CCJ0114 by dwatson

january 2014

CCj FALL SYMPOSIUM Change in coming year and beyond a constant theme page 34

FINDING DRIVERS FASTER

page 22

Technology brings speed, consistency to recruiting

FERRO DEFENDS HOURS RULE

page 7

FMCSA administrator grilled during House hearing BUSINESS SOLUTIONS FOR TRUCKING PROFESSIONALS

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upfront

The year in review

2013 shaped up to be a blockbuster year for industry news as scandals and lawsuits led the way BY JEff CrISSEY

f you’re a fan of lawsuits, 2013 was an interesting year, to say the least. And if you’re an attorney in the transportation sector, chances are good that 2013 was a banner year. In 2013, it seemed the entire trucking industry was in a litigious mood. We saw lawsuits by shareholders against an engine maker, customers suing a fuel provider, carriers suing carriers and OEMs suing OEMs. And the Federal Motor Carrier Safety Administration was sued by just about everyone for everything from the cross-border trucking program and its Compliance Safety Accountability program to its latest hours-of-service rule. But what were the top headline-grabbing news stories from last year? Thanks to in-depth website metrics, we were able to sort it all out. Here are the top 10 news stories from 2013 based on the number of page views at ccjdigital.com: 10. White House proposes new round of truck emissions reductions. Laying out his new Climate Action Plan on June 25, President Obama announced his administration will work with industry stakeholders to develop post-2018 fuel economy standards using “advanced cost-effective technologies” and other freight efficiency initiatives; 9. Cummins, Eaton collaborate on new powertrain package. Not to be outdone by a number of vertically integrated powertrains being offered by other OEMs, Cummins and Eaton announced a cooperative effort that would allow their proprietary engines and transmissions to communicate better and optimize fuel efficiency; 8. U.S. engine makers ask court to revoke Navistar’s EPA certificates. In September, Volvo, Mack and Daimler argued to the U.S. Court of Appeals that the embattled engine maker benefited from “certificates of conformity” while being allowed to sell noncompliant engines at a penalty of $1,919 per unit. Later, federal appellate judges tossed out the Environmental Protection Agency rule that benefited Navistar; 7. California trucking association continues pressing suit against CARB. The California Construction Trucking Association continued its suit against the California Air Resources Board’s incremental year-to-year truck and emissions regulations, alleging truck owners would shoulder the brunt of equipment upgrade costs. The initial suit took place in March 2011; 6. Sleep apnea bill clears Senate. After clearing the U.S. House with a unanimous 405-0 vote, the Senate in October passed legislation that would require FMCSA to use formal rulemaking rather than guidance for any sleep disorder screening mandate for trucking companies. Days later, President Obama signed the bill into law; 4

commercial carrier journal

| january 2014

5. Ray LaHood out as Transportation Secretary. LaHood announced he was leaving the president’s cabinet post in January. He was replaced by former Charlotte Mayor Anthony Foxx, who pledged to focus on safety, efficiency and performance to improve the nation’s transportation system; 4. Pilot Flying J fraudulently withheld millions in rebates for years, documents allege. In one of the biggest scandals in the trucking industry, a court released a 120-page affidavit on April 18 stating the truck stop company knowingly had withheld fuel rebates from customers. A string of arrests and classaction lawsuits followed, and Pilot later reached an $85 million settlement with 5,500 trucking companies; 3. CSA being audited by Inspector General over data quality. In January, the Office of Inspector General began an assessment of CSA and its ability to evaluate carrier performance and risk accurately. Aspects of the program remain under fire from industry groups; 2. EOBR rule could come by September, says Ferro. As of this writing, no formal electronic logging device proposed rulemaking has been published. However, FMCSA Administrator Anne Ferro earlier last year said the agency could issue a rule requiring the use of ELDs as early as September 2013; 1. New hours-of-service rule takes effect July 1. OK, in full disclosure, HOS-related news stories actually rated Nos. 1, 3, 4, 6, 7 and 8, but rather than squeeze other stories out of the top 10, we lumped all HOS-related stories in at No. 1. Industry analysts and fleet feedback point to a 3 to 5 percent drop in productivity since July 1 when the rule took effect that requires a mandatory 30-minute rest period within the first eight hours of drive time and a 34-hour restart limited to once per week and that contains two consecutive 1-5 a.m. periods of rest. Industry groups and members of Congress continue to challenge the new rule and advocate for a rollback to previous hours requirements. After a relatively quiet regulatory environment in 2012, last year lived up to its billing with a number of regulatory issues grabbing headlines. As we close the book on 2013, the new year likely will see a new host of rulemakings that garner plenty of attention. If recent history is any judge, there will be plenty of legal challenges to follow. JEFF CRISSEY is Editor of Commercial Carrier Journal. E-mail jcrissey@ccjmagazine.com.

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leading news, trucking market conditions and industry analysis

Ferro defends hours rule

ederal Motor Carrier Safety Administration Administrator Anne Ferro persistently defended her agency’s hours-of-service rule in a House subcommittee hearing. “No, absolutely not,” she said when asked by subcommittee chairman U.S. Rep. Richard Hanna (R-N.Y.) whether she would be open to undoing the rule. The rule has been “upheld by the court. It’s based on sound research,” she said. Members of the House’s Small Business Subcommittee didn’t pull any punches in questioning Ferro, who testified at the Nov. 21 hearing dubbed “Wrong Way: The Impact of FMCSA’s Hours of Service Regulation on Small Businesses,” organized to question the agency’s data and methodology, as well as the rule’s effects on pay and productivity. The hearing also provided a public evidence gathering for Hanna’s TRUE Safety Act bill, which he and two other congressmen introduced in the House. The bill would undo the hours rule change until the Government Accountability Office could study FMCSA’s methodology further. Hanna and U.S. Rep. Tom Rice (R-S.C.) were the most vocal subcommittee members, continually trying to point out the detrimental effects the trucking industry says it’s experiencing due to the rule changes.

U.S. Rep. Richard Hanna took FMCSA Administrator Anne Ferro to task in an hours-of-service hearing.

Hanna said FMCSA has acted “arrogantly and insensitively” by moving forward with the rule without first performing and using the field study required by the MAP-21 highway funding act passed last summer. The agency, he said, “rushed into” creating a rule that “is inflicting pain on people.” Ferro said the agency did not rush the rule and that she stands by its methodology. The rule “absolutely is data-based, research-based, fully vetted, [with an] unprecedented level of transparency throughout the development of this rule process,” she said. Hanna challenged that assertion, saying the agency hasn’t completed the field study or taken into account the change of driver workload and how it has, in effect, pushed drivers “into hours that are more” congested. “Why is the agency so numb to the industry?” he said. Ferro insisted the agency has a great sensitivity for those in the industry, adding that Congress needs to address the issue of detention time and, more importantly, the lack of compensation for drivers when held for hours waiting to load or unload. “Inadequate compensation – 36 cents Scan the QR code with your smartphone or visit ccjdigital.com/news/subscribe-to-newsa mile for a driver runletters to sign up for the CCJ Daily Report, a ning 70 hours a week – is daily e-mail newsletter filled with news, analyunconscionable,” she said. sis, blogs and market condition articles. – James Jaillet

Summit: Urgent need for higher highway funding

he Highway Trust Fund likely will be dried up by 2015, and federal

and state governments must shore up funding not only for improved infrastructure but also for the overall health of the economy. That was the message of speakers at the Infrastructure for the Future conference last month in Washington, D.C. The event was put on by the American Highway Users and the Volvo Group. Over half of the highway miles traveled in the United States are on roads in less than good condition, said U.S. Sen. Barbara Boxer (D-Calif.), chairman of the Senate Environmental & Public Works Committee. The primary problem with funding is that Highway Trust Fund revenue, based on fuel taxes, is declining. “Guess what’s going to be in the Highway Trust Fund for 2015?” Boxer asked. “Nothing.” The difference between trust fund receipts and expenditures on highway spending has been $15 billion in recent years, said Bud Wright, executive director of the American Association of State Highway & Transportation officials.

commercial carrier journal

– Max Heine

| january 2014 7

JOURNAL NEWS

INBRIEF 1/14 • Calling for a transition to “a long-term stable funding source” for the nation’s transportation infrastructure, U.S. Rep. Earl Blumenauer (D-Ore.) introduced The UPDATE Act of 2013, legislation aimed at a short-term fix for declining highway dollars: a 15 cents-per-gallon increase in the federal motor fuels tax. • U.S. cargo thefts from August to October fell 9 percent from the previous rolling quarter to 212, according to FreightWatch International. The average value lost per load was $256,586.

• A judge ordered North Canton, Ohio-based Star Air Inc. to pay $302,000 to two drivers deemed wrongfully terminated after refusing to drive when they discovered their carriers’ trucks did not have the proper information (company name or USDOT number) displayed on the vehicles. The U.S. Department of Labor filed the lawsuit on the drivers’ behalf. • Warren, Mich.-based truckload carrier Universal Truckload Services (CCJ Top 250, No. 28) acquired Louisville, Ky.-based Westport Axle Corp. – a provider of warehousing and componentdistribution services to manufacturers of Class 4-8 trucks – from its Brazilian owners for $123 million.

• The Oregon Trucking Association last month sought a limited exemption for state timber haulers from the hours-of-service 30-minute break requirement, agreeing to restrict their duty day to 12 hours if relief was granted.

• Manitoulin Transport agreed to buy the remaining Canadian assets of Toronto-based Vitran Corp. (CCJ Top 250, No. 37) for $128 million.

• Five household goods movers were shut down by the Federal Motor Carrier Safety Administration for holding loads hostage and failing to cooperate with investigators: Allegiant Van Lines Inc., based in Davie, Fla.; Northern Van Lines Inc., based in Cooper City, Fla.; Northeastern Vanlines Inc., based in Pembroke Pines, Fla.; United West Moving and Storage Inc., based in Anderson, S.C.; and Direct Movers Inc., based in Pikesville, Md.

• More than 143,000 Christmas wreaths were placed at the headstones of fallen U.S. soldiers at Arlington National Cemetery by 30,000 volunteers working with Wreaths Across America, the organization said. In all, volunteers laid 540,000 wreaths delivered by more than 100 trucking companies at 908 veterans cemeteries across the United States. Wreaths Across America is sponsored in part by the Truckload Carriers Association and CCJ publisher Randall-Reilly.

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| JANUARY 2014

Text INFO to 205-289-3554 or visit www.ccjdigital.com/info 12/18/13 1:48 PM

journal news

CARB delays retrofit deadline

he California Air Resources Board is delaying the particulate matter filter retrofit enforcement deadline to July 1 for truck owners who report by Jan. 31 they made efforts toward trying to comply with the retrofit law. CARB said it would recognize truck owners’ “good faith” actions toward compliance by Jan. 1, the deadline for retrofitting a PM filter. The state says it will delay enforcement through July 1 for those who’ve made efforts and then reported the efforts by Jan. 31 to CARB’s Truck Regulations Upload and Compliance Reporting System. To qualify for the PM filter enforcement delay, owners of any sized fleet must show they took one of the following steps: • Have an agreement with an authorized installer of a PM filter retrofit; • Signed a purchase contract and ordered a replacement truck equipped with a PM filter (2007 model-year engine or newer); or • Were approved or denied financing for a retrofit filter or for a replacement truck equipped with a filter. CARB said it also will recognize “good faith” efforts of truck owners of small fleets – one to three trucks – that meet all requirements of the Proposition 1B Goods Movement Emissions Reduction Program. The board last month also proposed to increase its low-use mileage exemption from 1,000 to 5,000 miles per year per truck. Another exemption would allow truck owners to run in certain NOxexempt counties without retrofitting their trucks with PM filters or buying new equipment until January 2015. CARB also is investigating problems with PMs and skepticism of them by truck owners and will issue a report in the spring. CARB representative Todd Sax said the board realizes the costs of the regulations will be paid by truck owners, and the board is balancing that

with the need for clean air for the public. Any changes “need to be fair and enforceable” while “recognizing fleets that have already taken steps to comply,” Sax said. HowesCCJUSL_HalfPageIsland.pdf 1 – Jill Dunn

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| january 2014 9 12/12/13 8:32 AM

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journal news

FMCSA updates citation protocol to allow removal of violation from CSA, PSP

n an attempt to shore up some of the data quality issues facing the Federal Motor Carrier Safety Administration’s Compliance Safety Accountability and Pre-employment Screening Program initiatives, the agency unveiled changes to its data collection system that it said will better account for legal processes that take place after a citation is issued for a roadside inspection violation. FMCSA announced the changes Dec. 2 via the Federal Register, saying to this point there’s been no real way for it to receive updated information on “subsequent adjudication” that occurs with roadside inspection citations after they’ve been uploaded. The agency said the changes to its Motor Carrier Management Information System will allow it to remove violations from a carrier’s or driver’s CSA score and PSP report if the violation was dismissed or resulted in a “not guilty” ruling. If adjudication results in conviction of a different or lesser charge, FMCSA will retain and update the violation and change the severity weight in the carrier’s

FMCSA said the changes will better account for legal processes that take place after a citation is issued for a roadside inspection violation.

CSA Safety Measurement System as necessary. If the carrier is convicted of the original charge, both the CSA and PSP records will retain the violation. The changes in data collection includes challenges made in FMCSA’s DataQs system, which allows drivers and carriers to dispute citations from roadside inspections. DataQs challenges are forwarded to the state or local agency that issued the citation. FMCSA said its state and local partners will update their processes to ensure later adjudication of roadside inspection violations makes it back to the agency. – James Jaillet

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journal news

Court rejects broker group’s request to halt bond increase

CENTER Demystifying the World of Antifreeze / Coolant

Q How does antifreeze/ coolant (AFC) protect an engine from cavitation corrosion? By Colin Dilley, PhD Director of Technology

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While Quality AFC will provide effective inhibition of corrosion for most of the cooling system metals through a wide range of temperature extremes, high-heatrejecting surfaces such as wet sleeve liners are high-heat ﬂux areas where boiling can be generated. As bubbles form and collapse, they send a shock wave to the surface that can cause very localized damage, which appears as a circular pit on the surface of the metal. This damage can cause a leak resulting in a loss of the engine if it is not stopped or the part replaced in time. The corroded surface can generate products that are transported to other areas of the cooling system, leading to other serious problems including the overheating and loss of an engine. If you want to run at optimum performance and protect ALL engine metals from corrosion, pitting and rusting, it is imperative a quality AFC, such as Prestone Command® Extended Life Coolant, is utilized at the appropriate change interval.

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commercial carrier journal

broker trade association appealed a regulation that changed the minimum bond requirement from $10,000 to $75,000, which it said shut down 2,768 brokers who weren’t in compliance by the Dec. 1 deadline. On Dec. 3, the Association of Independent Property Brokers & Agents appealed the Federal Motor Carrier Safety Administration’s final rule in the U.S. Court of Appeals for the 11th Circuit. It argues the rulemaking violates the Administrative Procedure Act. FMCSA issued the rule after Congress stipulated brokers must obtain the higher bond by Oct. 1 in last year’s surface transportation reauthorization. The rule allowed an enforcement grace period until Dec. 1, after which the agency promised it would revoke the authority of brokers who had not obtained the higher bond. The association of small and mid-sized brokers stated that as of Dec. 5, the agency listed 21,565 active brokers, which it said was 13 percent fewer brokers than the previous month. Surety bond provider JW Bond Consultants put that number higher, estimating that about 3,800 broker authorities had been revoked by Dec. 3. AIPBA initially had asked the court for a temporary stay of the rule, which a threejudge panel for the circuit denied Nov. 26. FMCSA said it did not have discretion regarding the amount of the bond requirement because it had been set by Congress. It added federal law does not mandate a notice-and-comment period when agencies publish rules to comply with a statutory change, making a rulemaking procedure impractical or unnecessary. The Transportation Intermediaries Association, American Trucking Associations and Owner-Operator Independent Drivers Association supported the increased bond requirement. – Jill Dunn

Pilot Flying J settlement reaches $85M

federal judge granted final approval to Pilot Flying J’s class-action settlement agreement with trucking companies that sued the truck stop chain over alleged fuel rebate withholding fraud. Pilot will pay out about $84.9 million to roughly 5,500 class members – all of them trucking companies. Per the terms of the settlement approved Nov. 25 by U.S. District Court Judge James Moody in Little Rock, Ark., Pilot will pay 100 percent of discounts gone unpaid, along with 6 percent interest. The company also will pay class members costs for internal audits, court fees and expenses. As of Nov. 22, 146 members had opted out of the settlement, either to file a separate lawsuit or pursue other action. However, when treating affiliated companies as single entities, Pilot said, the number of opt-outs is 60. According to a court petition filed by Pilot last month, the settlement awards $56.5 million in owed fuel rebates, $9.75 million in interest, $4.5 million for auditing costs and up to $14 million in attorney’s fees. – James Jaillet

| january 2014 12/10/13 9:10 AM

journal news

Judges toss EPA rule in Navistar case

ederal appellate judges last month tossed out a U.S. Environmental Protection Agency rule that allowed for the approval of Navistar’s heavy-duty exhaust gas recirculation truck engines that did not meet 2010 emissions standards. The U.S. Court of Appeals panel agreed with Daimler, Mack and Volvo, which had argued that EPA was wrong to grant Navistar certificates of conformity and allow the truck maker to pay noncompliance fines based on “substantial work” that would be required to meet the emissions limits. The three plaintiffs argued that Navistar partnering with Cummins on a functioning selective catalytic reduction strategy didn’t require “substantial work” on the part of Navistar,

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and that granting the certificates on the grounds of “substantial work” constituted an EPA rule change that required a notice and a public comment period, which did not take place. While the decision is likely to have an impact on similar EPA rulings going forward, the court acknowledged the end result in the SCR case likely was moot since Navistar’s new engines would be in compliance with new emissions standards enacted this month. A federal court previously had dismissed a challenge from the three truck makers aimed at voiding the certificates. In the months since that ruling, Navistar has transitioned all of its Class 8 trucks to compliant SCR technology. – James Jaillet

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| january 2014 13 12/10/13 9:11 AM

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product reviews, oeM & supplier news, and equipMent ManageMent trends by Jack roberts

Regulation rage

Trucking about to be strangled by new rules

New regulatioNs: the forthcoming round is the largest concentration ever to hit the industry concurrently.

No oNe safe: the new rules will create challenges in the coming years for both fleets and owner-operators.

y any measure, CCJ’s Fall MaNy raMificatioNs: the onSymposium last month in slaught may spur more fleet mergers and Scottsdale, Ariz., was a resoundclosures while limiting newcomers. ing success. As the equipment editor for our publisher, Randall-Reilly, I – along with my fellow editors – attend this threeday series of meetings with two primary purposes. The first, naturally, is to report on the once and create incredible challenges various speakers and news generated by the Symposium and communicate that informain the next several years for both fleets tion back to you. (For a full roundup from the CCJ Fall Symposium, turn to page 34.) and owner-operators. Even if they truly Our other Symposium assignment is exactly the same as the fleet executives attending: don’t hit all at once, they will be coming Learn as much as possible about current and future trends facing the trucking industry so we hard and fast, like storm-tossed waves can be prepared for them as they develop. The funny thing is that you never know when some on a beach. By the time fleet managers vital piece of information is going to leap out at you. get a handle on one set of new rules, Case in point was Eric Starks’ excellent economic forecast, which he presented at the they’ll be trying to sort out another Symposium on its last morning. batch of regulations before they’ve had a Economist Eric Starks warned Now, I’m not going to lie to chance to catch their breaths. CCJ Fall Symposium attendees you: Even though they’re vitally It’s going to be a relentless and highly about the upcoming wave of important to all of us, I hate challenging environment, to say the least. government regulations afeconomic presentations. Every Starks predicted these new regulations fecting the trucking industry. time I attend one, I’m immewill spur additional fleet mergers, drive diately transported back to less healthy carriers out of the marketDr. Vallery’s Macroeconomics place and serve as a substantial barrier to 101 class at the University of entry that will – at least initially – make Alabama, where I sat in utter it considerably more difficult for new bewilderment for a whole setrucking companies to go into business. mester understanding virtually Needless to say, there will be a lot of nothing that was discussed the entire time. news coming as these regulations take efWhile taking notes at Starks’ presentation, it felt like I once again was sitting in Dr. Vallery’s fect, and the industry as a whole will have class trying to make sense of all of the statistics being thrown at me. But even if I hadn’t been to work diligently to get through them – taking notes, one of Starks’ main points would’ve made an immediate impression or take advantage of them. when he pointed out that the forthcoming round of government regulations is the That said, I hope you took a nice long rest over the largest concentration of such ever to hit the trucking industry concurrently. These holidays this year, because I changes include California Air Resources Board trailer regulations, hours-of-serthink you’re going to need vice changes, new greenhouse gas/mpg rules and potential mandatory electronic logging device and speed limiter requirements. it: I have a feeling that 2014 “The problem is not so much the regulations themselves,” Starks said. “It’s the fact is going to be a wild and that they’re all happening at once. But make no mistake – these regulations will be interesting ride. game-changers.” I knew full well beforehand that all of these regulations are coming, but until JACK ROBERTS is Executive Editor of Commercial Carrier Journal. E-mail jroberts@ccjmagazine.com or call (205) 248-1358. Starks pointed it out, it had not occurred to me that they will hit more or less all at commercial carrier journal

january 2014

InBrIeF •

•

Lane Departure Warning System from the Federal Motor Carrier Safety Administration, which cited highway safety and the benefits of LDW technology. The exemption extension from certain windshield clearance rules allows fleets and drivers to continue installing and using AutoVue while remaining within FMCSA regulations.

Accuride Corp. announced Steel Armor, a new three-phase coating process for its commercial vehicle steel wheels designed to enhance corrosion-fighting properties and help extend steel wheel service life by up to two years. Mack debuted its Granite Medium Heavy Duty rear loader designed for refuse fleets seeking a lightweight and cost-effective vehicle that also is tough and reliable.

•

Freightliner Trucks now offers twin steer chassis prep kits for its 114SD and 122SD truck models to facilitate quicker aftermarket conversions and installation of second steer axle and heavy-duty suspensions. Kenworth Truck Co. made Bendix ADB22X front air-disc brakes standard on its Class 8 tractors and trucks after previously offering the brakes as an option.

•

Bendix Commercial Vehicle Systems received a regulatory two-year exemption extension for its AutoVue

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Eaton’s Roadranger Class 6-8 used truck program features extended warranty options available for up to eight years and 1 million miles on transmissions and up to five years and 500,000 miles on clutch components.

•

Dolezych – a German-based manufacturer of load securing technologies – formed Doleco USA, its first sales, distribution and manufacturing presence in North America, and named Ralph Abato managing director.

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Meritor Wabco marked America Recycles Day by releasing a remanufactured System Saver air compressor for select trucks that use Mack’s ASET engine.

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Bendix produced its 1 millionth EverSure Spring Brake equipped with the No Touch Power Spring.

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Thermo King’s TriPac Evolution auxiliary power unit now is available with a 2,000-hour maintenance interval.

Wabash Composites produced its 100,000th DuraPlate AeroSkirt, which the company introduced in 2009 to address customers’ needs for improved fuel economy. Fontaine Fifth Wheel developed a catalog designed to make it easier for fleet managers to mix and match Navistar-compatible brackets and top plates to spec the optimal fifth wheels for their needs.

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or all the strides made in tractor-trailer aerodynamic research, a fundamental design trait still bedevils experts, and it’s a design feature crucial to the truck’s efficiency: The trailer gap. Any vehicle moving through an air mass faces two impediments: drag and a vacuum. Drag is simple enough to define: any object jutting out into the air that

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impedes a smooth flow of air streaming around, over and past the vehicle. Rearview mirrors and bug screens are excellent examples of drag-inflicting surfaces on a tractor-trailer. A vacuum is a little harder to identify. Basically, it’s an area of lower air pressure around a vehicle that sucks in air that ought to be flowing smoothly past the vehicle. As this low-pressure area robs air streaming around the truck, it can create turbulence in the airflow around the vehicle, making it more difficult to move efficiently forward while forcing the engine to generate more power to maintain forward motion. While bumper-mounted air dams, wheel coverings and trailer side skirts and tails have improved airflow underneath and around tractor-trailers dramatically, the trailer gap remains an inherently difficult area for engineers to address. “It is difficult to improve the aerodynamics of the tractor-trailer gap area because the trailer needs to articulate,” says Mario Bravo, director of marketing for aerodynamic device manufacturer FlowBelow. “In addition, because there are many trailer and tractor configurations, having to design and build many variations of any solution makes it difficult for a manufacturer to reach economies of scale and offer their product at an attractive price.” While the gap area is not the largest component of tractor-trailer drag, it is made more challenging by several difficult-to-resolve geometric issues, says Mike Henderson, chief scientist for SmartTruck. Computation fluid dynamics and testing have shown that gap drag results from low pressure in the gap reacting on the rear of the tractor and its fairing and the front of the trailer, Henderson says. The solution, Henderson says, is to close the gap or place fairings on the front of the trailer’s top and sides, keeping in mind that the larger the gap, the larger the fairings needed. “Because of the variation between

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commercial carrier journal | january 2014

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technology The Vista way

Omnitracs says acquisition gives it tighter focus

n Nov. 25, Vista Equity Partners formally announced it had completed its acquisition of Omnitracs, but the owners already had made something clear to John Graham, the new chief executive officer of Omnitracs. Vista is a large company with numerous vertically oriented software and data-enabled businesses. Company executives told Graham that they do not know the what and why for developing software in the trucking industry; they would expect those answers to come from Omnitracs and its collective expertise in that domain. However, Vista said it would be telling Omnitracs how to do it. Norm Ellis, vice president of transportation and logistics sales, services and marketing for Omnitracs, shared his thoughts on the Vista acquisition during a CCJ interview last month. One of the things Vista brings to Omnitracs is a set of standard operating procedures that cover every aspect of software development, from gathering the requirements to writing code, testing and deployment across all industries that it serves. “They are the experts at that, and that is exactly what we need,” Ellis said. “We now have a partner that has processes on how to do the development, find the requirements and achieve a return on investment customers are Omnitracs Optimized: new thrilled about. This owner Vista brings a set of standard is Vista’s intellectual operating procedures for software development. property.” Ellis said he anOther acquisitiOn: Vista knew about Vista’s knew that omnitracs was interested standard operating in roadnet and decided to pursue procedures (VSOPs) the deal. before the acquisimOre cOllabOratiOn: Distion, but neither he cussions between omnitracs and nor anyone else at roadnet are underway to find ways Omnitracs could to work together. see them until the

technology Making the latest technology developMents work for your fleet by AAron Huff

Omnitracs’ Norm Ellis said new owner Vista will help his company develop new software more efficiently and faster than ever.

Our customers will be the greatest beneficiary a year to 18 months from now. – norm ellis, omnitracs deal closed. Now that the books have been opened, Ellis said the VSOPs will help Omnitracs develop new software more efficiently and faster than ever. “Our customers will be the greatest beneficiary a year to 18 months from now,” he said. On the same date that Vista announced it had finalized the Omnitracs purchase, it added news that Roadnet Technologies – a provider of routing, scheduling, optimization and mobile resource management software – will be joining Omnitracs as part of a single organization. Omnitracs was considering buying Roadnet while under Qualcomm’s umbrella but had to back away when Qualcomm pursued suitors for Omnitracs. Vista knew that Omnitracs was interested in Roadnet and decided to pursue the deal on its own. “Customers expect us to grow and add on to our portfolio,” Ellis said. “We now have a perfect owner in Vista. They came at the right place and the right time.” Discussions between Omnitracs and Roadnet are underway to find ways to develop more collaboration between the two enterprises. This combination especially will be relevant for fleets in need of an integrated telematics and route planning system as they move into dedicated operations to replace their customers’ own private fleets, Ellis said. aaron huff is senior editor of Commercial Carrier Journal. e-mail ahuff@ccjmagazine.com or call (801) 754-4296. commercial carrier journal | january 2014

technology

InBrief •

Vigillo debuted Athena, a Software-as-aService offering designed to gather data from a wide variety of sources, distill it into understandable information and present it visually in a“dashboard” format accessible through all types of devices.

•

Pegasus TransTech released new versions of its scanning software designed to improve image quality and software performance. Enhancements were made to the company’s Transflo Express truckstop scanning service, Transflo Now anywhere in-cab scanning and Transflo Express Carrier Retrieval.

•

AT&T added dispatch features to AT&T Enhanced Push-to-Talk designed to enable workforce management functionality, which allows businesses to map the location of company-issued Enhanced PTT devices.

•

GE Capital Fleet Services announced a suite of analytical tools as part of its Strategic Consulting Services (SCS) capabilities.

•

Instructional Technologies released its Pro-Tread online training course for the Globally Harmonized System (GHS) for the Classification and Labeling of Chemicals. The title is shorthand for the Occupational Safety and Health Administration’s update to the HazCom Right-to-Know regulation.

•

J.J. Keller released online editions of its “HazCom: What You Need To Know” training program for Spanish- and Canadian French-speaking employees. The courses also are available in English and in a variety of additional training formats.

•

Inrix, a provider of traffic information and driver services, announced that GPS North America and Contigo Systems, which offer fleet management systems, adopted Inrix Driver Analytics, designed to help fleets reduce fuel and liability costs by comparing driver behavior to the actual travel conditions encountered by their vehicles at specific dates, times and locations on the road network.

IntereSted In truckIng technology? Scan the barcode or go to www.goo.gl/Ph9JK to subscribe to the CCJ Technology Weekly e-mail newsletter. 22

in focus: Streamlining driver recruiting

Overcoming the bottlenecks Technology brings speed, consistency to driver recruiting by aaron huff

rivers who submit an online application to the Celadon Group will be surprised at how quickly their phones ring afterward. Within seconds, a recruiter will be calling to help move the application along. The Indianapolis-based truckload carrier receives thousands of applications each month. Most come through online job boards and are sent to dozens of other carriers simultaneously. However, drivers who apply directly through Celadon’s websites are the ones that the company’s recruiters really want to contact. These drivers arrive at the rate of about 100 per month and are the hottest leads; they are looking not just for a job, but a job at Celadon. As soon as drivers applying through Celadon’s websites click the “submit” button, an application checks to see if they meet the company’s minimum requirements. Recruiters receive an automated phone call with an option to connect instantly with the drivers who pass the hurdle. About 75 percent of these prequalified leads will meet additional requirements and receive job offers, says Dave Chesterman, director of recruiting.

Speeding the pipeline Based on industry estimates, fleets spend between $3,500 and $8,000 per driver to hire and train recruits. While technology can help reduce these costs, it also can improve the quality of the recruiting pool and speed response time to hot leads. ACS developed the Virtual Recruiter software used by Celadon. Most fleets using Virtual Recruiter range in size from 200 trucks to more than 1,000, says Dennis Veneklase, vice president of digital media for ACS Advertising. McLeod Software and TMW Systems, the largest providers of enterprise transportation management software, have modules designed to speed the driver recruiting and hiring process. This year, McLeod added an online signature capture and authorization feature to its HirePower driver recruiting module. The features are part of its new Logix e-Forms online driver application. Fleets using the TMWSuite platform from TMW Systems, together with the company’s Synergize imaging and workflow modules, can receive applications from drivers directly online or from electronic submission methods such as fax or e-mail. The data can be mapped to specific workflow procedures and business process rules. Several products have an online application process linked into databases to verify past employment and qualify drivers instantly to move hot leads quickly through the pipeline. EBE Technologies uses an integrated online process in its Ships Driver Recruiting platform to validate driver qualifications against fleet standards. EBE also has a portal that conveys the status of the application process to drivers, helping to reduce the number of inquiries from drivers about the status of their applications. The portal also can

commercial carrier journal | january 2014

technology speed onboarding by having drivers complete payroll documents and other forms electronically before they arrive for orientation. Tenstreet’s IntelliApp system helps speed the process for drivers with an auto-fill feature that draws information from its database of unique applications that have contributed to more than 2.5 million applications processed to date. A separate platform, Xchange, integrates with IntelliApp to coordinate data sources used in the verification process. Predicting success FleetRisk, a division of Omnitracs, has added a predictive dimension to driver recruiting. FleetRisk uses a wide range of historical driver data in its predictive models to create a profile for drivers most likely to succeed for its fleet customers. The profile is derived from a set of fleet-specific “predictors,” says Vikas Jain, who leads the FleetRisk Advisors business unit of Omnitracs. FleetRisk Advisors integrates with Tenstreet and EBE to show rankings of drivers – the top 10 percent, the next 10 percent, etc. – that best match the profile. Fleets might consider offering the top 10 percent of their recruits a better pay package due to their greater likelihood of success, Jain says. When it comes to identifying, qualifying and hiring hot leads, technology makes it possible to offer jobs within seconds and minutes rather than days.

Right Weigh offers in-dash digital onboard load scale

ight Weigh Inc. launched its first indash mounting digital onboard load scale: the E-Z Weigh In-Dash Scale. The scale is available in two models. The dedicated truck-trailer model displays the on-ground weight for the trailer and the truck’s drive axles in pounds and kilograms while also showing an estimated steer and gross weight. The truck-only scale displays the on-ground weight for the truck’s drive axles, making it best suited for straight trucks or trucks that typically drop and hook. The in-dash design incorporates a two-point calibration process for each axle group being monitored to help facilitate accurate weight readings within 300 pounds or better per axle group. A large touchscreen with an adjustable backlight helps makes it easier for drivers to view the display. “We were very intentional with the straightforward design of this scale,” said Scott McCulloch, director of communications and international business development. “We recognize that fancy isn’t always better, so we remained focused on designing a product that is simple to install and easy to use effectively.” – Aaron Huff

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12/16/13 3:50 PMEST commercial carrier journal | january 2014 23 12/17/13 1:20 PM

Ready. Set. Learn.

CCJ and its CCJ Innovators partners are proud to provide a series of podcasts that highlight the achievements of recent Innovator honorees. The CCJ Innovators program profiles fleets that have shown initiative in addressing critical areas in their businesses: • • • • • •

Operational efficiency Use of information technology Customer relations Maintenance practices Employee recruiting and retention Safety

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Get the FREE mobile app for your smart phone at http://gettag.mobi. Scan the barcode to directly link to the CCJ Innovators website for the complete rules and criteria along with the nomination form.

Archives of past Innovator articles, webinars and podcasts are also available online. Nominate your fleet as a CCJ Innovator at ccjinnovators.com. Sponsored by:

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CCJ Fall Symposium

Change in 2014 and beyond the constant theme “You all literally make something move. That’s a foreign concept in Washington, which instead stops things – economic growth, wages and prosperity – from moving.”

– Laura Ingraham, political radio host and Fox News contributor

f fleets aren’t circling the wagons, they can’t be blamed for thinking about it. Challenges abound from every quarter in today’s business environment, from industry-specific issues such as a worsening driver shortage, fuel price volatility and a raft of new regulations slated to hit all at once, to broader concerns such as an uncertain economy and the reality of the Affordable Care Act – also known as “ObamaCare.” Speakers offered insights and advice on dealing with these pressing issues at the CCJ Fall Symposium held last month in Scottsdale, Ariz.

Fleet executive panel says driver image, engagement critical to solving shortage In the next decade, the trucking industry must add 239,000 drivers annually to keep up with freight demand and replace the 37 percent of current drivers who will retire. A panel of fleet executives discussed solutions to this employment problem. The panel agreed that improving the public’s image of the transportation industry is the single biggest obstacle for attracting new drivers to the profession. “We need to turn that ship in the right direction,” said panelist Keith Tuttle, pres34

“The best hire is somebody who has got experience. There is a much higher turnover rate with guys who are right out of driving school.”

– Keith Tuttle, president, Motor Carrier Service

ident of Motor Carrier Service, a 100-truck carrier based in Toledo, Ohio. Don Lefeve, executive director of the Commercial Vehicle Training Association, said federal and state funding for CDL schools would be helpful. Congress has not dedicated funds

commercial carrier journal

| january 2014

“We need to generate a workforce that wants to do this. People want a good job.”

– John Hancock, director of training and driver recruiting, Prime Inc.

ATA chAirmAn sAys hOs, csA, imprOving driver respecT Are priOriTies During his luncheon address, Phil Byrd Sr. – American Trucking Associations chairman and president of Bulldog Hiway Express – said three key legislative focuses for ATA in 2014 are electronic logging devices, rolling back the changes to the hoursof-service rule and improving components of the Compliance Safety Accountability program. ATA is working with Federal Motor Carrier Safety Administration Administrator Anne Ferro to work out CSA’s “fundamental flaws,” including having no-fault crashes removed, he said. ATA has been a strong supporter of recently introduced H.R. bill 3413 that would revert to the previous hours-of-service rule that existed prior to the current version that took effect in July.“Current HOS rules impede the free-flow movement of goods

to train workers for a career in transportation, Lefeve said. Tuttle, who prefers to hire experienced drivers, has noticed an alarming trend in recent month among his long-tenured drivers: “Drivers who are leaving now have been with us for 10 to 15 years.” Tuttle didn’t have an explanation for why experienced drivers are changing jobs. “Most good carriers will not hire a large percentage of drivers,” he said. “We will look at one out of 150 applications sent to us. We do very well financially, but we are frustrated with our ability to show

“Highways are literally crumbling beneath our trucks and cars. Congress knows how to fix the problem but doesn’t have the will to do it.”

– Phil Byrd Sr., ATA chairman and president of Bulldog Hiway Express

along U.S. highways and exacerbates congestion in metropolitan areas and will make the driver shortage worse,” said Byrd. Byrd said while early statistics show a 3 to 4 percent loss in productivity among large fleets, the impact on his own business has been greater. Highway infrastructure funding is also a priority for ATA, but Byrd said until the stalemate between Republicans and Democrats is broken, nothing is likely to change.

Byrd said improving driver respect is a cause he plans to champion during his tenure as ATA chairman. “These incredible men and women – U.S. trucking fleet drivers – are disrespected at every turn. When they go to our shippers’ door to pick up, their time is disrespected, they don’t have adequate facilities. Then they get that load secured and get that bill of lading in hand and go out on the public highway system. And because the motoring

public doesn’t understand how we operate as an industry, they are disrespected by the people we share the roads with. And when they arrive at our consignees to deliver the goods, they receive much of the same disrespect when they loaded the freight. “We have to change that,” Byrd said. “Until we restore the respect our drivers deserve, we can’t expect people to come into our industry to be mistreated and misunderstood.” – Jeff Crissey

“Lack of state and federal funding for training and education is a major obstacle to solving the driver shortage.”

– Don Lefeve, executive director, Commercial Vehicle Training Association

substantial growth with the driver situation right now.” Panelist John Hancock, director of training and driver recruiting for Prime Inc., said the Springfield, Mo.-based carrier sees a large number of applicants who are not employable for any job due to serious flaws in their work history. Prime – which has 5,300 power units and 6,300 drivers

in tanker, reefer and flatbed operations – has a turnover rate of 61 percent, below the average rate for large truckload carriers. The company is focused on creating opportunities to maximize income for its employees and contractors who see trucking as a good career choice. The panel agreed that health and wellness programs are part of the retention

solution and that having new equipment spec’d with modern creature comforts has become standard fare for attracting over-the-road drivers. MCS also involves its drivers in planning routes and rating customers. “We actually fired a good customer three weeks ago for some of their detention policies,” Tuttle said. – Aaron Huff

commercial carrier journal

january 2014

Four tips to consider with AFFordAble cAre Act lAunch dAte This month, the first elements of the Affordable Care Act – also known as “ObamaCare” or ACA – will take effect nationwide. Even though certain parts of the new health care law have been delayed until 2015 or even 2016, fleets still need to be preparing now for changes that soon will occur. Attorney Kathryne Feary-Gardner – of the law firm Scopelitis, Garvin, Light, Hanson & Feary – briefed fleet executives on a variety of concerns and actions they should take as the law goes into effect. She highlighted four acts that fleets can take now to make sure they are in compliance: 1. First, fleets should

“With ObamaCare, fleets must ask themselves if they want to pay or play.” – Kathryne Feary-Gardner, attorney for Scopelitis law firm

begin tracking both part- and full-time employees’ hours in 2014. While the new law applies to businesses with 50 or more full-time employees, smaller businesses on the threshold of this qualification must figure part-time hours into their equation to determine whether they will be required to provide insurance

for their employees. This requirement, called the “Employer Mandate,” has been delayed until 2015, but the determination as to whether a business qualifies for it will be based on 2014 employee hours worked. 2. Next, businesses must develop a compliance strategy – basically deciding if they will

“pay or play.” In other words, it may make sense for some businesses to pay the penalty for not providing health insurance for employees – at least initially – until rates decrease. Other businesses may find it more affordable to provide coverage for employees. 3. Next, smaller fleets need to determine if they are eligible for a Small Business Tax Credit to help them provide coverage for their employees. 4. Finally, if you already offer your employees health care, determine if that plan is acceptable under ACA guidelines and will be “grandfathered in” as a viable plan. – Jeff Crissey

dAvis tAlks criticAl csA points For drivers, oFFice Jeff Davis, principal with Fleet Safety Services, provided an update on the latest Compliance Safety Accountability developments, emphasizing several points he said fleets must realize as they operate in today’s environment. Davis also noted that the public access component to CSA is gaining steam rapidly. Many customers are beginning to review carrier scores online and hire – or fire – fleets according to what they see there. He said CSA is forcing fleets to focus not only on improvements in driver behavior and maintenance practices but also in all areas of fleet operations. Davis recalled a U.S. Department of Transportation audit for one of his clients. The fleet performed 81 drug tests to score a“satisfactory” rating in a Behavioral Analysis and 36

Safety Improvement Category. But the fleet’s office staff couldn’t produce paperwork for one of the drug tests.“The situation was corrected immediately, but they were still hit with an‘unsatisfactory triangle’that they were forced to carry around for 12 months before it was updated,”Davis said. That fleet’s problems didn’t end there, he said. Its biggest customer, a pharmaceutical company, was not pleased to see the carrier apparently was lax on drug enforce-

commercial carrier journal

ment, and several meetings took place to reassure that customer that this was a bureaucratic error. The law enforcement spotlight now shines too brightly upon drivers, Davis said.“Fully two-thirds of all roadside inspections are triggered by driver behavior,”he said. “One-third of them are triggered by traffic violations such as speeding or improper lane changes. Another one-third is triggered by failure to wear a seat belt. This behavior is essentially putting a

welcome mat out and inviting law enforcement officials in, and the odds are they’re going to find something – most often it will be an improperly kept logbook.” While drivers are a crucial element of CSA scores, they are the ones having the hardest time with the new rules, Davis said.“Be gentle and patient with them and retrain them to the fullest extent you are able to,”he said.“Keep your drivers in mind to be successful.” – Jack Roberts

“Today, under CSA, it is absolutely vital that you demand the same level of excellence from your office staff and their operations as you do from your drivers and maintenance personnel.”

– Jeff Davis, principal with Fleet Safety Services

| january 2014

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UNDERSTANDING FINANCIAL RATIOS The following is an excerpt from How to Use Financial Statements, a manual produced by Commercial Carrier University and sponsored by Chevron Delo and Sprint. CCU is an educational program produced by Commercial Carrier Journal that includes business management manuals, seminars aimed at improving management skills and a website. For more information, visit www.commercialcarrieruniversity.com. By now, you have developed a solid basic understanding of financial statements. Now it’s time to learn what sophisticated readers do with these numbers. Bankers, accountants, credit analysts, financial officers and potential buyers pull certain numbers out of the financial reports and perform mathematical calculations, called financial ratios, to measure your company’s health. Your own personal health, as measured by your annual physical exam, is a good model for how this works. After your lab work comes back, your doctor examines your blood test results and discusses them with you. He might say your cholesterol count is 185, which by itself means nothing to you, and you have no idea how the lab arrived at that figure. If the doctor says that you generally are healthy as long as the number stays below 200, you relax. But if he says that over the last four years it’s climbed steadily from 140, then you need to explore ways of reducing the number. Financial ratios and analyses are no different. You don’t have to be an expert at the computation, but you should know what the ratios say about your company’s financial health. Also, lenders almost always have loan covenants that dictate the minimum

COMMERCIAL CARRIER JOURNAL

ratios the company must achieve. Financial ratios help you compare current results with your company’s trends over time and with the current results of others. By examining the same ratio over time, you can determine whether the company is getting stronger or weaker in the area the ratio measures. Similarly, you can compare your profit margin to that of another company or to industry averages. Using ratios this way helps analysts make sense of pure dollar amounts, which can be confusing when comparing companies having different revenues or assets. Owners or managers who don’t have financial backgrounds might not realize that they already use ratios in their companies. If you’ve ever signed for a business loan, you likely agreed to keep the financial condition of your company within certain bounds. These affirmative covenants appear in the loan agreement as minimum financial ratios. Is your company in compliance? You won’t know unless someone in your company regularly computes the ratios. There are dozens of financial ratios, but they commonly fall into major groupings. Liquidity ratios measure the company’s working capital and how it is man-

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aged. It takes money to make money. Has the company invested enough to keep operating? How financially liquid or flexible is the company? Working capital is that part of the company’s current assets needed to keep its doors open: cash in the bank, plus receivables and other current assets, minus amounts borrowed from creditors for short-term needs. These may include lines of credit; payables due suppliers, drivers and employees; and for taxes. Although employees expect to be paid as often as weekly and vendors at least monthly, your customers might take 45 to 60 or more days to pay. That’s why you need more current assets than current liabilities. In other words, you need working capital. Suppose your current assets total $1 million and your current liabilities total $750,000. That leaves net working capital of $250,000. Without working capital, you will spend so much time making ends meet and answering calls from creditors that sales, operations and profits will suffer. Current ratios are current assets divided by current liabilities. In our example, $1 million divided by $750,000 produces a current ratio of 1.33 to 1. The minimum healthy

COMMERCIAL CARRIER UNIVERSITY range for current ratios in the trucking industry is at least 1.1 to 1 or better. Profitability ratios are measurements drawn primarily from the P&L. Strong sales are important, but more important is maintaining the margins as you grow your company’s revenues. Operating ratio, known as “OR,” is a basic and widely used measure of cost efficiency. It is calculated as a company’s total operating expenses, less interest and income taxes, expressed as a percentage of total company revenues. This is not to be confused with “operating margin.” Suppose your company’s total revenue was $1 million and that your total expenses were $1 million, including interest of $30,000 and income taxes of $10,000. To compute operating ratio, subtract interest and taxes, leaving $960,000. Divide $960,000 into $1 million, and your resulting operating ratio is 96 percent. Obviously, the lower your operating ratio, the better. Typically, an operating ratio below 95 percent is considered good, and outstanding com-

panies often post ORs in the 80s. Operating profit margin is operating profit divided by total revenues earned and is expressed as a percentage. This is generally income before interest expense or taxes. Four to six percent is considered average, and the most profitable companies may have eight percent or more. Pre-tax net is income before tax divided by revenues. Three to four percent is average for trucking companies; the most profitable are above five or six percent. Return on equity is computed by dividing after-tax net income by average equity from the balance sheet. If your company earned $150,000 after tax on average equity of $900,000, you earned almost 17 percent return on equity. Evaluate this number against what other investments earn. Efficiency or activity ratios measure management’s effectiveness in certain business activities. The most common is average days outstand-

ing for accounts receivable or DSO (Days Sales Outstanding), computed by dividing receivables by average daily revenues. If annual revenue is $7 million, each day averages $19,200 in revenue. If receivables total $850,000, the average receivable is outstanding 44 days ($850,000 divided by $19,200) from end of haul to payment — about industry average. If a company’s ratio is 60, then someone needs to get busy collecting. A similar ratio can be computed for vendor payables, with most averaging 30 days or less. DSO computations can go much deeper than a simple financial calculation. More sophisticated trucking companies start counting DSO from the time the truck is dispatched to the time the check is deposited into the bank. The masters of DSO do everything operationally possible to reduce this number. These guys want their cash! Refer to the CCU book “How to Manage Cash Flow” to see how to reduce DSO.

Commercial Carrier University is an educational initiative for owners and managers of trucking companies that are held at select Truckload Carriers Association events. We’re certain you will find this program a valuable resource in managing your business more easily and more profitably. CCU’s goal is to provide you with an in-depth road map for success through clear advice on basic and advanced business practices. CCU Titles Available: • How to Evaluate Life Cycle Costs • How to Manage Cashflow • How To Plan For Succession • How to Use Financial Statements • How To Write A Business Plan Produced by:

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