At the crossroads

As spring arrives, Noël Perry heads to his local garden center to buy pansies and snapdragons like many other consumers. But unlike most typical gardeners, Perry has a deep understanding of how those plants get to his garden. As managing director of FTR Intel, and an economist specializing in transportation, Perry watches for patterns in the way freight moves.

The trucking industry has enjoyed strong volume and prices in recent years, but the realities of a late-recovery economic cycle may soon slow freight growth.

Last summer, the American Trucking Associations released its U.S. Freight Transportation Forecast to 2026. The report projects a 28.6 percent increase in freight tonnage and an particularly rosy increase in freight revenues of 74.5 percent to $1.52 trillion in 2026.

Perry believes it will be “business as usual” for now, but cautions the entire industry to prepare for a potential economic downturn in the next three to five years.

Legislative update

Several major changes to the trucking industry have created upheaval. The most visible is electronic log-in devices, which are already in use by the larger fleets, and required by December 2016. Perry says companies can expect a 5-7 percent dip in production after initial adoption, then an increase after re-engineering their routes to take advantage of the logged information.

Also, by December 2016, a drug and alcohol database should be completed. This database would close a loophole that keeps companies in the dark about failed drug tests from fleet to fleet. Once the database is in place, a failed drug test will follow a driver from employer to employer. By this point, it’s probable that more sensitive hair testing will become the standard. This can pick up drug use 90 days prior to a test.

“When this happens, some fraction of the drivers will be disqualified,” Perry says. “It’s probably 2-3 percent, but when you’re measuring 2-3 percent of four million, it’s a big number.”

The third regulation is one requiring the use of a governor to control truck speed. Perry says this particular regulation has strong industry support because the big companies that lobby already do it and they would like the rest of the industry to follow their lead.

Safety first

The trucking industry has been very active in improving safety, both for its own drivers and those who share the road with them. The core of the improvements have come through training and technology.

The industry hires about 600,000 new drivers each year. The majority of the new hires don’t start with a commercial driver’s license (CDL). Right now, there is no training requirement for a CDL. Drivers must pass a test, like for a regular driver’s license.

The proposed plan, which Perry says will almost certainly pass, would require 30 hours of supervised experience driving. There are a few potential pitfalls, however. First, there is no specification whether any of those 30 hours are live practice. Most of the big training schools use simulators, like those used in flight school to train pilots. Second, the industry needs to hire 400,000 to 600,000 new drivers a year to meet capacity. The current capacity of existing schools is 125,000. Perry is sure those training grounds will ramp up their enrollment, but in the meantime, there will be a very painful correction.

The trucking industry has made major safety strides from automatic braking, lane drift awareness systems, all the way to self-driving trucks, which have been racking up thousands of miles of experience outside Las Vegas.

A study by the Insurance Institute of Highway Safety shows that front crash prevention systems reduce rear-end crashes and resulting injuries by 40 percent.

Carlton Plants

Researchers examined police-reported rear-end crashes in 22 states from 2010 to 2014 involving Acura, Honda, Mercedes-Benz, Subaru and Volvo vehicles with optional front crash prevention systems. Crash rates for these vehicles were compared to rates for the same models, unequipped.

Forward collision warning alone was determined to reduce rear-end crashes by nearly a quarter, while forward collision warning in tandem with auto-braking brought that number to 39 percent; injuries resulting from rear-end crashes plummeted by 42 percent with these safety features.

“If all vehicles had been equipped with auto-brake that worked as well as the systems studied, there would have been at least 700,000 fewer police-reported rear-end crashes in 2013,” IIHS stated.

In October, American Trucking Associations Board of Directors urged the nation’s truck and car manufactures to equip all their new vehicles with automatic emergency braking systems, and offered its support for a potential regulation.

“We believe ATA needs to be at the forefront of advocating for proven safety technologies,” says ATA President and CEO Bill Graves. “The experience of our member fleets tells us that automatic emergency braking systems hold tremendous promise and as such, we believe manufacturers should make this equipment standard and the federal government should seriously look at issuing regulatory standards.”

Many of these innovations are already in place in the larger fleets. Perry says the big fleets are now speccing automatic stopping and augmented cruise control, which includes distance control to the next car. Further automation is being tested out in today’s trucks: 40 to 50 percent of the industry already has max speed governing to keep truck drivers from driving faster than their bosses want, 15 percent have automatic stopping, 15 percent has rollover minimization, one-third of all trucks have automatic transmissions and almost all have automatic navigation systems.

The major players aren’t talking at all about autonomous trucks, because of the implications for the fleet of drivers, but they are giving it a hard look.

“Right now, 10 hours of a tractor trailer’s day is spent stopped while the driver rests,” Perry says. “If there ain’t no driver, that vehicle is going to be moving. Even with no other effects, the productivity of that vehicle will nearly double.”

The short-term effects of these automation measures are two-fold: safety benefits and the ability to simplify the driver’s job.

By 2020, the truck making your deliveries will have automatic speed control so the driver can’t speed, automatic lane control so the driver can’t wander, auto stopping and distance control so the driver can’t tailgate, automatic transmission so he’s always in the right gear, and automatic acceleration so he can’t waste fuel by stomping on the gas pedal.

This requires no government regulations. Beyond a clean drug record, police record and CDL, there are currently no requirements. Instead of making it more difficult to become a driver, these tools will allow trucking companies to lower their standards for hiring, which would make more people available. And do it without compromising safety, if the new technologies work as well as expected.

“We’re on the cusp of a huge fascinating and tremendous revolution,” Perry says. “The tension in all this is for the next three or four years, the issue is going to be shortage of capacity. But as these tools begin to hit the marketplace within five years, the situation will reverse. It will be excess capacity for 10 years before the system weans itself down. Just about the time your growers solve the capacity problem, all those solutions become obsolete because the problem reverses.”

Grower’s take

Rand Glenn, shipping supervisor, at Greenleaf Nursery has noticed the shortage, and that the drivers seem to be getting older. He says it’s tough to find drivers that meet the needs of the nursery industry, and that age is a factor.

“There are very few young drivers,” he says. “As far as the nursery industry, we still floor stack a percentage of our loads with racks. We require the trucks to basically get it to the tailgate, then it’s the customer’s responsibility. That is getting harder to find: truckers who are willing or able to move that product down the trailer.”

Greenleaf Nursery, a large Oklahoma wholesale grower, gets around the shortage by using a dedicated fleet. It’s imperative that plants aren’t sitting around waiting for a truck or a driver. Because timing of shipments is so important to the nursery industry, Glenn keeps 20-25 trucks on his “dedicated” list, and runs them twice a week.

On a busy day, Glenn will ship 30 trucks out from Greenleaf’s 56 docks. He leases refrigerated trailers, which is the key to achieving a two load per week benchmark.

“(Many truckers) don’t want to mess with reefer freight. We have a board up here with all our loads on it, might be 150 loads on it for the week. When a driver comes in, he looks at our board and says ‘I can make it to St. Louis and be back for my second load.’”

Then, Glenn’s team places one of the leased trailers on the dock, loads it, and moves it out of the way until the driver returns. Having the trailer ready to take off when the driver arrives minimizes the amount of time the driver spends waiting around.

“In our busy time, April through first part of May, as soon as that plant is off the dock, we’ve got another crew coming in putting plants on the ground for the next loadout,” Glenn says.

Why do they stay? The truckers like the guaranteed work, the “drop and hook” quick turnaround, and the pay system. Greenleaf eschews 30- or 60-day invoicing in favor of same-day payment. As soon as a driver returns from a job with the signed paperwork proving the product arrived at its destination, he gets a check.

“We don’t run on someone else’s money, so why would we expect someone else to run on their money,” Glenn says. “Most drivers love that.”

Jason Bizon, sales manager at Oregon’s Carlton Plants, uses refrigerated semis as well as a few 24-foot Penske “dry vans” for short runs to West Coast garden centers. He hasn’t noticed a shortage, but thought with low gasoline and diesel prices that reduced freight costs were incoming, but that hasn’t come to fruition.

After February, Carlton Plants uses strictly refrigerated semis and asks its drivers to maintain the trucks at a continuous 36°F. That is a safety factor that helps the material a) keep from freezing or b) later in the season, keep cool.

Bizon says there can be up to 15 drops on one truck. The nursery spreads that cost out to each customer on the truck based on how much square footage they’ve taken. Some customers may take half a truck, and four or five other customers that take up the other half. That first customer would pay roughly 50 percent of the freight on that truck.

Keeping their truckers happy is a vital part of both Carlton and Greenleaf’s business. Whether it’s shower facilities, a nice lunch, or a doggie treat for a four-legged companion, many nurseries go the extra mile for their drivers.

“When they come to haul a load for us, we make sure they leave on good terms and that they’re treated well while they’re here,” Bizon says. “They’re the last person our customer is going to see who has any sort of relation with the material they’re receiving.”

“You want your drivers to deliver your product with a smile on their face,” Glenn says.

For more: www.ftrintel.com; www.iihs.org; carltonplants.com; greenleafnursery.com