Posted on Jan 26, 2008 - 3:03pm by Ron Peacock in Business
The trucking industry is complex, not appreciated by or understood by society-at-large and is filled with people that will do anything for a dollar; thus driving down rates and compromising safety in an effort to stay ahead of the other guy.
I am a proponent of re-regulating the industry to some degree. As much as I am a capitalist and have a fair and pragmatic view of the free market, deregulation has adversely affected some of our most prosperous and technical advanced markets. And in the end, deregulation does not create a more competitive market, but just the opposite.
As we have seen in the telecommunications industry, deregulation destroyed our position as the most advanced country in the world (we are now ranked one of the lowest in the industrialized world), good careers were lost only to be replaced by McDonald wages jobs that afford no security (here today, gone tomorrow), our once unchallenged and unmatched R&D was abandoned or sold off to other countries and in the end what do we have? A monopoly or cabal of a few companies that have a stranglehold on the whole industry but provide services no better than some of the third world countries I have visited, not to mention, the loss of hundreds of thousands professional positions.
Before deregulation
Isn’t it funny, that prior to deregulation, the trucking industry had extremely larger numbers of independent drivers? It actually represented the American dream. You didn’t need a degree in business (or anything else) only the skill, will and determination to do the job and you could be a success; sort of like the pioneers that built this country (they depended upon government regulation, in the form of land grants, in order to realize their entrepreneurial dreams also).
After
Now, the trucking industry feeds upon itself dog-eat-dog style and in the end there will be just a select few who will profit from everyone else’s misery. So, deregulation has created an un-American environment and the idustry will slowly be swallowed up by cheap immigrant labor and competition from Mexican and Canadian companies (thanks to NAFTA). I don’t pretend to have any solid answers but, history has shown us, until American truckers unite as one, they are a species on the endangered list.
Who's to blame for the high cost of fuel?
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I’ve heard the idea that truck drivers should unite, and I don’t think you could find an argument to that. However, it’s a rare thing to get drivers to agree on anything. All we can agree on is that the current situation is bad. It’s bad for everybody except for those at the top of the food chain.
Those at the top count on keeping us divided and it’s not hard to do. No group is successful at pulling enough support to make a real difference. Look at those battling for hours of service changes now, virtually useless efforts.
Look at our politicians selling us out for the business that depends on our services. They obviously have plans to replace us with foreign drivers and it couldn’t be any clearer to me.
When every trucking publication you pick up caters to the idea of a “driver shortage” and every newspaper continues to slant against us, do you think we could get public support even if we were united. The public has no idea what trucking entails because people are so far removed from it.
Look at the laws we follow. Every driver is an outlaw for something because there is no way you could possibly follow them all. The public sees no problem with this.
It’s nice to dream of a group of truly united drivers, and it’s possible with the technology we have, but I could never see anything with teeth to it. As soon as one driver would refuse to work under a condition, another would be there to pick up the slack. A work stoppage would be an excellent example for a politician to add to his list of “jobs Americans won’t do” list.
I would say the first line of defense would be to stop the illegal labor. If they are there, we never stand a chance for any action to mean much.
USA Today, at least the online version picked up the same driver shortage article that came out of the Arizona paper. Lazy journalists.
There were about three pages of comments basically saying how bad trucking companies treat drivers, there is no shortage, etc… USA Today doesn’t care and probably doesn’t even read the comments.
It’s going to take more than organizing to fix this. Policticians have sold America and everything in it to special interests and foreign countries in the name of a global economy. Everyone wins but US.
We need politicians that believe in American sovereignty and not pandering to global corporations that only see America as a marketplace. There’s talk now that the rest of the world no longer needs the American consumer thanks to India and China populations are able to buy more stuff.
Soon we’re not going to have the best economy or even the best military. Then what?
As long as the top twenty major trucking companies are not complaining about cutting each others throats, there will be no real change in the industry. The federal Government only cares about the major players in this industry.
The drivers have no real voice therefore they are not in the game so to speak. OOIDA can’t even get its members all on the same sheet of music. Remember when they had that “Run Legal” month? I saw plenty of trucks carrying the OOIDA stickers exceeding the speed limit by more than ten miles per hour. Run legal means just that, Run legal! I think that unless the freight rates and driver compensation get regulated to a certain degree, this industry is going to continue going down the road to ruin. As I have said before, as long as there is a class of people out there that will work for far less, the pay will keep going down for company drivers and the American owner operator will be a thing of the past. Operating costs are driving owner operators out of the general freight business now. The cost of operating keeps going up yet the compensation is always ten years or more behind. I feel your pain more than you know as I sit here at home and off the road. The very things that I have talked about have put me here. If you are looking for a political candidate running for president to cure what ails you, I don’t see one running that cares about the rest of us more than themselves.
Yes, same old ideas will never get it here. No politician is going to help, strikes are out of the question, “run legal” will not work as many aren’t even sure what that is.
The small companies resort to their old bailout scheme of run faster and harder. We know what that produces.
Ask any broker what customers want and he’ll tell you, “the cheapest”. Only a few specialty companies need real service and they’re learning how to change that, the rest just want it there cheap.
I’ve always had reservations about OOIDA every since I went by their building and noticed only a bobtail could get in there. That sent me a message about them.
Re-regulation would help, but drivers are the only benefactors as far as I can tell. You’d never get the support for something that would make the price of all the imports folks like so much to rise.
I’ve had my tractor an trailer in ooida’s parking lot but I understand the worry about any group that states they are about the driver.The thing I wish would be to got back to regulation of the companies not not going after the drivers.I feel one thing that could helpp is if we could get included in some kind of min wage even if it was a cola starting where we are at[ not a fix just a start]. I have not done the math myself but had a friend I trust tell me as an o/o we need a 178% increase to get back to what we had in 1980. Maybe we could get the elected types to understand they could get more in taxes if we got it.
I am a very involved trucker’s wife and trucking industry professional…
The trucking industry is not only complex but is broken to say the least. De-regulation brought about a dog-eat-dog mentality and created a haven for scam brokers. I work for a mid-size van carrier company contracting 85% Owner Operators in it’s fleet as a credit and contracts specialist. My husband and I own a Kenworth that he drives and has been leased on with this company for the past 10 years. The battle for freight rates to engage the high cost of diesel most recently has been a failing issue in 2007 and continues to plummet now in 2008. For those of you interested in the math, here is a personal view of the difference as a sole proprietorship in the state of Texas of which is not subject to a state tax obligation:
January 2007
Freight Haul: $9856.00
Fuel Expense: $3557.61
All Other Expenses: $1984.00
Taxable Income $4315.00
Tax Liability: $1467.00
Total Net: $2848.00
January 2008
Freight Haul: $11061.00
Fuel Expense: $6107.00
All Other Expenses: $2121.00
Taxable Income $2833.00
Tax Liability: $934.00
Total Net: $1869.00
This is disgusting. A 50% drop in the profit margin due to fuel price and rate cut back is unacceptable by any means. The fact that anyone self-employed in the USA is subject to a rough 34% net profit tax rate is an abomination alone. Granted, there are variables in expenses but the bottom line is a glaring exposure of how disproportionate our tax designations fall upon those subjugated by fuel prices.
Scam brokers (please note that an MC# is very easy to retain) and massive Brokerage Houses are killing the industry – independent O/O’s do not have the tools to research who will pay and who will not and take whatever will move them. The other misnomer of this industry is the “back haul” rate. These situations are the backlash of De-regulation. Where I work, we hang up on anyone who references “back haul” and deny credit to any brokerage that does not pay their carriers. Call us crazy but yes, there are some who still retain ethics in the business…
Regulation back in trucking – yes, some needs to be established. Where the O/O is involved – Tax Reform would be way more beneficial… Just my 2 cents and BTW, you can find more support and information at http://www.atruckerswife.com
MJ Willis
Director Of Finance
A Truckers Wife Convention, Inc.
mj@atruckerswife.com
http://www.atruckerswife.org
Trucking regulation, as previously implemented, isn’t a panacea for current conditions. I also don’t agree that the concept of a back-haul or a back-haul rate is the result of deregulation. Under regulation, for example, an independent O/O or trucking company couldn’t legally make back to back exempt commodity moves.
That meant a company or individual trucker lacking authority, or the authority to haul the freight available in the area in which they found themselves, and having just completed an exempt commodity move, would be forced into a trip-lease situation or defy the law; which many did. The term “back-haul” was quite common and often spoken in conjunction with trip-lease or exempt commodity rate quotes.
If you explore previous regulation, as well as the history of truck transportation, you’ll find that the concept of a back-haul (and their reduced rates) grew out of the combination of regulation, increased operating expenses and increased taxes (of all kinds) creating a situation in which the inefficiency of trucks moving loaded in only one direction, a relatively common occurrence, became a nearly universally economic infeasibility.
Going backward, in my opinion, isn’t the answer. Additionally, current conditions, I believe, will lead those paying the freight bills to seek increased efficiency, a state unlikely to result from increased government regulation; especially if you explore the inefficiencies built into previous regulation.
I’m almost certain that trucking is going to undergo drastic changes. Companies that can increase their efficiency will likely flourish while those seeking status quo will likely flounder. I think innovation rather than regulation is going to provide any new directions for the industry.
Why stop with just trucking?
http://tcsdaily.com/Article.aspx?id=021108A