By Erin Richey

On a long stretch of highway, a semi-trailer sends a message to a trucking company that the truck’s refrigeration unit is warming up. Before the temperature in the trailer has a chance to affect the product being transported, the company notifies the truck driver of where to get it fixed, keeping the truck’s contents from being ruined.

Back at company headquarters, trucking experts connect with drivers on the road who are trying to improve fuel economy. In a series of phone conversations, they work together to diagnose equipment problems or improve driving habits, allowing drivers to make fewer fuel stops.

These are just two examples of how big data and trucking have intersected for early adopters like C.R. England Inc., one of the largest for-hire motor carriers in the country.

Telematics and electronic on-board recorders (EOBRs) are revolutionizing how large motor carriers transport goods, using intelligent systems that collect data and communicate in real-time to ensure that groceries arrive unspoiled, drivers are less fatigued and highways are safer for everyone. Big data has brought the potential to preserve, and possibly expand, the trucking industry’s narrow profit margins, and experts believe it won’t be long before multi-purpose monitoring units are installed in every semi-trailer in America.

Toward “total cost of ownership”

C.R. England has installed in-cab telematics systems in every one of its company and independent contractor vehicles: that’s 4,500 revenue-producing trucks, plus training and auxiliary vehicles. The devices track driving hours, fuel efficiency factors, location and critical events like hard braking and the activation of trailers’ roll stability controls. All of that is communicated in real time to the company, by satellite or cell tower, and used to make decisions en route.

“If you’re adopting EOBR and not using that now-visible log data in your planning and swap decision making, then you’re not taking the most advantage of that data,” says Ron Hall, senior director of operations technology at C.R. England. In 2008, the company began implementing EOBR at the encouragement of Chad England, the current CEO, who was the senior executive for safety and recruiting at the time.

Since then, the data collected by EOBR and telematics units in the fleet have been used to make major purchase decisions. “When we award business to a particular tractor manufacturer—and we review this yearly—we will actually award the business based on total cost of ownership, not just the purchase price, and fuel consumption is a major factor in that total cost of ownership model that we make our decisions off of,” says Hall.

The number crunching has paid off. According to Hall, the devices have helped the company reduce deadheading (trailers traveling empty between unloading and reloading) from 8 percent of miles traveled to below 7 percent, and he estimates fuel efficiency improvements at a tenth of a mile per gallon per year for the last three years.

Although big trucking companies have eagerly adopted big data strategies in their business models, smaller carriers have been less enthusiastic.

“The small guys, based on our research, typically delay a major technology investment three to five years,” says Dan Murray, vice president of research for the non-profit American Transportation Research Institute. He adds that after bigger carriers have outfitted their fleets and tested early versions of products, prices usually drop and models are usually easier to implement, given input from early adopters.

“The question is, can the small guys survive long enough to benefit from the technology? The trucking industry’s average profit margin is about 3.6 cents on the dollar,” says Murray. “So we only invest in technology that has an almost immediate ROI, and it has to have a pretty fast payback or break-even point, within 12 to 18 months.”

Lying on log books

The Federal Motor Carrier Safety Administration will soon require all carriers to install some type of electronic on-board monitoring device in vehicles to track vehicle status and how many hours a driver has been on the road.  Proponents of the new rules, such as president of the Arkansas Trucking Association Lane Kidd, say that electronic devices will improve trucking safety.

“Three million truck drivers today still use a paper log book, which is the same system we’ve had in the industry since 1938. And the worst kept secret is that drivers lie on their log books,” says Kidd. He believes that EOBR will, first and foremost, improve highway safety by preventing driver fatigue. “It gives the company a better view of what’s actually happening out on the highway.”

C.R. England compliance manager Kevin Carlisle says that for as many carriers that have implemented EOBR systems, “there are many, many more companies that are not using electronic logs.” And they’re missing out on a key advantage of adopting electronic logs: Carlisle says annual inspections found errors in 55 to 67 percent of paper logs, which can result in fines or detention of trailers. With the new electronic logs, he says, inspectors sometimes find no errors in their drivers’ logs during an inspection period.

The future of telematics and big data in trucking, says Murray, lies in cross-referencing real-time driver data with data on weather, parking availability and traffic delays to deliver information to the driver as quickly as possible. For instance, a driver’s device might tell him or her if weather ahead will cause a delivery delay that would extend past the maximum driving hours for the trip and then direct the driver to the nearest available parking area.

“I would say that within a couple years that level of sophistication will be out in the truck—for sure within two to three years,” Murray says.

By Mary Ellen Biery – research specialist, Sageworks

Privately held U.S. trucking companies posted their fourth year of higher sales, and profitability also improved in 2013, according to data from Sageworks, a financial information company.

A financial statement analysis shows that private companies in the general-freight trucking industry, on average, increased sales by about 7 percent. Industry sales growth slowed from 2012, although not quite as much as sales slowed among private companies of all types in Sageworks’ database.

Sageworks analyst Peter Brown said the trucking industry is a good indicator of the U.S. economy because it shows what’s going on domestically with shipments, as opposed to other forms of freight transport that are more heavily influenced by international shipments.

“What’s also true about the trucking industry is that it seems to parallel other measures of economic activity like manufacturing and consumer spending, which have risen in the last year as well,” Brown said.

Brown said it’s unclear whether volume, pricing, or a combination of the two was behind private trucking companies’ 2013 sales increases reported in Sageworks’ data. Other industry groups, however, have reported truckers generally have been hauling heavier loads, even if rates and the number of shipments haven’t improved materially.

Private trucking companies historically have thin profit margins relative to other industries, according to Sageworks’ data. But profitability improved in 2013, according to preliminary estimates. Net profit margin, on average, was about 6 percent, compared with average margins in the 3 percent to 4 percent range the previous three years.

Sageworks’ financial statement data indicate trucking companies may have been paying down debt rather than buying new equipment in 2013, Brown said. Preliminary 2013 data indicate expenses related to both overhead and cost of goods sold increased, relative to sales. Meanwhile, depreciation, a non-cash expense, declined relative to sales, and liabilities relative to assets decreased. These trends, coupled with a few other metrics, signal that trucking companies may be paying down loans.

Through its cooperative data model, Sageworks collects financial statements for private companies from accounting firms, banks and credit unions, and aggregates the data at an approximate rate of 1,000 statements a day. Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries. These adjustments are commonly made to private company financials in order to provide a more accurate picture of the companies’ operational performance.

Trucking dominates the freight transportation industry, accounting for more than two-thirds of tonnage, according to the American Trucking Associations. And while there are many large publicly traded trucking companies, including UPS and J.B. Hunt Transport Services, nearly half of the top 50 trucking companies are private, according to S.J. Consulting Group Inc. Furthermore, Census data indicate nearly a quarter of all 2007 revenue in the general freight trucking industry was made by businesses with no paid employees, i.e., mostly self-employed people operating non-incorporated businesses.

The American Trucking Associations last month reported the best year for truck tonnage since 1998. But Cass Information Systems, which processes freight transactions, has called the climate for North American freight “mediocre,” given fewer shipments and largely unchanged rates. January shipments declined from a year earlier, though expenditures were slightly higher, according to Cass. Industry consulting and research firm FTR expects freight growth in 2014 to weaken even as capacity utilization remains high, according to a published report.

By Derek Leathers, president and chief operating officer for Werner Enterprises, Inc

OMAHA, Neb. — Earlier this week, President Obama directed the transportation and energy-related agencies of the federal government to develop higher minimum fuel standards for medium and heavy-duty trucks — the latest effort in the administration’s effort to reduce the oil consumption that is costly to the U.S. economy and a culprit in global warming.

“Everybody who says you can’t grow the economy while bringing down pollution, it’s turned out they’ve been wrong,” the president said. “Improving gas mileage for these trucks is going to drive down our oil imports even further. That reduces carbon pollution even more, cuts down on businesses’ fuel costs, which should pay off in lower prices for consumers. So it’s not just a win-win, it’s a win-win-win. We got three wins.”

The president made his remarks in Upper Marlboro, Md., at a Safeway distribution center while standing beside a big rig that had been re-configured to maximize fuel efficiency. But the backdrop for his announcement could have been any number of places — including here in Nebraska, where our company, Werner Enterprises, is a leader in the movement toward sustainability and conservation.

At Werner, we rank reducing our carbon footprint as a top company priority. We are not alone. Trucking is competitive industry, and we are engaged in an arms race with other transportation firms to lower fuel consumption and emissions through measures that include idle reduction technologies, aerodynamic trucks, equipping trailers with trailer skirts, tire inflation systems, and continuing to invest in the newest diesel engine technologies.

We also partner with local utility districts to improve the long-term outlook for the use of natural gas-powered equipment and are excited about the future of alternative fuels. Such initiatives, backed by over $850 million of capital investments in our company alone, have allowed us to save more than 85 million gallons of fuel and reduce greenhouse emissions by 1 million tons since 2007.

The federal government has encouraged such efforts: Recently, Werner was honored with an EPA SmartWay® Excellence award for our successful reduction of emissions, carbon, and other criteria pollutants. And the president’s efforts to set target dates for minimum fuel standards is a concept that we support in principle, provided the administration moves ahead in ways that are both economically achievable and technologically feasible.

We believe, however, that there are other areas that would have an even greater impact in reducing emissions of carbon and other pollutants.

Chief among them are desperately needed investments in America’s roadway infrastructure, which would lead to significant improvements in fuel burn and productivity.

Sixty-eight percent of the nation’s freight tonnage is carried by trucks, which are a critical link for all modes of freight movement — and all of it is highly dependent on a quality highway system. Augmenting the current fuel tax system to raise additional revenues, with all funds dedicated solely to improving the highway system, would reap immediate benefits. Overcrowded roads, decaying bridges, and increased congestion further exacerbate safety, productivity, and efficiency concerns.

In addition, the latest Hours-of-Service (HOS) regulations have added substantial challenges to the nation’s fuel consumption. The newest HOS ruling limits the flexibility of the professional truck driver. As a result, more trucks are traveling during a compressed portion of the day. This requirement alone increases traffic congestion and decreases fuel efficiencies as it adds the equivalent of 70,000-75,000 trucks to an already stressed infrastructure. Revisions to this rule would positively impact fuel efficiencies and increase productivity, and allow the professional driver to rest when fatigued vs. when mandated.

The American Trucking Associations has estimated that the current HOS regulations have reduced productivity by 2 to 3 percent. A recent Wells Fargo Securities study came up with similar results. According to the Wells Fargo analysis, certain fleets may experience even larger productivity losses. These changes are affecting an industry that connects the entire global marketplace. To relieve congestion and increase the efficiency in moving the nation’s truck and intermodal freight, we urge the White House to revert back to the HOS rules that were in place prior to July 1, 2013.

Our industry is proud of our sustainability commitment and results, and applauds the president’s call to action. It is our hope that the administration continues to support efforts to fund, develop, and advance fuel efficient technologies for trucking that are attainable, economically feasible, and jointly researched.

Our industry is not afraid to stand up to challenges. We believe that working together, we can overcome any hurdle. To assist in delivering on the national goal of energy independence, we would respectfully ask that the input, guidance, and experience of the trucking industry are allowed a more active role in the conversation. Call it a “win-win.”

ALEXANDRIA, Va. — Many times, when people spot something odd on the side of the road or in a passing vehicle, they will assume the driver has the situation under control and keep going. Fortunately for one lucky motorist, professional truck driver David Flaherty does not think that way.

Flaherty, who lives in Walkertown, N. C., and drives for ABF Freight System Inc., of Fort Smith, Ark., has just been named TCA’s latest Highway Angel. On November 10, 2013, Flaherty was driving along I-85 near Concord, N.C., at 11 p.m., when he saw an intermittent flash of orange light ahead in the darkness. He eventually caught up to the vehicle — another tractor-trailer hauling doubles — and realized that the flickers were actually embers of heated metal falling from an area near one of the inside rear tires.

The other truck driver had no idea that there was a problem. It took Flaherty about 10 minutes of honking and flashing his lights to get the man to understand that he needed to pull off the road. Together, Flaherty and the other driver used both of their trucks’ fire extinguishers to smother the embers. But that was not enough, so they started pouring whatever drinks they had in their vehicles — water, sodas, even cranberry juice. By the time the fire department arrived, the smoldering was finished. But just then, the tire blew very loudly.

If it weren’t for Flaherty’s alertness and willingness to go out of his way to stop the man, it is likely that the trailer would have caught on fire and destroyed the load inside.

“It’s amazing how quickly a tire fire can burn a truck to the ground. They generate a ton of heat,” said Flaherty. “Another 10 minutes and that fire would have burned through the floor of the trailer and destroyed the load. I’ve seen it before … it goes up like a torch.”

TCA has presented Flaherty with a Highway Angel lapel pin, certificate and patch. The organization also gave ABF Freight System a certificate acknowledging that it has a Highway Angel in its midst.

Since the program’s inception in August 1997, hundreds of drivers have been recognized as Highway Angels for the unusual kindness, courtesy, and courage they have shown others while on the job.

To nominate a driver or learn more about the program and its honorees, visit the Highway Angel Web page at http://www.truckload.org/Highway-Angel or Facebook page at http://on.fb.me/tcanews. For additional information, contact TCA at (703) 838-1950 or angel@truckload.org.

By Brian Straight

Saying that he will use executive actions when appropriate, President Barack Obama promised to slash the red tape holding back infrastructure projects in this country during his fifth State of the Union address last night. He also reiterated his administration’s promise to implement further fuel efficiency targets for heavy-duty trucks beyond the current regulations that begin phasing in this year.

Noting the partisanship that exists in Washington, Obama asked Congress a simple question: “The question for everyone in this chamber, running through every decision we make this year, is whether we are going to help or hinder this progress,” he said, noting that progress was made in this area with the recent budget deal.

But, he added, more needs to be done.

“Our job is to reverse these trends. It won’t happen right away, and we won’t agree on everything. But what I offer tonight is a set of concrete, practical proposals to speed up growth, strengthen the middle class, and build new ladders of opportunity into the middle class. Some require Congressional action, and I’m eager to work with all of you. But America does not stand still – and neither will I. So wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do,” he said.

One of those first executive actions was his announcement that he was boosting the minimum wage for all new federal contract workers to $10.10/hr.

The next test may come in the form of slashing red tape for infrastructure projects. Proposing to tie infrastructure investment to tax reform, Obama hopes to “create jobs rebuilding our roads, upgrading our ports, unclogging our commutes – because in today’s global economy, first-class jobs gravitate to first-class infrastructure. We’ll need Congress to protect more than three million jobs by finishing transportation and waterways bills this summer. But I will act on my own to slash bureaucracy and streamline the permitting process for key projects, so we can get more construction workers on the job as fast as possible.”

Dept. of Transportation secretary Anthony Foxx said he would work to help bring Obama’s vision of an improved infrastructure to fruition.

“I will be working throughout the year from the federal to the local level to build more infrastructure while growing jobs now and making more jobs possible with first-rate transportation networks,” Foxx said in a statement. “We will also build ladders of opportunity, connecting every American to the global economy. I was especially glad to hear the president call on Congress to finish a much-needed transportation bill this summer, and the proposal to fund that bill through corporate tax reform can and should be done on a bipartisan basis.”

The American Trucking Assns. (ATA), though pleased with the comments, remained concerned about the lack of concrete ideas on how to increase investment.

“While we appreciate President Obama making reference to the need for infrastructure investment, we remain disappointed in the continued lack of specificity when he discusses funding,” said Bill Graves, ATA president and CEO, in a statement immediately following the address. “While it is critically important to the nation that Congress and the administration come together on a multiyear highway bill this year, we believe that until the administration puts forward a serious, user-based funding proposal we will risk going over the Highway Trust Fund ‘fiscal cliff’ in the near term and be woefully underfunded to meet the longer term needs of the nation.”

A mid-summer hearing in 2013 on the Highway Trust Fund included testimony from the Congressional Budget Office (CBO) that indicated “the revenues derived from existing excise [fuel] taxes will fall far short of covering the spending that would result from continuing to obligate funds in the amounts provided for 2013, as adjusted for inflation.

“The current trajectory of the Highway Trust Fund is unsustainable,” CBO stated. “Starting in fiscal year 2015, the trust fund will have insufficient resources to meet all of its obligations, resulting in steadily accumulating shortfalls.”

“It was an honor to attend the State of the Union, but the president’s proposal was sorely lacking in details and comes up short of what the nation needs to maintain our economic competitiveness,” Graves added. “Trucks use our roads and bridges to move more than 70% of the nation’s freight and if do not address our infrastructure deficit the system will soon become a drag on our economic recovery and hinder our future growth.”

Reaction to the speech from Patrick Jones, executive director and CEO of the International Bridge, Tunnel and Turnpike Assn., the worldwide association representing toll facility owners and operators, remained in line with that organization’s goals – providing states more flexibility in funding options, including the ability to toll more roads.

“The transportation funding needs of states are great. The resources of the federal government are limited. Therefore, we ask Congress and the president to give states maximum flexibility to meet their individual transportation funding needs, including the use of tolling on the existing Interstate highway system,” Jones said. “While we respect the president’s willingness ‘to create jobs rebuilding our roads,’ we know that no one source of revenue can be sufficient to build, maintain, and reconstruct our nation’s bridges, tunnels, and highways. Now is the time for Congress, the president, and other elected leaders to seriously consider all options to meet our country’s transportation funding needs. Tolling is one of the most powerful, effective, and proven tools in the funding toolbox.”

Terry O’Sullivan, general president of the Laborers’ International Union of North America, was also pleased with the speech and hoped that it could lead to a long-term highway reauthorization to succeed MAP-21, which expires later this year.

“Hopefully the president’s remarks start the engine of passing a long-term reauthorization of the MAP-21 Highway bill. Now it’s time for Congress to move forward before our nation’s Highway Trust Fund runs out of gas. Passing a new long-term bill, for at least 6 years to come, could save hundreds of billions of taxpayer dollars,” said O’Sullivan. “Adjusting user fees for inflation, along with new bipartisan proposals for infrastructure banks and loan guarantees to develop more public-private partnerships, will help reduce a deficit that is expected to reach 15 billion dollars this year alone. These new investments in rebuilding America’s roads and bridges will create family-supporting jobs that help more working families earn their way into the middle class, one of the most powerful drivers for economic growth.”

Earlier this week, Bill Shuster, chairman of the House Transportation and Infrastructure Committee, said it is that committee’s goal to introduce and move out of committee a comprehensive transportation bill before August.

Obama also touted the ongoing growth of natural gas, particularly in transportation.

“If extracted safely, [natural gas] is the bridge fuel that can power our economy with less of the carbon pollution that causes climate change,” he said. “Businesses plan to invest almost $100 billion in new factories that use natural gas. I’ll cut red tape to help states get those factories built, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas.”

He also reiterated his administration’s previously announced plan for a new round of fuel efficiency standards for heavy trucks.

“When we rescued our automakers, for example, we worked with them to set higher fuel efficiency standards for our cars. In the coming months, I’ll build on that success by setting new standards for our trucks, so we can keep driving down oil imports and what we pay at the pump,” Obama said.

Fuel efficiency standards are already starting to be phased in this year under joint agreement between the U.S. Dept. of Transportation (DOT) and the Environmental Protection Agency (EPA), along with input from the trucking industry, environmental groups, and state governments. Those rules, set to go into effect in stages between 2014 and 2018 and impose different fuel efficiency targets based on the size and weight of the vehicle involved:

Most, but not all, tractor-trailers will be required to achieve up to approximately a 20% reduction in fuel consumption and GHG emissions by model year 2018, saving up to 4 gals. of fuel for every 100 mi. traveled.

For heavy-duty pickup trucks and vans, separate standards are required for gasoline-powered and diesel trucks. These vehicles will be required to achieve up to about a 15% reduction in fuel consumption and GHG emissions by model year 2018. Under the finalized standards a typical gasoline or diesel powered heavy-duty pickup truck or van could save 1 gal. of fuel for every 100 mi. of travel.

Vocational vehicles – including delivery trucks, buses, and garbage trucks – will be required to reduce fuel consumption and greenhouse gas emissions by approximately 10% by model year 2018. These trucks could save an average of 1gal. of fuel for every 100 mi. of travel.

Earlier in 2013, the Obama administration announced a new round of standards for 2017 and beyond, although specifics have not been released as of yet.