Letters: Dropping Rates, Volvo Disagrees
This Letter to the Editor appears in the June 15 print edition of Transport Topics. Click here to subscribe today.
Dropping Rates
Since 1978, when I started operations, I have watched the trucking industry continually tear itself down. There will always be another fool with enough money to buy a cheap truck, charge below-profit rates and go out of business, while the next fool is in line to take his or her place.
We have watched this over and over for more than 30 years now.
It is more profitable for government to try to force regulation by handing out fines to the transportation industries at scales, railroad and airline inspections than to have a reasonable rate structure in place that allows enough revenue for these industries to be profitable.
There have been many corrections that should have and could have been made to the deregulation legislation in 1978, but instead they went the irresponsible “short-cut” route.
Here is a breakdown of “break even” operating expenses for an owner-operator:
Owner-Operator Business Expenses per Month (trailer, other equipment not included)
• Truck payment — $2,000.
• Truck insurance — $350.
• Fuel (at $2.359 average) — $6,500.
• Major repairs — $500.
• Maintenance and minor repairs — $1,100.
• Downtime (estimated at three days) — $ 1,500.
• Health insurance — $825.
• Vacation (shut-down money, based on a two-week vacation — $400.
• Retirement (Roth IRA, per person) — $425.
• Business office expenses (supplies, Internet, electric, heat, etc.) — $500.
• Truck storage/repair area —$500.
• Personal salary (comparable to company drivers) — $5,000.
Total Revenue Needed — $19,600.
These expenses do not include a trailer or other equipment.
If a company cannot pay its owner-operators a high enough rate to meet this minimum revenue required, it is charging too little.
I still see ads on the back of trucks offering 93 cents per mile. They are keeping your money.
If you run 2,700 miles a week at $1 per mile, you are being allowed to earn only $11,700 a month, or maybe a little more with stop-off pay for additional deliveries and a fuel surcharge. You are being short-changed by the trucking company, because it isn’t charging a profitable enough rate for its services.
Rates are still going down. When a government allows an industry to give 65% back to its clients, it is allowing companies to cheat their employees and contractors out of “quality-of-life” benefits.
If the 100% rate was considered reasonable in 1933, when the Interstate Commerce Commission set those rates and a loaf of bread cost 9 cents, how could a 65% discount be reasonable today, when the cost of living has gone up?
Deregulation, signed in 1978 by President Carter, has resulted in years of proof of its folly and is only a small part of the burden forced on the American working class by tearing down industry and regulation in the United States.
It is time for the government to restart regulation in both the financial and transportation industries.
Richard Johnson Jr.
Owner
RDJ Associates
Palmer, Mass.
Volvo Disagrees
In the May 25 letter “Heavy Trucks” the writer charges that Volvo Trucks’ position in support of longer, heavier trucks would place an additional burden on our national transportation system and effectively put “the little guy” out of business. We respectfully disagree that the use of more productive vehicles and vehicle combinations — which we believe will be required to serve a U.S. population expected to grow more than 35% by the middle of this century — would put any well-run transport company out of business.
According to the Federal Highway Administration, the U.S. trucking industry moved nearly 13 billion tons of freight in 2006, and it predicts that number will rise to 23 billion tons by 2035. How can we possibly haul that much more freight with today’s tractor-trailer configurations, today’s Interstate Highway System and tomorrow’s fuel cost? As the saying goes, “something’s gotta give.” It is time to think in a different — perhaps bigger — way.
As a nation, we cannot afford to be wasteful and inefficient, or to lag behind our global competitors, when it comes to moving goods across the country to every major metropolitan area, town and rural community.
It’s important to recognize Volvo Trucks is not advocating changes requiring the purchase of special equipment, which has been a concern of some in the trucking industry in the past. Efficient movement of freight is our objective — and efficiency improvement can take many forms, including a single tractor-trailer, larger combination vehicles, better aerodynamics and smarter transport logistics planning. Any of these solutions also requires maximizing our intermodality and investments in highway and freight infrastructure.
Volvo Trucks is seeking to facilitate a public dialogue on the issue of more productive trucks and to identify and address issues of concern from all stakeholders. We need to find workable solutions that address fuel efficiency, freight productivity and traffic congestion to keep costs down for business and consumers. We need to adopt strategies that tackle environmental concerns and safety issues — rather than using fear as a rationale for avoiding the hard work of innovation and change.
The challenge is not going away by maintaining the status quo, or holding fast to old arguments.
Scott Kress
Senior Vice President
Sales & Marketing
Volvo Trucks North America
Greensboro, N.C.
