• Cost of Traffic

    Dec 03, 2013

    Everyday across the country, millions of Americans have to drive on congested roadways. Traffic has become the bane of existence for many nine-to-fivers whose commute involves the phenomenon. However, for fleet businesses whom generate revenue from driving, traffic jams cost them billions of dollars annually due to delays, wasted fuel and unproductive hours.  

    For the average driver in America's busiest cities, an hour of their day is lost to traffic. TomTom's Traffic Index reports the most congested city as Los Angeles with a 24 hour congestion rate of 35%. This means that L.A. drivers are on the road a third more throughout the day than is designated by routes and speed limits. For rush hours, however, this number peaks at 55% in the morning and 78% in the evening. While the least congested city as reported by TomTom is Cleveland with a 24 hour congestion rate of 10%. The average congestion rate is 25% throughout the week. This much additional time on the road has an enormous impact on businesses relying on transportation for profit.

    The Texas A&M Transportation Institute researched the impact of traffic throughout the country in 2011 and the results are staggering:

    ~  5.5 billion extra hours of time is due to traffic

    ~  There are 2.9 billion gallons of fuel wasted due to idling in traffic

    ~  56 billion pounds of carbon dioxide are released into the air due to congested conditions

    ~  $27 billion caused for truck operations which was primarily passed onto consumers as higher retail prices

    This $27 billion from trucking operations in congestion has an even greater impact upon subsequent links of the supply chain. Across the 15 most congested urban areas, the average commodity value transported was $208.9 million in 2011.  However, with an average 12.3 million hours of truck delay, this $200 million was increased to a value of $933 million due to the negative repercussions of congestion.

    Intermodal terminals, warehouse districts and urban or rural corridors are the heaviest cause of truck congestion.  Unfortunately, until definitive plans for an upgraded interstate system and road surface network are produced by congress, there are few opportunities for businesses to reduce these costs of traffic. Technology utilization and scheduling or regulation enhancements can levy some of the burden congestion has on the bottom line, but the biggest relief will come from an updated national highway system.

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  • While discussion of fuel consumption has always been a topic of concern, the most prevalent issue that is currently swirling through the transportation industry is the FMCSA's recent adjustment to the hours-of-service regulation. Safety administrators are praising the policy change for its structured increase of off-duty time requirements. However, Fleet managers, drivers, and business owners alike are up in arms about the massive reduction of available working hours. In our last article on the topic, which summarized the full policy, we calculated that each individual driver is having 624 hours cut annually due to the change. To put that into greater perspective, if driving at an average pace of 60 MPH for 624 hours, 37440 miles will be traversed; equivalent to starting in Seattle, WA and circling the contiguous United States 4 times. If this reduction was spread across a fleet of drivers, the business would feel the repercussions. However, this is for each of the nearly 6 million Commercial Motor Vehicle drivers in the United States, so "it's only a matter of time before these impacts ripple throughout the nation's economy." (K. Burch)

    The American Transportation Research Institute (ATRI) recently released a 60-pg, thorough analysis of the "Operational and Economic Impacts of the New Hours-of-Service". Utilizing results from a 2300 driver survey and 40,000 commercial driver logbooks, the research established a few noteworthy operational and economic impacts from the HOS update.

    ~  Greater than 80% of motor carriers are in the midst of a quantifiable productivity loss since July.

    ~  Nearly half of the businesses surveyed have had to employ more drivers to deliver the same amount of inventory.

    ~  Even though the updated HOS policy reduced a driver's weekly hours from 82 to 70, 66% of the drivers are experienced greater levels of fatigue while just over 82% of commercial drivers have had their quality of life negatively affected.

    ~  Unchanged deadlines have required drivers to operate at more time periods of greater traffic a financial risk to fleets that we discussed last week.

    ~  Annualized loss of wages is around $2 billion due to the drop in hours

    The research also provided the key outcomes related to productivity which are as follows:

    ~  More Drivers are now Required to Move the Same Amount of Freight: To comply with the HOS rules carriers have shifted driver schedules. Many of these new schedules have resulted in a decrease in the number of weekly miles a driver can log. Due to the decrease in miles, carriers have a choice of turning down freight or making up the miles by incorporating additional drivers and/or equipment into their operations. These options are less efficient than operations prior to the new HOS rules, and are a central component of the productivity loss.

    ~  Driver Shortage and Turnover: Prior to the July 1st HOS rules, qualified drivers were scarce with an estimated shortage of 20,000 to 25,000 for-hire truckload drivers.7 As a result of the changes more drivers are required and the level of scarcity has increased. To attract drivers after the HOS change, some carriers have opted to increase pay8 and some may increase rates for shippers. Rate hikes are challenging, however, due to strong competition among industry participants. If rate increases do not fully compensate for driver pay increases then carriers raising pay will assume an additional financial burden.

    ~  Decreased Flexibility to Meet Customer Requirements: Meeting customer requirements is more difficult under the new HOS rules. In particular, drivers are limited to one restart per week and must take those restarts across two nighttime periods. Shippers, however, may require delivery at any point on a given day, and with little notice. The data show, particularly those data describing the variability in driver weekly work time, that flexibility has decreased. As a result, drivers are less able to accumulate hours for unanticipated shipper requests via the 34-hour restart. In many instances carriers must either turn down business or increase driver capacity.

    This valuable research will likely be presented in some form at the subcommittee hearing on Thursday, November, 21. Chairman of the Subcommittee on Contracting and Workforce of the House Small Business Committee, Rep. Richard Hanna (R-NY) stated that the hearing will "examine the economic and operational impact of the FMCSA new Hours of Service regulation on small businesses". Hanna went on to add that he "looks forward to learning from the witnesses how they are operating under this rule and examining how we can better balance the needs of our economy and the important goal of highway safety." These witnesses will represent both sides of the argument as Anne Ferro of the FMCSA is scheduled to be heard alongside carrier executives from the Owner-Operator Independent Drivers Association and the American Trucking Association.

    It will be interesting to see the outcome of this hearing, so stay tuned to FleetCardsUSA.com for all your industry updates. 

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  • As colder weather approaches the farmlands spread across the bread-basket of America, Farmers begin the routine of harvesting and drying grains to prep for distribution. This process is a simplified chain of order that begins with the planting season, and ends in the grain elevators. Unfortunately, there have been three events this year which have disrupted the supply chain and are now a cause for concern throughout the Midwest.

    There was a delayed start to the planting season, which pushed back harvest from the get-go, while heavy rains in September and October have increased the moisture in the corn harvest by as much as 7% (source: INFORUM). This increase in harvest moisture is the generation of most worry.

    A propane shortage has swept through the region with many crops' harvests occurring at the same time. Being the primary medium for drying crops in preparation for storage and distribution, this shortage has put many farmers between a rock and a hard place; store moist grain over the winter in hopes that it won't spoil, or leave crops in the field with fingers crossed that the weather won't shift to winter cold to early and freeze the grains.

    Major propane distributor, Kinder Morgan Company, has stated that they are reaching out nationwide for truckers to assist in distribution to minimize the impacts of this drought.  With a three-fold increase of propane through its Cochin Pipeline, Kinder called upon the state governing bodies of Minnesota, North and South Dakota, Montana and other Midwest states to relax the recently stringent hours-of-service regulation for truckers. The propane is available, but because of the high demand throughout the region, in addition to the new hours-of-service policy enacted in July, it is proving difficult to get the propane from the pipeline to the grain elevators.

    Hopefully this issue will clear up so that we all have plenty of cornbread and stuffing this Thanksgiving!

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  • Just hours after the 2013 government shutdown ended last week, President Barack Obama signed into law a succinct sleep apnea bill.  While only three sentences in length, the bill sets forth legislation which has been desired by all those invested in and employed by the trucking industry.  In the past, the issues of sleep apnea impacting the safety of fleet operators have only been addressed by regulatory guidance. However, after unanimously passing through both the House of Representatives and Senate, it is now law that:

    "a requirement providing for the screening, testing, or treatment (including consideration of all possible treatment alternatives) of individuals operating commercial motor vehicles for sleep disorders only if the requirement is adopted pursuant to a rule-making proceeding."

    This piece of legislation (Public Law #113-45) is so highly touted throughout the industry because it requires that the FMCSA must execute a full cost-benefit and regulatory impact analysis before setting policy regarding sleep apnea as opposed to the loosely adhered to 'guidance'.

    Prior to this bill being signed into law, the FMCSA could set policy without taking into account the high costs to the industry (estimated to be greater than $1 billion) – which would most likely fall on the shoulders of the safer fleets controlled by small businesses. Now, with the law passed, Todd Spencer of the Owner-Operator Independent Drivers Association (OOIDA) has thanked Representatives Bucshon and Lipinski for their efforts and stated that this law "is common sense legislation that has the support of the entire industry." Spencer went on to say that "anything FMCSA does regarding sleep apnea should absolutely consider the costs such a policy will pass on to truckers."

    While it was explicitly announced that a rulemaking process will be followed, the FMCSA stated to the press that "Congress should still weigh in by passing legislation and guaranteeing that a transparent and sound process is used."

    While this Sleep Apnea bill is important for the costs imposed on the industry and passed through Congress in record time, don't expect the same ease of passage to be seen next year as the Highway Trust Fund reaches its limit.

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  • Think your fleet is one of the best in the trucking industry?  The Truckload Carriers Association's (TCA) 6th annual Best Fleets to Drive For® award is right around the corner, so now is the time to see how your fleet stacks up against the rest.

    Best Fleets to Drive For® is an annual evaluation of North American for-hire trucking companies that provide an exceptional workplace environment for drivers and owner-operators.  Conducted by CarriersEdge in partnership with the Truckload Carriers Association (TCA), the Best Fleets to Drive For® award highlights the best employers in the trucking industry.

    This annual contest and survey promotes positive elements and great opportunities within the trucking industry. In addition to these accolades, this award sets higher employer standards for companies to follow through the documentation of success stories and showcase of fleets providing exceptional workplace environments.

    "This program publicly recognizes and celebrates the fleets that are working to provide exceptional workplace environments," said Mark Murrell, president of CarriersEdge. "As we survey the participants, we're documenting a series of success stories that model best practices for other companies to adopt or follow. It's good for the carriers, the drivers, and the image of trucking, which is why the number of nominations seems to double every year. As we head into the next round, I have no doubt that this trend will continue."

    The contest guidelines are straightforward for drivers or owner-operators: nominate your fleet for the award and complete the driver survey which is conducted to gain deeper feedback. In addition to the operator submitted metrics, company safety and driver retention data are collected, as well as corporate interviews of each nominated company. After data is compiled of all applicable fleets, it is reviewed to determine the Top 20 Best Fleets to Drive For®. Before voting, read the full list of evaluation metrics.

    There is no fee to nominate a company and the Best Fleets to Drive For® 2013 survey is open to all North American, for-hire trucking companies with 10 vehicles or more. Since this is a vote of the best fleets to drive for, only those employees that operate the vehicles can complete a nomination; i.e. office staff, management, and company owners cannot nominate their fleet.

    To nominate a fleet, drivers can fill out the nomination form  or send an email to Nominate@BestFleetsToDriveFor.com, and include the full name and contact info for both the nominated fleet and the individual submitting the nomination.  Nomination deadline is 5:00 pm EST November 1st, 2013.

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  • In a recent study by Robert Poole, revealing information was brought to light on the status of the United States National Highway System (NHS). Most notably of which is the lack of inflation indexing for the current pre-gallon fuel taxes. This is an issue for the interstate infrastructure due to the road surfaces reaching the effective lifetime of 50 years, thus providing a need of modernization and replacement.  Unfortunately, the national average fuel tax of forty-six cents per gallon of gasoline or fifty-two cents per gallon of diesel (Source) in conjunction with the state and federal highway trust funds is not nearly enough to adequately finance the near one trillion dollar project; aptly named "Interstate 2.0".  According to Poole "reconstruction is estimated at $589 billion, in 2010 dollars, and lane additions at $394 billion, for a total 2010 cost of $983 billion." For sufficient funding of this project, Poole has proposed a per-mile tolling system which will garner enough revenue to provide 99% of the net present value of the project's proposed cost.

    Included within these costs is the estimate for executing the tolling system. One of the overt drawbacks of the current toll booth/ toll plaza system is the traffic congestion that builds up behind the checkpoint. Within the proposal for 'Interstate 2.0' adjustments to this antiquated process have been delineated. State-of-the-art All-Electronic Tolling (AET) equipment will allow fleet operators to travel throughout the United States with a single transponder linked to the fleet's account without having to reduce speed for a toll plaza.

    Value-Added Tolling

    Recognizing that regular interstate users would be more than perturbed at the concept of being tolled on a surface that was already paid for with fuel taxes, Poole has proposed that the practice of per-mile tolling "be implemented on the principle of 'value-added tolling." This principle means that tolling would only begin after a corridor has been brought up to 'Interstate 2.0' standards. In addition to quelling the population's nerves, this will effectively limit the risk of redundant taxation that has the possibility to occur if states are slow to remove the gas tax currently in place. However, if there is an event of double taxation, the system permits "rebates of fuel taxes generated by the miles driven on the tolled Interstates".

    Advantages of Per-Mile Tolling

    Since the current system of fuel taxes supports the funding of all roadways at an average rate, light passenger vehicles and long-haul tractor trailers all pay the same average price to utilize the entire nationwide transportation surface. In this outdated system of taxation, a fleet that operates primarily on inexpensive local streets pays the same fuel tax as the fleet of long-haul tractor trailers that spend a majority of its miles on multi-billion dollar bridges, interchanges and expressways. However, with the per-mile based AET proposed for Interstate 2.0, toll rates will be "tailored to the cost of each highway."

    Cost dependent toll rates is just one of the advantages of per-mile tolling, in addition to this, Poole describes six other reasons for per-mile tolling creating greater benefit than per-gallon taxation:

    Per-mile tolling reflects greater fairness, since those who drive mostly on Interstates will pay higher rates than those who drive mostly on local streets.

    If per-mile tolling is implemented as a true user fee, it will be self-limiting, dedicated solely to the purpose for which it was implemented (and enforceable via bond covenants with those who buy toll revenue bonds).

    Per-mile tolling will guarantee proper ongoing maintenance of the tolled corridors, since bond-buyers and other investors legally require this as a condition of providing the funds.

    Per-mile tolling also provides a ready source of funding for future improvements to the tolled corridor.

    Toll financing means needed projects, such as reconstruction and widening, can be done when they are needed, and paid for over several decades as highway users enjoy the benefits of the improved facilities.

    Finally, a per-mile tolling system using AET can easily implement variable pricing on urban expressways to reduce and manage traffic congestion.

    Roadblocks to Interstate 2.0

    For the wheels to be set in motion on modernizing the NHS, Congress needs to provide permission due to current federal law prohibiting tolling of existing lanes on Interstate highways.  In the
    current pilot program, only three states – Missouri, North Carolina, Virginia - have the opportunity to implement tolls on interstates for funding of reconstruction. Local politics for each of these states has created a stalemate in the process which is inhibiting the system from being tested. Fortunately, the Federal Surface Transportation Program is up for reauthorization in 2014 which would expand the immobile pilot program from Missouri, North Carolina and Virginia nationwide. This expansion could be the necessary catalyst for both individual states and the federal government to realize the benefits of 'value-added tolling'.

    Impact for Fleet Owners

    Like all political decisions, Interstate 2.0 will have a ripple effect throughout the transportation industry. Whether this will be a positive reaction from small fleets or large has yet to be evaluated. Fleetcards USA has reason to believe that fleet owners and fleet managers will look upon this favorably after open-mindedly reviewing the study. With fuel taxes being removed, the cost of fuel will be reduced while the tailoring of toll rates will create an ecosystem of fairness for fleets that travel hundreds of thousands of miles annually. Fleet Owners should approach the study with objectivity rather than stubborn bias for the long-standing system of per-gallon fuel taxes.

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  • Here at FleetCardsUSA we stress the important decisions that fleet managers need to make in order to prevent costly mistakes for the whole business. These necessities range from stressing efficient driving to keep fuel costs down to ensuring that fleet drivers are healthy and safe throughout their tenure.  Unfortunately, the backbone of the industry – the drivers themselves – is swept to the side as replaceable and uncouth. With the third week of September halfway through, it is important to note that we are in the midst of Driver Appreciation Week.

    Consistently delivering around 68% of the U.S. freight tonnage year after year, truck drivers are not only the backbone of the shipping industry but the country as well. These tireless operators haul the necessary wares that keep your life organized, your car running, and your stomach full. In addition to the payload consistently tagging behind the Tractor to keep shelves stocked, aggressive updates in regulations by the Federal Motor Carrier Safety Administration have allowed safe, defensive drivers to rise to the top of this thankless career.  By logging nearly 400 billion miles annually and looking out for fellow man, these highly skilled fleet operators are facilitating a safer transportation environment for those of us that merely utilize the highway infrastructure weaving across America as a commute medium.

    Fleet management needs to continue this upward trend of higher regard for drivers by effectively communicating to individual operators and fleet teams on the topics of safety, fuel efficiency, productivity and satisfaction of the driver. Through transferring the focus of the fleet from goals to the people responsible for goal completion, managers can effectively increase productivity and employee retention. This can be accomplished through provision of proactive insight on responsibilities as well as allowing a back-and-forth line of communication so that operators can provide feedback on their satisfaction with, and desires from the company.

    These drivers have long hours away from loved ones, in unhealthy environments so that the rest of the country can survive on the goods being delivered. As summer comes to a close this weekend, if you find yourself at a rest stop, take a moment to thank the individuals that enable many of us to live in a consistent, happy lifestyle.

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  • During an era in which gas prices seem to only get higher and higher, many drivers believe there’s no end in sight. Coupons and discounts are non-existent and limited transportation and fueling alternatives give consumers little choice. In a sign of global economic development, geography is playing its biggest part yet in the price of gasoline, and consumers, politicians, and even oil companies are taking notice.

    Although there isn’t one dominating factor that drives the price of gas up or down, the large discrepancies worldwide and nationwide can be attributed to supply and demand, natural disasters, taxes and geography. While the price of gasoline this year has remained below $4 per gallon for most of the country, prices vary widely from coast to coast.

    In the United States, remote locations often lead to more expensive products and services, and gasoline is no different. Most notably the West, where there is a lack of refineries, the price of gasoline is more sensitive to unplanned changes, including pipeline connections, distance to active physical trading markets and outages. Without a single oil pipeline cutting across the Rocky Mountains, the West Coast is virtually cut off from the rest of the nation’s supply of gas, making the region extremely susceptible to sudden gas shortages and steep price increases.

    Although isolated from oil reserves, the West still inhibits large populations in need of gasoline. Being the ninth largest economy in the world, California’s gas demands require its refineries to operate at near full capacity. Additionally, California also supplies fuel to other Western states such as Oregon, Arizona, Washington and Nevada, increasing the reliance beyond just California on the minimal resources.

    Although the West Coast gets the brunt of high prices, the entire country goes through price fluctuations – no matter where one resides. Annually, refineries shut down or reduce production for routine maintenance and adjust their fuel to make a cleaner, more expensive gas. During this time, which usually occurs April to September, consumers tend to travel more, only pushing demand – and prices – higher. Those living in a populated area in an oil producing state, still have a price disadvantage compared to those across town. Oil companies use zone pricing to determine the price each dealer sells by charging dealers different amounts for fuel based on traffic volume, station amenities, nearby household incomes, the strength of competitors, and other factors, all in an effort to boost profits.

    Like many industries, government regulation and taxes also contribute to pricing differences. (californiagasprices.com, 2012) Washington holds the highest tax rate for gasoline at 37.5 cents-per-gallon, followed by California at 35.3 cents-per-gallon. Oregon, a state limited by refineries and location, also has a high tax rates at 30. cents-per-gallon. Those states that have refineries on the other hand, have generous tax rates. Alaska and Wyoming, both oil supplying states, are taxed 8 and 13 cents-per-gallon, respectively.  

    The demand for gas isn’t just limited within the United States, as it also extends beyond our borders. This is a sign of the times to come, as we can anticipate gas prices to continue to increase, regardless of fueling location.

    For businesses who rely on transportation to provide services, the increasing gas prices are a cost that is closely monitored - from coast to coast or one side of town to the other. Businesses are looking for more fuel management solutions to help control and manage their business. Whether a business owner, a driver by profession, or even just a vehicle owner, knowing pricing differences can help you understand what you are paying for in this fast changing industry, what options are available, and even helping to improve your fleets efficiency. A fleet fuel card program is a solid place to start!

    References:

    californiagasprices.com. (2012, Oct 19). Total US Fuel Taxes by State. (californiagasprices.com, Producer) Retrieved Oct 19, 2012, from californiagasprices.com: http://www.californiagasprices.com/tax_info.aspx

    fuelgaugereport.aaa.com. (2012, Oct 19). National Average Prices. (fuelgaugereport.aaa.com, Producer) Retrieved Oct 19, 2012, from fuelgaugereport.aaa.com: http://fuelgaugereport.aaa.com/?redirectto=http://fuelgaugereport.opisnet.com/index.asp

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  • car imgIn the wake of Hurricane Irene, devastating flooding has affected the Eastern seaboard. This week’s Automotive Fleet safety tip, courtesy of CBS News, is to help prepare your drivers for the potential for more flooding this hurricane season by knowing what to do in case your vehicle becomes submerged.

    If you are in a vehicle that has fallen into water, take the following steps to make sure you get out safely:

    - Don’t panic. You will use up a lot of energy and possibly make poor decisions. Stay calm and remain in your seat with your seat belt fastened.

    - Leave the vehicle on and roll down the windows. This will make escape easier.

    - Remain in your seat and wait for the car to submerge completely. Trying to climb out as water rushes in will be impossible, and water pressure will keep the doors from opening.

    - Grab hold of the window frame to maintain orientation if the car begins to roll or flip.

    - Once the car has submerged and completely filled with water, either open your door or exit through the window and swim to safety.

    - Again: Do Not Panic. Keeping calm and following these steps will ensure that you escape to safety.


    Photo courtesy of Brian Tomlinson and re-used under the Creative Commons license.
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  • hands imgIn a presentation to the a href="http://www.nafa.org/">National Association of Fleet Administrators (NAFA), analysts from Edmunds.com said that automotive market conditions could favor fleet managers in the second half of 2011 as retail sales begin to drop off.


    Declining consumer confidence and other economic factors will likely restrict the retail automotive market in the second half of the year, said Edmunds.com chief economist Lacey Plache.
If demand falls enough, automakers and dealers could turn to fleet sales to meet sales goals.  This should give fleet managers a stronger negotiating position when purchasing new vehicles for the coming year! The resale value of used cars also rose, further to fleet managers’ advantage.

    While the retail vehicle market is not yet guaranteed to suffer an extreme slowdown, fleet managers and business owners should be on the lookout to find the best opportunities for repurchasing. Making smart decisions about vehicle purchasing will keep your fleet financially secure, even in tough economic times.

    Photo courtesy of buddawiggi and re-used under the Creative Commons license.

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