011  11:01 AM

Annualized seasonally adjusted U.S. sales of domestic and foreign autos and light trucks totaled 13.6 million in November; the third month in a row over the 13 million mark. Using our 3-month moving average, sales are up 10.3% from the prior year. The industry's hoped for 2011 sales of 13 million plus will not happen. Annualized sales averaged 13 million for the first four months of 2011, but only 12.5 million for the last six months. High unemployment, stock market gyrations, $4 gas, and worries about a double-dip recession are all working against an auto sales recovery. Auto sales remain about 19% below the average annual sales of 16.7 million from January of 2001 to December of 2007, before sales started to decline in 2008. The low point for sales were the first six months of 2009, when annualized sales averaged 9.621 million. It is clear from the data that the $3 billion Cash for Clunkers program did nothing but reward people for buying cars later or earlier than they had already planned. Our graph shows a 3-month moving average of seasonally adjusted annual rates to smooth out some of the month-to-month volatility.

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Categories: Auto sales and assemblies
Dec 152011

Flatbed capacity remains tighter than normal for this time of year

Posted By: Tom Sanderson
Date Posted:  Thursday, December 15, 2011  9:00 AM

Morgan Stanley's flatbed freight index continues to fall, but remains high relative to historical patterns. Capacity had eased early in the second quarter but tightened significantly coming out of Q2. The index softened through Q3 and into Q4 but remains higher than all other reference years and is considerably higher (tighter capacity) than the average over the complete time frame. The flatbed market was particularly hard hit by the fall off in housing starts, but gained ground with the growth in U. S. manufacturing. The index measures incremental demand for flatbed truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period.

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Graph reproduced with permission from Morgan Stanley. For more information contact: Adam Longson at Adam.Longson@morganstanley.com or Bill Greene at William.Greene@morganstanley.com


Dec 082011

Same store sales increase, but not at a robust pace

Posted By: Tom Sanderson
Date Posted:  Thursday, December 08, 2011  2:31 PM

While most retailers are seeing low single digit growth rates, the most recent monthly/quarterly same store sales data showed strong growth for four large retailers with sales up over 4% from last year. Costco, Sam’s and Kroger in particular had very strong numbers. Only Best Buy and Sears are reporting declining same store sales in the most recent reporting period. Results have improved from 2010 when same store sales for the same reporting period showed slower growth or greater declines for 7 of the 11. The retail segment drives a tremendous amount of freight transportation and this data shows that demand for freight transportation has some small upward momentum.

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Source: www.retailerdaily.com, www.stores.org, Transplace analysis, excludes fuel sales.


Comments:  (0)
Categories: Retail sales and same store sales
Dec 082011

SMS data shows serious flaws in methodology

Posted By: Tom Sanderson
Date Posted:  Thursday, December 08, 2011  10:48 AM

We have been analyzing CSA/SMS data posted on the FMCSA web site and have found some interesting and disturbing results that cast significant doubts on the effectiveness of the SMS methodology. First, the data is incomplete. Only 12% of all carriers are even measured by the system. There are about 770,000 carriers in the FMCSA downloadable SMS results. Of those, only 325,000 have even had a recorded inspection in the last two years or only 42% of carriers. Several inspections are required before an SMS score or percentage is reported and only 92,000 carriers have even a single score on one of the five publicly available BASICs. So 92,000 out of 770,000 carriers are being measured by the system. That is a paltry 12%. What about the other 88%?

Second, and more important, the SMS methodology indicates that over half of all measured carriers have scores above the intervention threshold on at least one BASIC. To suggest that over half of the available carriers have some deficiency in safety is absurd and flies in the face of the data showing the dramatic reduction in trucking accidents and fatalities per million miles. Over 51,000 of the 92,000 measured carriers have a score that exceeds the arbitrary thresholds established by the FMCSA. The agency is, at best, disingenuous in its claims that a much smaller percentage of carriers exceed the FMCSA limbo bars. They are comparing the 51,000 “golden triangle” carriers to a total of 500,000 or so carriers.

Finally, and most important, we know from the fine work of Anthony Gallo at Wells Fargo that there is no correlation between BASIC scores and accidents per million miles.

Shippers and brokers should not be using this flawed system to select carriers. The FMCSA needs to change its approach before many small businesses (carriers) are damaged or destroyed.

If you want to support my efforts to get sensible changes to CSA/SMS, starting with removal of SMS scores from the FMCS web site, please visit ASECTT and indicate your support for my letter to Congress.


Comments:  (2)
Categories: CSA 2010
Dec 082011

Dry van capacity-demand balance at average level for this time of year

Posted By: Tom Sanderson
Date Posted:  Thursday, December 08, 2011  8:16 AM

Morgan Stanley's dry van truckload freight index indicates capacity-demand balance remains very near the long term average for this time of year but that capacity is more tight than in 2010. Capacity had been more readily available than 2010 since the lines crossed in April, but they crossed again in September, indicating tighter capacity through the Fall. Our view is that until the economy recovers, we are not likely to see significantly tighter capacity and that is unlikely until some time in 2012. The index measures incremental demand for dry-van truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period.

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Graph reproduced with permission from Morgan Stanley. For more information contact: Adam Longson at Adam.Longson@morganstanley.com or Bill Greene at William.Greene@morganstanley.com


Dec 072011

Diesel remains near the $4 per gallon mark

Posted By: Tom Sanderson
Date Posted:  Wednesday, December 07, 2011  4:55 PM

Weekly retail on-highway U.S. diesel prices decreased by 3.1 cents to $3.931 per gallon. Diesel topped $4 two weeks ago but has dropped nearly 8 cents since then. Diesel remains 23% above the level from one year ago. The recent low price point for diesel was $2.023 on March 16, 2009. A view of weekly prices over the last 3 years shows much higher prices than seen in 2009 or 2010 (second graph). Diesel prices peaked at $4.771 per gallon in July of 2008 and were above $3 per gallon from September 24, 2007 to November 3, 2008 (over 13 months). Prices have been back over $3 since October 4, 2010 (14 months). In 2008, diesel exceeded $4 per gallon for 23 straight weeks, compared with 6 straight weeks earlier in 2011. In the 31 weeks since the 2011 peak of $4.124, diesel has fallen by 19.3 cents per gallon. In 2008, in the 23 weeks following the peak, fuel dropped by $2.57 all the way down to $2.20 per gallon.

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Comments:  (2)
Categories: Diesel fuel prices
Dec 062011

Auto sales remain over 13 million annual rate for second straight month

Posted By: Tom Sanderson
Date Posted:  Tuesday, December 06, 2011  1:53 PM

Annualized seasonally adjusted U.S. sales of domestic and foreign autos and light trucks totaled 13.2 million in October; the second month in a row over the 13 million mark. Using our 3-month moving average, sales are up 8.5% from the prior year. The industry's hoped for 2011 sales of 13 million plus seems extremely unlikely at this point. Annualized sales averaged 13 million for the first four months of 2011, but only 12.3 million for the last six months. High unemployment, stock market gyrations, $4 gas, and worries about a double-dip recession are all working against an auto sales recovery. Auto sales remain about 21% below the average annual sales of 16.7 million from January of 2001 to December of 2007, before sales started to decline in 2008. The low point for sales were the first six months of 2009, when annualized sales averaged 9.621 million. It is clear from the data that the $3 billion Cash for Clunkers program did nothing but reward people for buying cars later or earlier than they had already planned. Our graph shows a 3-month moving average of seasonally adjusted annual rates to smooth out some of the month-to-month volatility.

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Comments:  (0)
Categories: Auto sales and assemblies
Dec 062011

U.S. auto assemblies surge to 9 million annual pace

Posted By: Tom Sanderson
Date Posted:  Tuesday, December 06, 2011  10:39 AM

Annualized U.S. assemblies of autos and light trucks surged to 9.0 million in October (seasonally adjusted). The last time assemblies exceeded 9 million was July 2008. Assemblies had been relatively flat for the previous 17 months ranging between 7.5 and 8.6 million units annualized (seasonally adjusted). Our graph is a 3-month moving average of the seasonally adjusted annualized assemblies. Year over year percentage growth using the three-month moving average jumped to 11.4%. Average monthly seasonally adjusted assemblies were 11.4 million from January of 2001 through December of 2007 indicating that auto assemblies are still at depressed levels.

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Comments:  (0)
Categories: Auto sales and assemblies
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