Truckers face ‘perfect storm’ of more regulation, high prices

A crane adds freshly-cut timber to Wayne Daggett's payload at a harvesting area in Dover-Foxcroft on Feb. 10, 2011. Daggett runs Charles Daggett Inc. based in Topsfield and hauls wood for private contractors. By far, trucking dwarfs other forms of transport in Maine despite the recession and despite federal regulations imposed on the trucking industry.
John Clarke Russ | BDN
A crane adds freshly-cut timber to Wayne Daggett's payload at a harvesting area in Dover-Foxcroft on Feb. 10, 2011. Daggett runs Charles Daggett Inc. based in Topsfield and hauls wood for private contractors. By far, trucking dwarfs other forms of transport in Maine despite the recession and despite federal regulations imposed on the trucking industry.
By Christopher Cousins, BDN Staff
Posted March 12, 2011, at 12 a.m.

BANGOR, Maine — As Wayne Daggett sat at a traffic light on Broadway near downtown Bangor, passenger cars idled in the lane next to him and his 100,000-pound tractor-trailer filled to capacity with pulpwood.

“I should have blocked the other lane,” said Daggett, surveying the situation around him through his side mirrors. “This will be a tight turn.”

When the light switched to green, the smaller vehicles surged forward while Daggett eased out the clutch. His Kenworth — one of the best-riding rigs he has owned in more than 30 years of trucking, he said —  lurched forward. By the time he had completed the turn, he had gone through three gears.

“Watch my back wheels,” he said to a reporter in the passenger seat. Far behind, the row of tires and their massive load nipped the curb. “There’s no way to avoid that. They don’t make roads for trucks as long as this one.”

If not for recent changes in federal law that banned 100,000-pound rigs from Maine’s federal interstates after a year of accepting them, Daggett could have avoided most of downtown Bangor by using Interstate 395.

Truck weights have attracted a lot of attention from the media and government officials in recent months, with many painting the issue as a threat to Maine’s economy. To Daggett, who with his son Cory constitutes the totality of Charles Daggett Inc., a family-owned trucking firm in Topsfield, the expiration of the 100,000-pound limit in December was just one more blow in the decades-long assault on his profit margin.

The price of diesel fuel has gone from below 50 cents a gallon in 1973, when Daggett started working for his father, Charles Daggett, to near $4 a gallon now. Fully loaded, Daggett’s truck averages fewer than five miles per gallon. The cost of a truck itself was approximately $16,000 back then, compared with around $120,000 now.

“I make less now than I did back then,” said Daggett, 60, who owns the company with his wife, Dianne. “Do you think we’ve gotten a raise? No. The costs of everything will go up for a long time before we’ll get a raise.”

For hauling a load of pulpwood from Dover-Foxcroft to Verso’s Bucksport mill, a round trip of about 100 miles, Daggett said, he earned approximately $250. Nearly $100 of that paid for fuel, with more profit siphoned off for insurance, which Daggett said costs $10,000 per year.

“When I was first hauling in 1973, we were getting paid within $1 per 100 miles of what we’re getting now,” said Daggett. “You do the math. I’m making less now than I did years ago.”

The economics of Daggett’s small-time operation provide a glimpse into an industry that most people take for granted. Most every product there is comes to consumers on a road, rails, waterway or by air. When times are tough in the transportation industry, the effects rampage through the economy, making it difficult for manufacturers to move their products and for consumers to afford them.

And right now, times are tough for the trucking industry, and not just for small-time operators.

Barry Pottle, president and CEO of Pottle’s Transportation Inc., a Hermon-based firm that operates almost everywhere east of the Mississippi River, said the trucking industry is facing “a perfect storm” of factors working against it — and it’s a storm that for many is set to hit in the coming weeks. With insurance premiums, registrations and truck payments coming due for many operators in March or April, Pottle said, he fears the slow-building consequences of the economic recession in the past two years are about to reveal themselves ferociously.

“Unfortunately, I think we’re going to see a lot of trucking companies go out of business,” said Pottle.

Exacerbating the situation is caution being exercised by both manufacturers and the wholesalers and retailers who sell their products. Virtually gone are the days when sellers kept large amounts of products in stock, with many firms opting for a supply-chain concept known as “just-in-time” delivery. That allows companies to reduce the amount of money they have to spend for stock, which might not sell for months. It also causes turbulence in the transportation industry, according to Jeff Castonguay, general manager for Bangor-based Hartt Transportation, which employs 450 drivers and another 160 subcontractors.

“We’re optimistic about what’s to come with the economy, but right now everyone is being extremely cautious,” said Castonguay. “A lot of manufacturers have cut back to nothing or they basically are treading water. We feel that some of them are walking a fine line right now in terms of their survival.”

That cautious atmosphere, according to Castonguay, makes it difficult to predict how much trucking business might be on the horizon.

“In the past, you could count on what was going to happen,” he said. “Now we see surges of business when we don’t anticipate them. It’s a very uneasy feeling. If the economy rebounds, the issue will be can we hire enough drivers.”

The available truck driver pool in Maine is pressured on many levels. In addition to downsizing caused by the slack economy, which has pushed some drivers out of the industry, regulations imposed by the Federal Motor Carrier Safety Administration in 2010 could further deplete the driver pool.

The administration’s Compliance, Safety, Accountability initiative is designed to improve large truck and bus safety by, among other things, monitoring data that record truck drivers’ safety records. That includes traffic law and driver logbook violations, maintenance records, inspections and accidents. Castonguay said some in the trucking industry expect that CSA will push as many as 15 percent of truckers out of the industry.

“If you have a bad score, the feds can come in and do audits and potentially cause a lot of headaches,” said Castonguay. “As a result, what we’re trying to do is find the cream of the crop and take care of them. That’s one of our major challenges, keeping drivers in our trucks.”

Brian Parke is president and CEO of the Maine Motor Transport Association, which lobbies on behalf of the trucking industry. He said the industry supports CSA and its efforts to improve safety, but that doesn’t mean there aren’t problems.

A driver could be labeled a safety hazard for reasons beyond his control, such as involvement in an accident caused by another motorist, he said. For that reason, Parke said his group wants to ensure there is a fair appeals process in place. He is also concerned whether enforcement and statistical input are administered consistently from state to state.

Parke said his group has conducted outreach sessions for Maine trucking firms who are grappling with CSA. One round was held last year and another is scheduled for this month.

“Our goal is to help members understand what CSA is, how it will affect their company and what they can do to ensure compliance,” said Parke.

Another challenging factor, according to Castonguay, was new Environmental Protection Agency emission standards for all trucks and buses for model year 2007 and newer. In addition to increasing the cost of the trucks by several thousand dollars, the newly required emissions equipment increased the weight of the truck — thus decreasing the payload they could haul under truck weight laws —  and decreased mileage. Castonguay said the equipment reduced fuel consumption of new trucks from around seven miles per gallon to about 5.2 miles per gallon.

Hartt Transportation has tried to counter that effect by using wider “super single” tires in place of the traditional two-tire configuration seen on most trucks and installing aerodynamic sideboards on some of its trailer fleet. Those measures alone can restore about 1.5 miles per gallon in fuel consumption, but they require a greater upfront investment.

Terry Whitney, sales manager for Whited Ford in Bangor, which sells commercial trucks, said there was a pronounced surge in sales just before the new emissions standards went into effect in 2007.

“A lot of people wanted to get into the trucks because of the new emissions standards,” he said. “We definitely saw a rush prior to 2007.”

That, combined with the start of the recession in 2008, drastically reduced sales thereafter.

“Unfortunately in the last couple of years everybody’s held off on buying new trucks,” he said. “Sales are getting more stable, no question … but I don’t see any major rebound happening right in the near future.”

Tim Dysart, vice president of Hermon-based Dysart’s Transportation, another of Maine’s large trucking firms, said all these changes, along with the slow decline of the state’s paper industry, add up to a troubling picture for consumers.

“In the long term, the increased costs are going to be passed on to the consumers,” he said. “They’re going to see it at the grocery store, the gas pump and just about everywhere else.”

http://bangordailynews.com/2011/03/12/business/truckers-face-%e2%80%98perfect-storm%e2%80%99-of-more-regulation-high-prices/ printed on April 25, 2014