RSI’s Transportation Insights

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The changing tides of hybrid technology. 
Southern California ports continue to pioneer greener paths – this time with a hybrid tugboat.   In an ongoing effort to reduce images both on land and sea, the ports of Long Beach and Los Angeles have jumpstarted an environmentally friendly  -  and forward thinking  - partnership that could bring a hybrid tugboat to the ports in 2009. 
Two of the busiest ports in the world, both Long Beach and Los Angeles see their fare share pollution and in this case, it comes in the form of, “thick, dirty sludge called bunker fuel while at sea and slurp diesel to keep the lights and air conditioning running while in port.” (insert citation) In addition, “Inefficient yard tractors and cranes guzzle fuel and spew exhaust as they stack containers. And tugboats, pound for pound the most powerful vessels on the water, waste most of that muscle idling or cruising.” 

Enter the tugboat hybrid.  At a cost of $1.35 million, Foss Maritime Co. of Seattle developed the tugboat hybrid that will improve water and air quality.   The vessel will run on both batteries and diesel fuel. 

A majority of the of the ports’ environmental focus has been on not on sea vessels – but those travelling on land.  Trucks must now go through retrofitting, inspections, you name it - but all in the name of cleaner air. 

On a larger scale, there are currently about 4,000 tugboats in America, according to the American Waterways Operators.  GE is also in the process of creating a hybrid tug and that will work off of a diesel-electric drivetrains.  The hybrid engines must be able to provide short burst of high power in order to move the gigantic freighters and tankers. GE’s technology - battery powered engines -  would allow them to do both without the fuel intake the non-hybrids require now.  The type of fuel intake that leads to loads of  pollution.  According to Wired.com, “General Electric wants to take the technology to sea in a tugboat that could burn 35 percent less fuel and emit 80 percent less pollution than anything else on the water,”  (http://blog.wired.com/cars/2008/05/ge-developing-a.html) .

As consumers, drivers, business owners, and Americans – we’ve all seen fuel prices drop drastically in the last month and a half.  While it’s good for the wallet, it raises concerns about the economy as a whole.  Like we need more of those!  Fortunately, federal organizations including the Energy Information Administration (EIA) collects, analyzes, and provides detailed answers and projections in regards to fuel consumption and pricing on a domestic and international scale.  This blog will look at the EIA’s just-released report concerning the short-term energy outlook. 
The EIA reports that, “The current U.S. and global economic downturn has led to a decrease in global energy demand and a rapid and substantial reduction in crude oil and other energy prices.  As a result, projections for both energy demand and prices are considerably lower than last month’s Outlook.” (http://www.eia.doe.gov/steo.)

We’ve all seen barrel prices rice and fall faster than it takes the media to release the latest economic report.  Just last July, the monthly average price of West Texas Intermediate (WTI) crude oil dropped from more than $133 per barrel, landing at approximately $77 per barrel just last month.  While many of us are enjoying the drop in price, a fog of anxiety still lingers as none of us know when prices may go back up just as quickly as they fell.

The economy and world economy at that has played a significant role in the EIA’s findings and overall outlook.  The nation’s dropping economic growth is reminiscent of the entire world.  The EIA stated this drop, “has led to a significant reduction in (the EIA’s)  Outlook’s assumptions for world economic growth and projections of energy demand and prices,” (http://www.eia.doe.gov/steo.)
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Overall, as consumption drops, the EIA feels future fuel prices (in relation to OPEC and Non-OPEC trends) will remain a they are – which is a lot less than what they were four months ago.  Good news for the gas tank, but telling news of an economy that steers the rise and fall of oil prices. 

When business is tight, tech is a good place to put the company’s money.  The right technology can streamline processes, communication, strategy, payroll, logistics - you name it. Web-based software for example,  is easily accessible and the costs are minimal.  According to Entrepreneur.com, “Now with software as a service, you plug into the internet and this software just comes down the pipe.”

The service is part of the “cloud computing” revolution. Experts believe that, in the near future, computers will be used mainly to access the internet. Files, programs and communication will be stored and facilitated in the cloud of data that makes up the web. Computers won’t run programs; they’ll only be needed to access them.” (http://www.entrepreneur.com/technology/newsandtrends/article197518.html.) 

Creating (if you don’t have one) and managing a central database is another way to improve day to day function and plan quarterly objectives and for an organization as large as the Portl of Long Beach - incredibly critical. 

This past July,  The POLB looked to Microsoft, specifically Microsoft Dynamics CRM 4.0, “to provide the technology needed to create a single repository for information on its 15,000 contacts, representing 5,000 companies,” (http://www.microsoft.com/Presspass/press/2008/jul08/07-22PortOfLongBeachPR.mspx.)

Prior to Microsoft Dynamics CRM, the POLB relied on a bevy of individual solutions inluding spreadsheets, online sales management systems, and even penned notes - that’s right - people still go to the old pencil and paper.   Almost 400 employees work at the POLB offices and all will now have everything from contacts to bullet points scratched onto a sticky pad zipped up in one tight Microsoft managed database.   
 

Microsoft listed the following benefits in a press release last summer:
• Integration of information.  .
 
• Improved image with customers.   
 
• Time savings. 
• More accurate data.  

• Better reporting.   
 
• Customization by division to speed workflow.   
 
Whether your company has five or five hundred employeeds, maintaining accessible and accurate database information is essential.  The POLB moves nearly $150 billion through its waters each year.  And implementing new and improved software that fits your business needs is one way to ensure business runs as usual - or even better. 

Considering current economic trends – the ones no one wants to read about anymore anyway – it can come as a surprise that an industry is in desperate need of employees – in the tens of thousands.  It was first reported three years ago in an American Truck Association (ATA) report that the trucking industry could be short 300,000 drivers by the year 2014.  Several factors have and will affect the industry’s loss of long haul, heavy load drivers. 
According to the ATA, it’s demographic trends that will hit the industry the hardest.  Considering the facts.  A majority of current long haul drivers are between the ages of 35-54.  In less than a decade, half of that group will likely retire from what can often be a mentally and physically draining position.   In addition, the ATA reported, “A major
Problem for the trucking industry and the U.S. economy as a whole is that the
annual rate of growth of the overall labor force will slow sharply, from 1.4%
currently to only 0.5% by 2012.” 
 

 Fuel prices have hit fleet owners hard, leaving many unable to provide adequate wages increases.  The situation is compounded by job stresses that include long periods of time away from family and unpredictable schedules. 

The good news is, the industry’s taken notice.  Recognizing regular demographics aren’t going to be available in ten years, companies have begun to target women and couples as potential drivers.  This trend has trickled down, affecting big rig design, position requirements, and more.  Ward Truckload Express is one company in particular that’s reshaping the position to be more desirable – and balanced.  Ward President, Tim Ward said, “Our goal is to provide our drivers with a lifestyle that balances time at home with time on the job.  We are committed to providing excellent income potential and benefits, and we strive to create a pleasant work environment.” (http://www.bigrigjobs.com/Truck-Driving-Blog/?postid=50)  According to the Auto Channel, Ward drivers receive medical benefits, profit sharing, and first year earnings in the $50,000 range.  

Time, economics, and industry evolutions will all impact whether or not positions get filled.  In the meantime, there’s some hiring to be done! 

Diesel Fuel Prices

It’s been a crazy week on Wall Street and while we’ll spare you the details that have overwhelmed every available media outlet this week, we will note one thing:  Gas prices have dropped.  The reason for the price drop is pure weight of the situation on Wall Street.  The trickle effect – dropping valuations of financial giants – hit the barrel too, causing a slight decrease in the price per.  While this is good news, truckers will still see that diesel is priced higher than regular gas.  While this is not a new phenomenon, many don’t know why this is.  We’ll explain. 
 

First the facts:  Diesel is used in compression ignition engines and is a distillate of crude oil.  Gasoline used in non-diesel engines is a lighter chain of hydrogen and carbon. and operates at a lower compression.   While diesel has not always been priced higher than regular gasoline, the past four years have shown otherwise. 

According to the Energy Information Administration (EIA), “Since September 2004, the price of diesel fuel has been generally higher than the price of regular gasoline all year round for several reasons.   Worldwide demand for diesel fuel and other distillate fuel oils has been increasing steadily, with strong demand in China, Europe, and the United States, putting more pressure on the tight global refining capacity. In the United States, the transition to ultra-low-sulfur diesel fuel has affected diesel fuel production and distribution costs. Also, the Federal excise tax on diesel fuel is 6 cents higher per gallon (24.4 cents per gallon) than the tax on gasoline,” (http://www.eia.doe.gov/bookshelf/brochures/diesel/). 

What determines the cost of diesel?  Same as cost configuration of regular gasoline, the price of diesel is determined on a number of factors that occur nationally and internationally, manmade and made by Mother Nature.  According to the EIA, the true costs are attached to production, delivery, processing, marketing and distribution. 
The future of diesel prices compared to regular gasoline?  Given the past week on Wall Street, predicting the price of anything would be anyone’s guess.  In the long-term however, the price of diesel may radically change as new fuels including bio-diesel become mainstream, and easier to produce. 
 
 

On September 11th, the Port of Long Beach held a clean trucks workshop formatted to inform and ease the transition into an increasingly environmentally conscious port.  The workshop is now accessible via a webinar at the Port’s homepage, www.polb.com.  One key point to remember from the workshop is that as of October 1st, 2008, trucks entering the port must be complaint with a new set of environmentally friendly rules and regulations enforced by the POLB.   

According to the POLB, the workshop was intended, “for beneficial cargo owners (BCOs), ocean carriers, customs brokers and freight forwarders and other logistics industry professionals,” (www.polb.com.)  Dr. Robert Kanter who is the Port’s Managing Director of Environmental Affairs and Planning Conducted the workshop and advised truckers, fleet owners, operators and many more of the coming changes that are to take effect.  Dr. Kanter reminded those attending of the reasons why the Clean Trucks Program is needed.  Among those reasons, air pollution, health risks, and the economic impacts associated with all three.

According to Dr. Kanter, “The Ports’ Clean Air Action Plan will reduce pollution from Port sources 45% by 2012” (www.polb.com)  Back to this blog’s main point – the impending compliance date. If you’re planning on driving a truck, sending a truck, or have anything to do with a truck entering the port effective October 1st, it’s important to become familiar to the following requirements:

 The Clean Trucks Program

1) Trucks must operate for a Licensed Motor Carrier firm with a Port-approved concession.

2) Trucks must be registered in Port’s Drayage Truck Registry

Clean Trucks Schedule

1) As of October 1, 2008 trucks with a model year of 98′ and older are not allowed unless they’re sporting a newer engine

2) By January 1, 2010 trucks with engines ranging from years 89′ - 93′ are banned from entering altogether.  Plus ’94-’03 trucks without retrofitted engines will be prohibited as well. 

3) As of January 1, 2012 no trucks will be allowed that are not compliant with 2007 EPA  engine emission standards.

Although coverage regarding the POLB’s transition to a greener port has been ongoing for well over a year, October first is coming up quick.  Check back at RSI’s Transportation Insights for helpful information that will help your trucks’ transition go smoothly. 

Nobody likes traffic.  Except for maybe a motorcyclist or two who like the thrill of cutting in and out of lanes while passenger cars sit, idling away gas and patience.  Similar to cities such as New York (as the most visible – and costly)  where regular toll fares increase as congestion mushrooms, Los Angeles is considering the addition of a toll lane on three major freeways that would charge drivers based on the amount of congestion on the road. 
Steve Hymon of the Los Angeles Times reported, “Officials here are seeking federal money to put toll lanes initially on three freeways, including the 210 and 10 in the San Gabriel Valley and the 110 south of downtown. The 60 Freeway is next on the list.
The tolls would vary by time of day and be highest during rush hour. Single-occupant cars would probably pay the most to use the lanes,”  (http://articles.latimes.com/2008/apr/14/local/me-roadsage14). 
Economic and environmental concerns top the list of reasons to convert the lanes with advocates arguing that the measure would improve current conditions.  The amount of traffic on the road would inevitably lessen (just like it did when gas prices went up – suggesting that people really don’t want to – or can’t – pay even more to drive.)  Meanwhile, opponents of the measure believe such a toll would tax an already financially burdened lower and middle class.  (More on that topic in a yet-to-be published blog.) 
Similar plans were proposed in San Francisco as well, but were quickly vetoed on August 8th by the San Francisco Transportation.  According to a report in the San Francisco Chronicle, the Authority voted down the plan and will instead  As an alternative, the Authority agreed to take money from the federal gas tax to buy new parking meters that will be used to charge significantly higher rates for parking based on the time of day.

Currently - $213 million dollars from the Federal Government sits on the laps of local and state lofficials. 

A seaport the size of Long Beach and Los Angeles on the West Coast?  Our Southern California ports have become increasingly exposed and strained due to environmental initiatives and urban development,  which Mexico is aiming to both relieve and rival as it plans the construction of its new port.  

Considered to be the country’s largest infrastructure project in history, Mexican government officials including President Felipe Calderon intend to snare Asian cargo traffic and freight it off to the U.S.  The new port would be located in Punto Colonet, which is located roughly 150 miles south Tijuana. 
The Los Angeles Times reported that, “Punta Colonet is expected to have a capacity of 2 million shipping containers annually when it opens in 2014, Mexico’s transportation secretariat told The Times But officials envision it ultimately handling five times that amount. Last year, the ports of L.A. and Long Beach handled 15.7 million containers combined.” (www.latimes.com)
A tiny village, Punto Colonet is currently home to about 2,500 residents who will be visited by President Calderon in coming days.  Calderon, other government officials, and businessmen and women see potential in the location which is not a high traffic area and relatively close to Southern California. While 30 million shipping containers traversed the Pacific ocean last year to West Coast ports (15.7 million to Long Beach and Los Angeles ports combined), Calderon expects Punto Colonet to handle about 2 million containers its first year in action. 
Money to fund the colossal project will be privately funded.  And while overall economic tribulations have hit the logistics industry, it is expected to rebound in the next year or two. Should Calderon’s vision go as planned the port would be open for business in 2014. 

For a long time, putting a dollar value on the cost of car insurance in California has been dependent on zip code, prior claims, and a few qualitative characteristics including gender and age.    Insurance Commissioner Steve Poizner may change these pricing tenets and base premiums primarily on the distance we drive. 
From a risk perspective, it’s statistically proven and logically true that the more one drives, the higher the chances he or she will be involved in an accident.  Aside from the safety benefits though, this provision would have positive economic and environmental impacts as well. 

In a Business Week article, the Associated Press reported, “Two out of three households in the state could save an average of $276 per vehicle, and lower-income people, who generally use their cars less than the middle class or the wealthy, might save even more, said a July study by the Brookings Institution in Washington. However, some high-mileage drivers might see their rates increase by opting for pay as you drive, the Brookings report said.”  (www.businessweek.com)
And the savings continues.  According to the same article, the Environmental Defense Fund estimates that California drivers would save $40 billion in car-related expenses from 2009 to 2020 if only about 8.5 million drivers sign up for pay-as-you-drive policies.  Where’s the pen?   
 
Less cars on the road also means less greenhouse gas emissions – music to environmentalists ears.  It was reported such a move would be equivalent to taking 10 million cars off the road.  Considering there are nearly 5 million cars that travel through Los Angeles a day alone, the improvements in air quality would be significant. 
This means less fuel, smog and ultimately more motivation to really look at alternative modes of transportation.  For the transportation industry – this move would mean less congestion, ultimately leading to greater fuel efficiency (if there’s a reduction in stop and go traffic) and quicker transporting of goods and services.  
A public hearing is set for October 20th – enough time to start reconsidering our driving habits and re-navigating our routes. 

The Great American Trucking Show that is!  This summer’s event will be held August 21st through Saturday the 23rd in Dallas, Texas.  This year marks the show’s 10th anniversary and there will be no shortage of celebrations.  Even better - RSI will be exhibiting all three days in booth# 11028!
Did we mention the party?  Special attractions include the Pride and Polish Truck Beauty Competition, Educational Seminars sponsored by TMTA, the 4th annual Fleet Form, special appearances by the Chrome Shop Mafia, free concerts from top country music artists, and exhibits from leaders in the heavy duty trucking industry according to www.gatsonline.com. 
 
Nearly 50,000 people are expected to attend, and for those who can’t, the show can be heard in daily podcasts featured on http://www.midnighttrucking.com/.  In addition to an exhibit hall featuring hundreds of companies (including RSI – don’t forget), concerts, and contests, there will be discussion forums and educational seminars.   The feature forum titled, Just for Fleets: Steering past obstacles to success will be held Thursday August 21st.  Items to be discussed include:
 - Fleets’ fuel saving measures
 - Key financial tactics
 - Managing risk
 - What’s happening in safety
 - Negotiating in a tough market
 Fleet owners and operators will especially benefit from this particular forum as the focus is on their ability to thrive given current economic conditions and industry specific challenges. 
 

And there will be prizes!  The Midnight Trucking Radio Network is hosting one of the top contests at the Great American Trucking Show where one registration enables one to win $1,000 Cash, a pair of Caterpillar Boots, a set of Alcoa-Dura Bright Wheels and the Sweet Freedom Custom Truck.  

All in all – it will be an informative and fun and if you’re in the Dallas area be sure to stop on by – ya’ here!