Life on the Road - Trucking News Blog

If you are in the transportation business, you have heard of the term “JIT Freight.” To those who are not familiar with the term it simply means “Just In Time.”

Just in time freight was created to cut costs for manufacturers. With this type of freight movement, the manufacturer does not need to worry about warehousing (or the costs associated with having a warehouse) nor do they have to worry about inventory costs because there is no inventory sitting around.

The idea of JIT works like this: a product is made - in order to make this one product there are several materials that are needed to make it and the materials are to arrive ‘just in time’. A lot of the automakers use JIT freight. A driver may pick up parts (say something like door handles) in the morning and he has to drive straight thru to the manufacturer because as soon as his appointment time arrives (or perhaps even when he arrives at the manufacturer) he is unloaded because they will need the freight he is hauling in order to manufacture whatever they are working on.

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I began my career in the transportation business working for a rather small company. Not very many trucks. I was told at least 50 but I think it was more like 20. I went in not knowing a thing, I left knowing probably more than what I ever really wanted to.

It is really amazing to see the different aspects of trucking when you are married to a driver. You get to see both sides of everything from payroll problems to log audits to dispatch trouble. I also think it is hard sometimes to adjust to trying not to take a company side of view when you are married to a driver. You always see both sides of the fence and try to make either side look more appealing to your spouse, but sometimes that does not always work!

I am very much a people person. So it was very easy for me to get along with the drivers in the company. Even when they had problems and would be screaming and yelling at me on the phone I would listen politely and stay calm in all situations. It seemed as if when they heard me still having a very relaxed, low key type of attitude, it made things better all the way around.

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When Life hands you a Lemon, make Lemonade. Or When the going gets tough, the tough get going. Or It’s not the size of the dog in the fight, it’s the size of the fight in the DOG

and like that.

Winston Churchill said…..”"never, ever,ever, give up

Comprende?

However, not giving up, not quitting may not be the same thing as continuing with the same old thing.

Tactics they call it. The strategy is the same (make more money) but the tactics might change.

If one thing doesn’t work, try something else.

Almost every truck driver started out pulling a dry box. Of those few that didn’t many of THEM started by pulling a standard Flatbed. (of course there are the exceptions like me. I started out hauling bombs during the VietNam War, Police Action, Conflict)

Dry Vans have the highest turnover in the Industry. It’s no wonder a HUGE percentage of folks who think they “have what it takes” to be a trucker don’t. Just about EVERY trucker is “one in a hundred”. THAT many drop out, more maybe.

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In 1999, after months of soul searching, bank statement searching, and just plain searching I decided to buy a new truck. After that it was pretty easy. I just selected a dealer who would give me a decent trade on the truck I had at that time (more searching), decided just WHAT I wanted in a truck, and plop down a fairly hefty deposit, and then wait.

About six months later the truck showed up at the dealer. I drove in with my ‘ole Pete, swapped for a brand new shiny KW and drove off.

That was it. No worries beyond the “normal” worries. It worked out pretty well.

That was nine years ago. The OLD KW has been rode hard and put up wet too many times and she’s showing her age. In creaks, rattles, moans and groans if not in looks. She still looks pretty good for an old truck, pretty good. Some clearcoat is gone, a couple of nicks, a scratch or two, but she looks pretty good.

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Unless you have been living under a rock for the last few weeks, you have seen the price you pay for a gallon of diesel fuel skyrocket; Oil prices have broken records everyday this week. Fuel went up 3.3 cents overnight and have set a new record for diesel at $3.909 a gallon. As I sit writing this article in Georgia, the sign on the truckstop says $4.01 per gallon, and there appears to be no end in sight for the run-up of prices.

Why the big jump, even with all of the gloom and doom stories about how bad the economy is? According to John Wilen, an AP Business Writer, Fed policy on interest rates, ignoring inflation to keep economy going, has driven down the value of the dollar, the same dollars we give to other countries for oil. It has also driven investors to put their money heavily into oil and energy, driving up the price even in the face of adequate supply.

“This cocktail’s been whipped up by the Federal Reserve,” said James Cordier, founder of OptionSellers.com, a Tampa, Fla., trading firm. “Until inflation is their number one concern, we have nowhere to go but up.”

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Carrier: “Hi, it’s John from ABC Trucking… You have a van load posted on Truckstop.com from Dallas to Chicago?”
Broker: “Yes, do you have a truck available?
Carrier: “Yes, he’s empty now, what does it pay?”
Broker: “You called me, what do you need?

… And so starts the negotiation game. But who truly has the advantage in this scenario? The broker of course. The broker now knows that the carrier is calling for something that the broker has and the carrier wants. Game over. The carrier will be forced to give their rate first at which point the broker will initiate a counter offer and they will settle somewhere in between the two rates. But what if:

Broker: “Hey it’s Mike from ABC Brokerage… do you still have that truck in Dallas available to go to Chicago?”
Carrier: “Yes I do. What have you got and what does it pay?

Now, the carrier has forced the broker to throw out their first rate, which of course will be the basis for the negotiation. The broker is going to offer less than what they are getting paid, to make their margin but what if the number that they offer is far greater than what you would have opened with? You may have just left a bunch of money on the table all because you chose not to post your truck.

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Look at any of the freebie recruiting mags at truck stops and a lot of ads read something like

Become an Owner Operator, Zero Cash Down, Bad Credit okay.

Sounds like one of those late night used car commercials. I don’t even think I could drive for a company that does that. These companies prey on people’s desire to own a business and make money. Why would you be a company driver making .35 a mile when you can own your own truck and make three times as much?

This is a great deal for companies, a really, really bad deal for drivers. Far too many reasons to list here, these are such a bad deals. You will find more people that fail in these programs than succeed. The driver will fail, but the company and their truck move on to someone else.

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This was from March of ‘07 Overdrive Magazine, they had an article that came from their survey of owner operators, trying to find out what the successful owner ops have in common. It’s probably more important now than it was then. Their definition of a successful owner -

Creatures of Habit
by Todd Dills
…and especially those whose net income ranks in
the top 25 percent — reveals highlights on the road to success. The
typical high-earning owner-operator is a little more than 50 years old
and has been in business as an owner-operator since he was 30. He makes more than $70,000 a year after expenses and is three times as likely to be leased as independent.

The top 25% have these seven practices in common -

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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. Read the rest of this entry »

Fedex Ground has been in the news lately about how the IRS thinks their drivers are employees and not independent contractors. Apparently Fedex Ground has been having problems in various states on this issue. The article starts with the IRS, these two paragraphs reference their problem in Massachusetts

IRS differs with FedEx Ground
By Jill Dunn
Coakley charged that FedEx Ground “intentionally violated all three prongs of the independent contractor law by directing and controlling the activities of drivers and restricting the drivers’ ability to deliver for any other entity.”

Coakley said her investigators also determined drivers were “performing the core business of FedEx Ground” — language especially troubling to any trucking fleet that operates on an owner-operator business model.

If the IRS wins almost any trucking company in the country could be next. Read the rest of this entry »