By Tom Berg, Senior Editor
Operators of temperature-controlled equipment deliver premium service and should be getting premium rates from shippers, but in many cases aren’t. This is indicated in relatively low return-on-investment figures presented at the Truckload Carriers Association’s Refrigerated Division annual meeting last week in New Mexico.
A tractor and refrigerated trailer today costs about $200,000 compared to $182,000 for a tractor and dry van, said economist John Larkin, quoting survey figures during the opening general session. However, going rates give dry-van operators a 6.6% return on investment, while reefer operators get only 5.8%. That has caused some fleets to consider buying more dry vans because they can make more money with them, he noted.
“You shouldn’t be bashful” in asking for higher rates, said Larkin, managing director at Stifel-Nicolaus. The more complex and expensive reefer trailer, plus the fuel to feed it and all the care the load gets en route, should be rewarded, and shippers should be told that.
Rates should also rise because of increasing fuel costs and pressures from new federal regulations which will exacerbate the driver shortage – something faced by all fleets and a topic of casual discussions among members during social functions.
“How many trucks you got?” one fleet manager asked another across a table at an evening reception. “We’ve gotâ€¦” the man began to answer, then corrected what he was going to say with, “â€¦ We’ve got 195 drivers.”
“Yeah, that’s where it’s at now,” the questioner remarked. “How many drivers do you have.” Understood was the fact that a fleet can have a million trucks, but can only operate as many as it has people to drive them.
The conversation quickly turned to electronic driver logs, which one man’s fleet had begun using. And he was not happy about them. E-logs are inflexible and restrict what a driver can do and not do.
Most troublesome is that “once he starts working, he’s got to keep going” because the e-logging device records exactly what the truck is doing, including loading delays and nap stops that cannot be papered over as they can with a manual log.
Most inspectors today don’t know what to do with an e-log, the manager continued. “Oh, that thing – never mind,” an inspector will say and wave the driver on. “That saves time because we don’t get inspected,” the manager said. “But you don’t get any good inspections” of equipment which can help with Federal Motor Carrier Safety Administration’s new CSA scores that are now becoming important to a fleet and its drivers.
“We’ve got ’em on about half our trucks and the drivers don’t like ’em,” the manager said of the devices. “We’ve stopped there and are thinking about, should we go on” and equip the rest of the trucks. “But now we’re in a bind. If we don’t do the other trucks, those guys will be happy. But the ones we’ve asked to deal with the e-logs, now what do we tell them?”
E-logs and electronic on-board recorders are not yet required, but they will be, another manager explained when asked why anybody now bothers with them. They need to get accustomed to the devices and how they affect operations. But truck operators are wary of them.
Paying for Reefer Fuel
Back on the money side of the business, some operators are finding limited success in collecting a “reefer surcharge.” This is primarily the fuel expense a trucker incurs in running the reefer unit while the load is enroute, and was one of the topics covered in a panel discussion of “accessorial costs coverage” on the meeting’s second morning.
“Shippers think they’ve overcompensated us on the fuel surcharge” for tractors, “so want to hold back on reefers,” said Steve Wutke, vice president of sales at Prime Inc., a panel member. Also, “They want one fuel surcharge to fit all. They don’t want to administer two surcharges.”
Shippers generally prefer to keep things simple and don’t want to be inundated with operating data, some observed. However, when asked to compensate the trucker for expenses, they then want to see the pertinent numbers.
On the tractor fuel surcharge, “They want to re-index from 5 to 5 and a half, and from 5 and a half to 6” mpg as the measure to compute what the surcharge should be, Wutke observed.
He later noted that getting shippers to pay a reefer surchange or anything else, including a contracted freight rate, is not a matter of what’s correct or proper. “It’s supply and demand.”
Printer Friendly Version
Email This Story
Industry : Related News
7/19/2011 – Reefer Operators Say They Deserve ‘Premium Rate for Premium Services’
Operators of temperature-controlled equipment deliver premium service and should be getting premium rates from shippers, but in many cases aren’t. This is indicated in relatively low return-on-investment figures presented at the Truckload Carriers Association’s Refrigerated Division annual meeting last week in New Mexico….
7/19/2011 – FTR Shippers Condition Index Improves for Second Consecutive Month
FTR Associates’ Shippers’ Condition Index has moved upward again this month, signifying improving conditions for shippers with the current softness in the economy. However, FTR analysts say don’t expect that trend to last….
7/15/2011 – Another Record Month for TransCore’s North American Freight Index in June
For the month of June, TransCore’s North American Freight Index recorded the second-highest load volume this year and in its 15-year history….
7/14/2011 – BTS Index: Freight Shipments Fall 1.8% in May from April
Freight carried by the for-hire transportation industry fell 1.8% in May from April, falling for the second consecutive month, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics’ Freight Transportation Services Index….
7/14/2011 – Class 8 Vehicle Demand Continues to be Constrained by Industry’s Ability to Build
While some near term concerns are being generated on the international scene and the U.S. political landscape, demand for commercial vehicles continues to be solid….
7/11/2011 – As Tire Prices Rise, Association Warns of Casing Shortage
The Retread Tire Association is warning of a severe shortage of retreadable truck tires, also known as casings, as the first week of July saw another round of tire price hikes….
7/8/2011 – Most Carriers Expect Driver Pay to Increase This Year
Two thirds of carriers expect driver wage increases of 1-5% in the recent Second Quarter Business Expectations Survey by Transport Capital Partners….
7/7/2011 – FTR’s Trucking Conditions Index Stabilizes in May
FTR’s May Trucking Conditions Index remained basically flat month over month with a reading of 7.3. The Index appears to have stabilized in solidly positive territory after April’s sharp one-month drop in response to softened economic conditions….
7/7/2011 – Commercial Vehicle Orders Remain at Healthy Levels in June
A preliminary reading of commercial vehicle net orders in June for North American markets indicated continued strength in demand for medium and heavy-duty vehicles according to ACT Research….
7/6/2011 – TransCore’s First Produce Report Tracks Rising Reefer Rates
TransCore released its first in a series of free monthly Produce Season Reports, which shows rates have been rising in most areas of the country….
6/30/2011 – Used Truck Sales Volumes Fall in Response to Lack of Available Inventory
Challenged by a lack of available inventory, sales volumes of used trucks fell in all sales channels during May, according to ACT Research….
April 2011 Surface Trade with Canada and Mexico Rose 12.1% from April 2010
Trade using surface transportation between the United States and its North American Free Trade Agreement partners Canada and Mexico was 12.1 percent higher in April 2011 than in April 2010, reaching $73.8 billion, according to the Bureau of Transportation Statistics of the U.S. Department of Transportation….
6/29/2011 – Trailer Orders Fall for Second Month, but Backlogs Continue Growing
Total U.S. trailer net orders fell 9% during May, the second consecutive monthly decline for the industry, accord to ACT Research….
6/29/2011 – Odyssey Logistics Technology Acquires Capital Transportation Solutions
Odyssey Logistics Technology Corporation acquired Capital Transportation Solutions, a non-asset-based third-party logistics provider specializing in less than truckload transportation management….
6/29/2011 – Carriers Report Increase in Rates in Second Quarter
Eighty-three percent of carriers reported average rate increases in the recent Second Quarter Business Expectations Survey by Transport Capital Partners….
6/27/2011 – U.S. Cargo Theft Report: Theft Down March to May YoY
Cargo theft appeared to be down somewhat for the three-month period of March, April and May compared to last year, according to FreightWatch International, although the May numbers for two of the most highly targeted states are still pending….
6/23/2011 – Driver Turnover Rises in First Quarter
Turnover for longhaul truck drivers increased in the first three months of 2011, according to American Trucking Associations’ latest Trucking Activity Report….
6/22/2011 – Carriers’ Plans to Add Capacity Remain Unchanged for Four Quarters
The recent Second Quarter Business Expectations Survey by Transport Capital Partners found the carriers’ responses were essentially unchanged for the last four quarters on capacity plans….
6/20/2011 – Heavy Duty Order Backlog Continues to Grow
North American Class 8 net orders, while below April’s overheated intake, were still 77 percent about the same month last year, continuing to fuel growth in the industry backlog….
6/17/2011 – PTDI Revises Training Standards
The Professional Truck Driver Institute (PTDI) has revised its standards for entry-level drivers and driver training courses. Revisions include ease of use, updated terminology, more flexible standards, and inclusion of advancements in technology….
6/16/2011 – ATRI Updates Costs of Trucking Report: Drivers, Fuel Largest Expense
The American Transportation Research Institute released the findings of its 2011 update to An Analysis of the Operational Costs of Trucking….
6/15/2011 – Stage is Set for Long Run-Up in Class 8 Vehicle Demand
Despite some recent easing in freight growth and a softening in the path of the U.S. economy, demand for commercial vehicles continues to be strong….
6/15/2011 – Spot Market Freight Index Sets Record
TransCore’s North American Freight Index marked the fifth consecutive month with the highest same-month spot market freight availability in its 15-year history, up 10 percent compared to one year ago….
6/9/2011 – Jeremy Heiderscheit Captures Best in Show at Shell Rotella SuperRigs Judging
Amid high spirits and bright sunshine, Jeremy Heiderscheit of Peosta, Iowa, hauled in Best in Show honors with his blue and white 2003 Peterbilt 379 at the 29th Shell Rotella SuperRigs held at the Kenly 95 Petro in Kenly, N.C….
6/7/2011 – FTR’s Trucking Conditions Index Fell in April
The April Trucking Conditions Index from industry forecaster FTR fell to a reading of 7.57 from a March reading of 13.30….
6/7/2011 – Net Orders for Heavy Duty Commercial Vehicles Remain Strong in May
A preliminary reading of net orders for heavy duty Class 8 commercial vehicles in North America fell from April’s high water mark, but remained strong, according to ACT Research….