Carrier execs focus on capacity, regulations, and safety in NASSTRAC panel

While the economy continues its gradual recovery, it has become more important than ever for carriers to manage multiple obstacles while re-growing networks and getting back to full strength. That was the main message of three leading trucking and supply chain executives during a panel discussion at this week’s NASSTRAC Logistics Conference and Expo in Orlando, Florida.

These obstacles include government regulations, managing capacity, increasing fuel costs, and shipper-carrier relationships and collaboration, among others.

Participating in the panel, entitled “Trucking Issues in 2011,” were Derek Leathers, incoming president and chief operating officer of Werner Enterprises Inc., Judy McReynolds, president and CEO of Arkansas Best (parent company of ABF Freight), David Congdon, president and CEO of Old Dominion Freight Line (ODFL), and Bill Logue, president and CEO of FedEx Freight.

Leading things off ABF’s McReynolds discussed the challenges of dealing with a changing marketplace.

“Our market seems to change very rapidly, particularly when there seems to be a swift change in the economy,” she said. “This presents issues for all of us in trying to plan for the future, and we are experiencing one of those periods right now. This time it seems to be a positive change. I am glad to see improvements in our business levels, which appear to be greater than what might be expected normally.”

McReynolds added that during the depths of the recession ABF kept its “ear to the ground” with its customers, saying it was critical for ABF to enhance its services and not move backwards, despite the challenges the recession was presenting at the time.

And the importance of shippers and carriers being able to truly understand each other in terms of what their respective needs are was essential during this period. Aside from the economy, safety and the ability for shippers to have a successful carrier relationship in a more regulated environment is a challenge for carriers like ABF, she said.

Addressing LTL capacity, McReynolds said that the LTL sector has gone through some dramatic changes, and the capacity available to the industry is significantly less than it once was, which, in turn, sees LTL carriers taking steps to ensure they have the capacity that is needed. She said ABF is doing this by making sure there is certainty for its customers as an asset-based carrier by effectively communicating asset availability to its customers.

ODFL’s Congdon honed in on sustainability in his comments, citing how his company runs triple 28-foot trailers in 16 western-based states in making is case for increasing truck size and weight.

“We as an industry are utilizing every proven means to operate productively and in an environmentally sustainable fashion,” said Congdon. “Increasing vehicle productivity through increased size and weight is the only meaningful lever left to pull. This can make a dramatic difference in the productivity of our industry and the value that can be provided to shippers.”

He added that with the U.S. population increasing by about 2.6 million people per year, it is increasing the amount of consumer demand, which necessitates the need for more trucks and subsequently more congestion.

And coupled with the threats of proposed Hours-of-Service changes that would decrease available driver time per day by one hour and CSA, which could reduce capacity, Congdon stressed that all modes of transportation need more methods by which they can improve productivity.

“There is a theme in Washington to shift more freight to rail and get trucks off the highway…that is not the answer,” he said. “Our customers and 3PLs are looking at the supply chain from the perspective of time, costs, and reliability, and shippers decide the mode by which they can move freight in the most efficient manner. More productive trucks in terms of LCVs (longer combination vehicles) or increased weight will get trucks off the highway. In the LTL industry, our primary concern is getting more cubic capacity, and if we can expand the use of LCV’s, triples in particular, we will meet those supply chain needs for time, costs, and reliability.”

Triples, said Congdon, will reduce the number of trucks on highways and the need for carriers to buy as many tractors and trailers, and also reduce the number of drivers required. He also noted how the extra trailer provides 50 percent more cargo space and has a 20 percent better safety record, and 20-to-25 percent less fuel consumption per ton-mile, with no impact on infrastructure, as the weight of the third trailer is spread across 32 more feet of increased axle weights.

FedEx Freight’s Logue said that the issue of driver availability could be impacted depending on how the HOS ruling plays out, coupled with what CSA numbers look like as it moves further along.

“While safety is critical, these things could increase expense and increase congestion,” said Logue. We believe we should go forward with CSA and EOBRs but perhaps back off HOS changes that have been in place since 2004 and have been very successful.”

Werner’s Leathers led off his comments by saying that the main theme in trucking today is capacity. In the truckload market, he said that about 18-to-20 percent of U.S. capacity has gone away in recent years.

This capacity exodus is a combination of bankruptcies, fleet shrinkage, and carriers that have closed down, said Leathers.

“There are a lot of companies that are quietly going away,” he said. “Werner’s fleet shrank by 15 percent. The obstacles we are faced with are real. The big three issues for us are CSA, EOBR and HOS. These are things we out to be focusing on as an industry. There needs to be collaboration between shippers and carriers, and we need to enforce the rules we have today.”

Leathers cited recent American Trucking Associations data which highlighted how 2009 was the safest year on record for heavy-duty trucks, making the case that changes in HOS guidelines are not necessary.

In addressing the proposed HOS changes, which call for a decrease in daily driving time from 11 hours to ten hours, coupled with an increase in the hours required to “restart” the clock from the current 34 hours off duty to as much as 48 hours, could result in a 4-to-10 percent productivity loss, said Leathers.

“We are against and concerned about the restart language,” said Leathers. “The concept of telling a fleet of drivers they need to wait until 6 a.m. on Monday morning to start a truck and head out into rush hour traffic is a winner on a list of bad ideas coming out of Washington. This is something we need to work together on to get our voices heard on this.”

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