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  • ELD Mandate, with equipment headaches, presents ‘tough call’ for one owner-operator

    VOICES
    Michael Wright, May 03, 2016
     
    The following, written by Michigan-based leased owner-operator Michael Wright, appears in the forthcoming May print edition of Overdrive. Wright was writing in part in response. He also referenced the Alliance for California Business’ press release, released in March, detailing what it views as the California Air Resources Board’s admittance that diesel-particulate-filter systems cause engine damage if not properly cleaned/replaced. Wright also noted particular concern for the longevity of newer engines.

    I am in the process of an in-frame on my 2008 ProStar tri-axle. I thought about selling her and going with a pre-2000 truck, but the truck was not sellable with the blown head gasket. And I could not in good conscience pass this problem off to another owner-operator like many guys would. The truck is outfitted with a lot, and has not depreciated much in the past two years, a first as this is my 7th tractor. She is set up to do just about anything with the 600-hp ISX and 18 speed with a wet kit. She can go from tanker to lowboys and everything in between. It is hard to part with that kind of equipment when it is paid for in this economy. We never know what is coming at us next — best to be prepared, is my thinking, the reason I really do not think parting with this tractor is a good idea.

    At once, the days of a simple service, lube, oil and filters, along with general maintenance, are long gone. Now you have to be an engineer and a mechanic with many of these new trucks. I have to carry a laptop and very expensive computer programs along with an electronic reader. I have to do this to monitor what is going on with all of these electronics and sensors, just to keep mine on the road. If you take these motors in to a shop, they just throw parts at them as per the manufacturer recommendations, costing drivers and/or companies thousands of dollars in unnecessary repairs. The engine manufacturers really have us owners and the dealers [in a bind].
  • Banks Will Squeeze the Oil Patch

    Banks Will Squeeze the Oil Patch
    Bah, humbug.
    While it is the wrong season for “A Christmas Carol,” U.S. energy companies are bracing for words to
    that effect from lenders. Redetermination season, a twice yearly ritual when banks reassess credit lines,
    is upon us. They are likely to be Scrooge-like. The result: More companies using desperate types of
    financing or filing for bankruptcy.
    U.S. oil and gas producers depend disproportionately on bank credit to run their businesses. In normal
    times redeterminations are a pretty ho-hum affair, but the sharp swoon in commodities since mid-2014
    is spooking banks. Even so, last spring’s redetermination came after a brief rebound in prices and
    successful stock and bond issues by many firms. And last fall banks were fairly generous, cutting
    borrowing bases by just 11% according to analysts at Raymond James.
    Now, despite a 40% bounce since February’s low in crude prices, estimated reductions are sharper—
    some 20% to 30% on average. Part of that is because banks have been lenient. For example, Raymond
    James thinks banks valued the “strip”—all the futures prices for oil or natural gas—at 87% to 95% of
    what they fetched on markets. A more normal margin of safety is just 80%.
    There are two other factors working against indebted energy companies. One is that their hedges are
    running out. A barrel fetching $38 but effectively sold for $70 because its price was locked in with
    derivatives such as swaps can be valued at that higher price. But prices have been low for long enough
    that few companies have much of their production covered.
    Another issue is that, in their effort to save money, drilling has slowed. That has an impact on how
    banks account for proven, undeveloped reserves. If it looks unlikely that oil or gas in the ground will
    be extracted then banks can’t count it as collateral for a loan.
    Some companies already have delivered the bad news. WPX Energy said it had a 30% reduction in
    its borrowing base and Whiting Petroleum estimated that its base would be cut by 38%.
    Furthermore, covenants may become more serious and “antihoarding clauses” introduced. These
    prevent financially troubled companies from drawing down unused credit lines just to have the cash
    on their balance sheets.
    The irony in redeterminations is that, despite the negative tone, energy companies’ high-yield bonds
    have rallied in recent weeks as oil prices recovered, vastly outperforming industries such as
    technology and
    finance. That is small solace, though, as the ghost of energy booms past sends a chill through the
    industry in coming weeks.
    —Spencer Jakab, WSJ, 4/1/2016
  • Web Boom Roils Trucking Industry

    Web Boom Roils Trucking Industry
    Big-rig drivers increasingly make home deliveries of large, heavy items bought online
    A continuing series on how changes in shopping habits are forcing big shifts across retail and other
    industries.


    A seismic change in the way Americans are shopping is affecting everything from how, when and
    where they make purchases to whether they pay with credit cards or mobile clicks.
    It also is roiling trucking, which is caught in a tug of war with shippers and parcel carriers over who
    should pay for the true price of delivering e-commerce, especially the ever-bigger items consumers
    are ordering. As they struggle with unanticipated costs, truckers are considering whether to specialize, partner or
    ratchet up prices, which would pressure shippers and maybe consumers.


    E-commerce comprises 10% to 20% of deliveries in the $35 billion trucking industry segment called LTL or “less than
    truckload,” estimates Kevin Zweier, a vice president at supply-chain consultancy Chainalytics. LTLs
    pack loads from multiple customers into a single truck.


    Big rigs are increasingly hauling consumer goods they weren’t designed for into neighborhoods, bumping tree
    branches and utility wires. Truck drivers, used to moving efficiently from one loading dock to another,
    must now juggle big, often heavy and more time-consuming home deliveries, too.


    UPS and FedEx Corp. are raising prices for delivering big, heavy items such as kayaks and picnic
    tables that don’t fit their automated systems and cut into profit margins. Both nearly doubled to $110
    the extra fee on oversize items in their parcel ground networks. FedEx said soon it would assess a
    special handling surcharge to even more packages.


    Shipping by truck instead of parcel van can be cheaper. A retailer might pay $104 for truck delivery of
    a 110-pound clothes dryer in a metropolitan area versus $234 by parcel carrier, estimates SJ
    Consulting Group, a transportation consultancy. That has helped residential shipments in the LTL
    segment grow at a compound annual rate of 6.9% compared with commercial shipments’ 1.2% over
    six years through 2015.


    Some industry players are charging extra for the last time-consuming leg of an item’s transport, and
    also offering specialty “white glove” services such as installation or assembly.
    But many traditional trucking companies like Wilson, which provides LTL and other transportation
    services mostly throughout the Southeast, are caught in the middle. The Internet “is creating all this
    activity,” said Wilson’s president, Steven D. Gast, as he walked his Conley, Ga., loading dock
    recently, pointing out oddly shaped outdoor fireplaces, a Chevy Silverado hood, boxed mirrors
    marked “fragile” and spa covers from Florida-based Prestige Spa. All require extra space or special
    handling.
    “If you’re the seller, you’re happy. If you’re the guy delivering it, you’re pulling your hair out,” he
    said.

    Amazon.com Inc. raised consumer expectations. Now, shippers like Home Depot Inc. oblige, mixing
    big and heavy residential shipments in with its commercial ones because it makes shipping simpler.
    So firms like Wilson are “kind of forced to take it all if they want to do business with that shipper,”
    said Mr. Zweier of Chainalytics.


    The $25 minimum fee often charged by trucking firms for a home delivery probably isn’t covering the
    extra labor, equipment and time, he said. Drivers, for instance, are often paid $18 to $25 an hour.
    Mr. Gast said Wilson is working with customers to figure out fair pricing and is evaluating
    partnerships that would allow it to focus on business deliveries. “Nobody’s figured out the cost side,”
    he said. “Everybody is scrambling.”    - BY BETSY MORRIS, WSJ, 4/1/2016


    Todd E. Smith, President

    Thomas Wilson Group, LLC

     Mission Statement

    "Thomas Wilson Group's goal is to treat each individual as a potential lifelong customer, through communicating a professional image that embraces honesty and integrity"

  • UCR enforcement for 2016 delayed until Feb 1

    Enforcement of the Unified Carrier Registration Agreement has been delayed until Feb. 1, according to an inspection bulletin released this week by the Commercial Vehicle Safety Alliance. Enforcement was originally set to begin Jan. 1.

    The delay gives motor carriers, brokers, freight forwarders and leasing companies an extra month to file their registration fees for the 2016 registration year.

    CVSA said the Federal Motor Carrier Safety Administration added a violation code into the Aspen software to to indicate that a carrier isn’t in compliance with the UCR. After Feb. 1, enforcement will only occur after online or telephonic verification that the company failed to register for 2016. Because of the online system, no UCR credential is required to be carried in the CMV.

    There are two groups who aren’t subject to the UCR:

    Purely intrastate carriers that don’t handle interstate/international freight or make interstate/international movements, except when a state has adopted the UCR program for intrastate carriers
    Private motor carriers of passengers engaged in the interstate/international transportation of passengers that’s not available to the public at large
    There are 41 states that participate in the UCR program, which can be seen at the UCR website.


     
    Todd E. Smith, President         
     
    Thomas Wilson Group, LLC
    5214 Maryland Way, Ste. 303
    Brentwood, Tennessee 37027
     
     
     
    615.277.0751
    615.277.0754 fax
     
    Mission Statement
     
    "Thomas Wilson Group's goal is to treat each individual as a potential lifelong customer, through communicating a professional image that embraces honesty and integrity"