Letters: Intermodal Elephants, Flatbed Carrier Rates, Price Hike for Bonds
These Letters to the Editor appear in the July 12 print edition of Transport Topics. Click here to subscribe today.
Intermodal Elephants
What does every intermodal shipment need that no one wants to really talk about? The answer — and the elephant in the room — is an intermodal chassis (“Chassis Safety Rules Take Effect, but Industry Questions Linger,” 6-28, p. 2; click here for previous story).
Cost-cutting efforts go first toward the “out of sight, out of mind” items, and chassis stay near the top of the list. Now that intermodal equipment providers (IEPs) are under pressure to provide roadworthy chassis, suddenly those who currently provide them are not as interested in being in that business in the future.
Despite some providers’ claim that it’s “not about the money,” the chassis situation certainly must be part of the impetus.
Here is a question that is not meant to be simplistic: What does a driver vehicle inspection report (DVIR) do to meet the goal of IEPs to offer roadworthy chassis? These are their chassis, their business and their commitment.
Each IEP is responsible for offering roadworthy chassis to a driver at each transaction. (Car rental companies do it. Highway trailer providers do it. Only the intermodal section of transportation falls down on this issue.)
The system is such that drivers really have a disincentive to provide DVIRs; for one thing, DVIRs often will cost money to send.
If DVIRs are to be provided (or retained) only on defective chassis, the subsequent data will be horribly skewed to indicate the chassis are defect-free. If DVIRs continue to be part of this process, then they must be on all chassis and be retained by the IEP for a length of time.
This topic is as misunderstood as it is ignored. But one embarrassing truth is this: Individual drivers, who are our fellow transportation workers and key links in every supply chain, have had to go above and beyond, year after year, just to keep shipments moving on substandard intermodal chassis.
All companies, from shippers to importers and from ship lines to truck lines, need to step forward and resolve this problem once and for all.
Danny Schnautz
Operations Manager
Clark Freight Lines
Pasadena, Texas
Flatbed Carrier Rates
About your June 14 article headlined “Flatbed Carrier Rates Increase as Freight Swamps Capacity” (p. 1; click here for previous story): We have been a flatbed carrier for more than 40 years and have never seen a 30-to-1 ratio.
You need to get your information up to date or have your staff retrained.
It makes your paper look like a 5-year-old child put this article together. In good times, flatbed freight was at a 6-to-1 ratio.
Let me know if we should cancel Transport Topics or keep reading unreliable information.
Robert Dunlap Sr.
President
Dunlap Trucking Inc.
Erie, Pa.
Editor’s Note: Our story said, “An electronic load board’s load-to-truck ratio for flatbeds jumped from 7.1 loads chasing a truck in January to better than 30-to-1 in May and June.” That was, in fact, an accurate quote of material from the Freight Services division of TransCore, which said of flatbed load-to-truck ratios in 2010 that in April they were 23.5-to-1, in May, 38.9-to-1 and in June, 32.6-to-1.
TransCore operates three U.S. and Canadian load boards, combines all the data across the three boards and bases its analyses on the results. Transport Topics quotes them often.
However, TT also considers and quotes other sources. For example, freight broker Alec Gizzi recently told TT (6-28, p. 4; click here for previous story) that load boards often reflect the extremity of the moment. If there is a big shortage of etrucks during a month, brokers use lots and lots of load boards, driving up the ratio of loads to trucks to what appears to be a ridiculous level. On the other hand, when freight is scarce, as was the case until quite recently, truckers flood the load boards and depress the ratio absurdly. That is why load-board statistics sometimes look very strange for short periods of time.
Price Hike for Bonds
On June 11, legislation dubbed the “Motor Carrier Protection Act of 2010” — formally, S. 3483 — was introduced in the U.S. Senate by Sens. Olympia Snowe (R-Maine) and Amy Klobuchar (D-Minn.). (Click here for previous story.)
If it becomes law, the measure will, in part, raise the property broker bond from $10,000 to $100,000.
The Owner-Operator Independent Drivers Association and the Transportation Intermediaries Association have endorsed this bill, but some folks in the industry already are referring to it derisively as the “Motor Carrier Destruction Act.”
I recently wrote a letter to this publication explaining that Congress should steer clear of a $100,000 bond because it would have a devastating effect on independent property brokers, independent owner-operators, motor carriers and the industry at large (4-26, p. 7; click here for previous letter). The measure would drastically affect supply and demand, eliminate competition and give big brokerages an unfair advantage in rate negotiations with motor carriers and independent owner-operators.
I suggested then that small brokers needed a new trade group to safeguard their interests. I am writing now to announce the formation of the Association of Independent Property Brokers and Agents and invite the industry to listen to a free webinar that presents the case against the proposed $100,000 property broker bond.
The webinar, scheduled for 2 p.m. Eastern Daylight Time on July 15, will detail how the raised price, which its backers claim will “fight fraud,” actually will hurt motor carriers, owner-operators and small freight brokers. Interested parties may register for the webinar at www.independentpropertybrokers.org.
James Lamb
President
Association of Independent Property Brokers and Agents
Commack, N.Y.
In recent weeks, there have been several published opinions or pieces in Transport Topics regarding the brokerage industry. These writings were relative to CSA 2010 [now to be called simply “CSA” according to a recent announcement by the Federal Motor Carrier Safety Administration] and its implications for risk management in the carrier selection process, the broker’s surety bond, the broker’s commission or fee for services and so forth.
Let’s be clear: The brokerage business model is no different than most other “for-profit” business ventures.
The business plans of skilled, reputable and properly capitalized organizations will have the best chance to succeed — and they should. Conversely, the opposite can be said of unskilled, dishonest, poorly capitalized operators.
In terms of quality of experience for carriers and customers dealing with brokers, the market decides which companies are meeting expectations. But surely we all recognize that the market has long since determined that third parties bring value to the supply chain.
With those housekeeping matters resolved, is government regulation necessary to protect the public, the freight customers and motor carriers?
CSA, when it is implemented, will redefine safety and financial fitness standards for licensed motor carriers of nonexempt commodities. By limiting the access of the scrutinizing public, including third parties, the government again has overreached and assumed responsibility for highway safety in a way that pulls the rug from under the feet of the market.
By making third parties liable in some cases for damages caused by hired truckers, and then making access to significant safety data difficult, CSA very well may create uninsurable risk exposure for third parties. Such stress is unwarranted and destructive.
Excessive or unnecessary government regulation stinks. Raising the minimum surety bond, however, is an absolute must. Certain financial responsibility barriers to entry are a good thing when doing so probably would eliminate 75% to 99% of the fraud in the industry.
Do the small guys get hurt by a $100,000 bond requirement? Of course they do, but rest assured that of that group of “smalls,” the skilled, reputable and properly capitalized organizations will find purveyors of bond services willing to do business. Bond applications that are stamped “declined” do everyone a favor.
Last, but not least: Are skilled, reputable and properly capitalized brokers deserving of the “fee” earned by providing shippers with tested operations professionals, technology solutions designed to extract valued leverage of critical transactional data, financing and cash flow support of transportation receivables, and allocation of certain risk and financial responsibility? Hmmm, let me give that some thought . . .
Michael Williams
Chief Operating Officer
Sunteck Transport Co. Inc.
Boca Raton, Fla.
