by Bekah Porter
CORRIDOR – The open road lost a bit of its luster when the economic crisis struck in 2008.
But the pressures pushing against the shipping and distribution industry didn’t cease once recovery surfaced.
Instead, trucking companies now face an influx of other issues, including increased federal regulations, a national driver shortage and, most recently, a spike in fuel prices.
Yet through it all, Corridor trucking companies remain optimistic about the outlook of the industry delivers to all of America.
Dave Rusch, president and CEO of CRST International, a trucking company headquartered in Cedar Rapids, said he anticipates more changes in the future for his organization, which oversees some 3,600 tractors and 5,200 drivers.
However, those shifts in services should be positive, he said. Here’s a look at his thoughts on the outlook of the industry:
Q: What are some of the challenges facing the trucking industry today?
A: One of our short-term problems is fuel. The cost is going up. I think it went over $95 a barrel (this past week) because of all the problems in the Middle East. It’s up significantly from where it was a year ago, and that’s always a problem (for the trucking industry.) What we tend to see when fuel goes up is that it tends to hold back the economy, and obviously, the economy is pretty fragile right now as we come out of this recession, and the fear is that fuel prices going up could stall (the nation’s) economic growth, which would obviously be bad for truck operators.
Q: What about some longer-term problems?
A: The longer-term problem in our industry is the federal regulations that are coming down the pipeline. The (U.S. Department of Transportation’s Federal Motor Carrier Safety Administration’s) 2010 regulation that’s starting to be implemented now could cut available drivers by up to 10 percent. So, that’s 10 percent of the current drivers forced off the road.
Also, we have hours-of-service regulations that are going to limit the number of hours a driver can drive. Those regulations have been drafted by the DOT, and they are in a waiting period where the public can comment. Obviously, we have some issues with those regulations, as there is no proof that decreasing driving hours is going to improve highway safety. What that regulation will do is restrict the number of hours a driver can drive and will ultimately decrease the productivity of the trucks.
The number of fatalities by motor carriers in the last five years has come down every year, so we are doing a lot of things to improve our accident frequency, but we just don’t think that this regulation has any scientific evidence to support what they’re trying to accomplish. There’s always been a chronic driver shortage in our industry, and this is just going to escalate this.
Overall, though, for the long term, I think as an industry we’re all much more optimistic than we were a year ago. The freight has improved.
Q: How has distribution and shipping changed since you first got involved?
A: I think the industry has evolved, and it’s been good for us (at CRST). For example, in our expedited division, all of our trucks have team drivers. Our business model is to provide services to those customers who need their product moved across the country quickly, so our clients can have their (goods) shipped from the east coast to the west coast in 60 hours.
Warehousing is an expensive process, and we mitigate the need for warehousing because we can run freight from origin to destination very quickly. We eliminate the need for a lot of shippers to warehouse their product, and I think that’s something that’s going to continue in the future. People are looking for a more expedited means of transportation, and we can now provide that.
Q: Would you recommend truck driving as a career?
A: Well, I think driving a truck, for certain individuals out there, is a very good profession. We have many of our drivers who have been with us for decades. However, it takes a very specific type of person. You’re away from home days or weeks on end, and that’s not for everybody. But for folks who enjoy that kind of lifestyle, then they can do really well financially. As an industry, we do have high turnover. A lot of people like the idea of making money and seeing the country, but when you do it several months or several years, well… A majority of the new people who come into the industry, they leave in three or four months. When the mystique wears off, and you realize that you can’t do all the things you could when you had a stationary position, then it can be tough to stay at it. So, we’re always looking for that person who enjoys the open road.
Q: What are you doing to attract drivers?
A: CRST is one of the few companies out there who bring people into the profession who have no truck driving experience. We offer them training, and they come on board with us after they get the CDL (commercial drivers license) – which we funded. Then we put them into finishing school for a month with a senior driver, and again, we pick up the tab. In exchange for that, we ask them to stay for eight months. We’re one of the few companies that upfronts the training for people who want to come into the industry.
Lately, with the housing market being down nationally, we’re seeing a lot of new drivers who are coming from the construction industry, and they want something new to do, and we finance their training.
Q: What do you see down the line for the distribution and shipping industry?
A: I think it’s going to stay the course. But I do think you’re going to see a chronic shortage of truck capacity for customers. I think that the regulations are going to cut the available drivers. Also, the last two to three years have been so tough with the economy that some reports say that more than 4,500 trucking companies have gone bankrupt in America during that time, which has pulled about 300,000 trucks off America’s highways. So what we’re seeing now is a shortage capacity, in that there just aren’t enough trucks to meet the shipping public’s needs. I think that’s going to be exaggerated in the future by these regulations that are going to impact driver availability.
Q: What do you think the public’s perception of trucking is now?
A: Well, you have the knowledgeable people, and then unknowledgeable people. The knowledgeable people know the industry, they read articles about it, and they review it. Those people should be pleased with what they see. For the last five to seven years, accident frequencies and fatalities caused by the trucking industry have dropped dramatically. So, those people recognize the effort trucking companies are putting in to make the industry more safe. I think the people who don’t understand the industry or seek to understand it have the perception of us being the big, bad trucking industry, and I think that’s too bad, because that’s not who we are. We have made a lot of positive movement from a safety perspective, and we continue to do so.
Q: How do you think the industry has improved its environmental aspects in the last few years?
A: We all have green in our truck. That’s just how it is. We have gone through three (Environmental Protection Agency) mandated engine upgrades in the last 10 years, and each have improved the environmental output of the engine. Each one of those changes cost between $5,000 to $10,000 per truck. So, 10 years ago, we bought a Class A truck for around $65,000. Today, that same truck is about $115,000. The majority of that price difference is environmental-related.
It costs us a lot of money, but when I first got into the industry, that black smoke would be pumping out of those pipes, and today, there’s nothing. So, at the end of the day, it might have cost a lot, but it needed to be done.
Q: How would you describe the trucking industry’s impact on the Corridor?
A: Unfortunately, with the nature of the business we are in, we do very little transporting into our out of the Corridor. But what is important to us, as we do have our corporate headquarters here, is to have the Corridor be a good place to live. Last year, for example, with our rapid growth, we hired 150 professional people on our administrative side. So, we were hiring a lot of senior executives and we were driving them around the Corridor to see what we had. So, I do like the efforts of our leaders to promote the Corridor, being the Iowa City and Cedar Rapids area. Iowa City has the University, and that’s a great selling point, as it has all the arts and culture. And then Cedar Rapids has the big business. Combined, they have a lot to offer. So, I really do like the idea of promoting the Corridor, because when people come here, they look at the entire Corridor as a region.