Letters: Everyday Trucking, The Next Buggy Whip
These Letters to the Editor appear in the May 10 print edition of Transport Topics. Click here to subscribe today.
This is not a question, just a comment: Transport Topics, I want to thank you for always keeping us in the trucking industry informed. However, I don’t know if I’m jealous or just sick of hearing just how good or bad one company or another is doing financially; if I want a financial report, I’ll call my broker.
I read TT online and would like to see more articles pertaining to doing business in the everyday trucking world. For example, with the economy improving, I’d like to see something highlighting the hiring of new drivers and CSA 2010. I believe the transportation market will lean toward hiring student drivers with a clean history — new drivers who don’t have the exposure the older drivers have had, who don’t have the roadside inspections on their score. Where are we going to find them?
Let’s roll up our sleeves and get back to work!
Di Pietro Trucking
Editor’s Note: Print edition subscribers received a 38-page “Special Report” on Comprehensive Safety Analysis 2010, packaged with the April 26 issue of Transport Topics. The report included a story about what the new system will mean for drivers. To request a PDF of the special report, send an e-mail to: email@example.com.
The Next Buggy Whip
I have been in the outsourced truck transportation services industry for 35 years — 29 of them working for three truck-leasing companies and six as a consultant in the industry.
The business of providing commercial truck/transportation services is nearing a crossroads. Full-service truck leasing for many years has been a staple as an option to owning a commercial truck fleet.
The “pre-buy” of 2006-07 created a roller-coaster ride involving manufacturers, service providers and private fleet operators. A combination of the nation’s economic downturn tied to changes in engine design has created the prospect of full-service leasing that is too expensive.
Equipment costs have risen more in the past seven years than in any comparable amount of time, at least in the years I have been in this industry. During that time, three different cost increases have occurred based on a mandated reduction in engine emissions.
The process of attempting to introduce lease pricing into the market based on the higher costs of equipment has begun. The three-digit monthly increases seen in the industry have been met with the apprehension and resistance one would expect. Tied to uncertain economic times, the current method of producing full-service leasing rates is producing a noncompetitive alternative.
The rationale that end users simply “have no choice” belies an adage that may well come true: “If you force customers to find an alternative, they will.”
Tied to this issue has been further discussion based on the changes to Financial Accounting Standards Board Statement No. 13, “Accounting for Leases,” as it applies to full-service truck leasing qualifying as an operating (off-balance-sheet) agreement.
If such a change were to be enacted, it would further reduce the viability of the product line.
Government’s intended tax incentives in commercial truck transportation could be expanded to include these higher-cost, lower-emission engines. Currently, tax credits are available in some states and on the federal level for alternative fuel sourced equipment.
At issue are several questions:
• Are full-service lease providers willing and/or able to alter their pricing methodology?
• Is the government willing to allow full-service leasing to retain an off-balance-sheet status?
• Can tax incentives consistent with the production of hybrid and electric technology be extended to reduced-emission diesel engines?
Full-service truck leasing pro-viders cannot maintain the viability of a service no one is willing or able to purchase.
Peter Jacobs & Associates