11 for’11

by REPLACEMENT PARTS: WHAT TO BUY?

1. BIODEBATABLES

It’s easily made with vegetables that no one likes to eat; governments tripped over themselves to subsidize it; and Willie Nelson loved to sing about it (and smoke to it). So, what happened to biodiesel?

Well, as some "…For Dummies" book probably says somewhere, "it’s the economy, stupid."

Despite all the green-rage in the last decade, biodiesel demand still lags drummed-up supply in areas where it isn’t mandated by government. Ottawa, which once pledged a nation-wide B2 or B5 rule, still hasn’t pulled the trigger.

Perhaps it’s because there’s emerging evidence that there’s little, if any, net environmental benefit from mass biodiesel production and it’s been outpaced by other alt power advancements, like LNG. Expect even more large for-hire and private fleets to make LNG investments in 2011, putting that technology at the forefront of the green vehicles market.

Hybrids, meanwhile, are expected to rebound in 2011. At the recent Hybrid Truck Users Forum, attendees heard that the hybrid sector is "beyond science projects" and despite some recessionary speed bumps, the market is poised for a breakthrough.

2. CSA IN HIGH GEAR

It’s been described as one of the most significant safety enforcement overhauls in the history of trucking. Earlier this month, CSA replaced the outdated SafeStat safety-rating module. It’s in mid 2011, though, when full-scale enforcement kicks in, that many carriers will really start to notice the change.

The tougher rules scrutinize equipment and driver fitness more than ever before and if you’re not in compliance (pre-CSA records count!) we’re sure you’ll be hearing from the DOT soon. In fact, the agency expects to send out warning letters in the six-figure range early next year to carriers who fall short in even one of the seven safety categories. For the many who still don’t even know where they stand, it’ll be baptism by fire.

Also coming along sometime in 2011 is a separate Safety Fitness Determination rulemaking that would automatically assign carriers their official safety designation (satisfactory, conditional, etc.) based on their active CSA scores.

Still, there’s plenty of tweaking to be done. Last month, the agency announced several more changes — mostly good. One is doing away with the term "deficient" to describe carriers that score below the allowable threshold. Carriers felt (and the agency agreed) that sort of pejorative language could be used by aggressive plaintiffs’ attorneys against them in court.

3. EGR vs SCR

Those who’ve been wondering how many emissions credits Navistar has left in the bank recently got their answer. The stockpiled credits, which allow the company to sell engines that exceed the 0.2g NOx limit of the EPA’s 2010 emissions rule, will likely last another two years.

How do we know? Well, the company announced that it does finally have a NOx-compliant engine, but it won’t hit the streets until 2012, when its credits are used up. Until then, Navistar will continue to push its preferred 13-liter MaxxForce, although a Cat-based 15-liter will be reviewed by the EPA for certification in 2011.

The specific technology Navistar will use to meet the NOx standard — whether it remains strictly EGR or not — is somewhat unclear at this time, however.

Navistar had been researching a number of alternatives, including a "dry" ammonia system that some consider to be a non-liquid, urea-based SCR system.

When asked for details by Today’s Trucking, a Navistar spokesman would only confirm that the "0.2g NOx MaxxForce 13… will achieve emissions ‘in-cylinder.’" Stay tuned."

Rival engine makers have said that their decision to switch from EGR to SCR for EPA 2010 was mainly because the 0.2g NOx limit couldn’t be met — as one engineer told us –"[with] any semblance of fuel economy."

Since Navistar says the 0.2g NOx models do in fact improve fuel economy, the company has either proved its competitors wrong or another technology beyond EGR could be at play.

Also worth watching in ’11, now that Navistar’s emissions solution is reportedly near complete, is whether the company tones down its marketing and legal campaigns against competitors and the EPA for certifying rival SCR engines.

4. A.D.D: ATTENTION DEFICIT DRIVING

It’s a worldwide "epidemic," don’t you know? No, not famine, debt, or spend-obsessed governments. We’re talking about distracted driving. At least that’s what the Obama administration is saying as it attempts to lead the world in curbing talking and texting from behind the wheel.

We’re not sure if this qualifies for another Nobel Prize, but the U.S. government is taking the problem of distracted driving very seriously.
 

Expect new HOS rules and an expanded
EOBR mandate any day now

Its first shot as part of the safety campaign was aimed at interstate truck drivers. Pushing states to adopt legislation that bans local commercial drivers from using hand-held devices will likely be a priority in 2011. So, at some point next year, there’ll be very few jurisdictions where using a hand-held device will be tolerated.

That’s more or less the case in many Canadian provinces too. Ontario followed Quebec and New Brunswick’s lead last year with sweeping anti-text and cell phone legislation for all drivers.

Alberta is one of the few provinces that still doesn’t have a rule, but don’t chalk it up to lone-wolf status. In fact, the province recently passed the toughest legislation of its kind in Canada at some point next year.

Not only will it ban talking and texting, but all sorts of other activities behind the wheel, too.

Any trucker who’s witnessed that Oakville soccer mom’s less-than-perfect lip grooming skills in the rearview mirror will probably admit that , generally, a broader law is a perfectly sensible idea.

Less sensible is the governments insistence that "recreational" use of a CB radio is supposedly also banned. We wouldn’t worry too much though. As Today’s Trucking explained in this exclusive update, the province still doesn’t really know what "recreational" actually means as it pertains to truck drivers.

5. NEXTGEN ENGINE STANDARD

The EPA’s decision to standardize the fuel-efficiency output from truck diesel engines will be top of mind for truck and engine designers, suppliers, and buyers between 2011 and 2014.

The rule proposes an incremental five to 15 percent fuel reduction for a variety of diesels by 2018. The first wave of engines to come under the rule should meet the standards with currently available technology and add-ons, but later on engineers might have to look further to meet the toughest cuts by 2018. (Trailers will not initially be subject to the rules).

Canada too is feverishly working on its own set of efficiency guidelines that should mirror the U.S proposal in many ways. An ironed-out proposal is expected by mid 2011 and, if bureaucratic scheduling is to be trusted, we could see a final rule by next December.

The challenge, as even Enviro Canada admits, is to keep the rules consistent across the whole range of commercial vehicles. Finding uniformity with the U.S. standards, while also accommodating the significant differences in Canada’s operating environments, will also be something rulemakers will have to navigate.

6 a) HOURS OF ACRONYMS

In a recent article, we detailed how 2009 was the safest year on record for trucks, culminating a steady fall in truck-involved accidents and fatalities during the ought years. No matter. While it boasts about those stats, the Federal Motor Carriers Safety Administration (FMCSA) apparently agreed with the Teamsters and Public Citizen that something’s broke and needs fixin’ and so it announced it would rewrite the hours-of-service (HOS) rules — again.

Last we heard, a new HOS rule was expected to clear the White House by New Years’ Day, so you should be hearing some details early in the New Year. There’s speculation that the union-friendly Obama admin will cave in some way to the special interest groups, possibly by cutting behind-the-wheel time from 11 to 10 hours (One particularly influential group of anti-truck activists who go by the name Public Citizen, laughably, wants eight hours); trim total workday hours down from 14; extend the consecutive sleeper berth time; alter the 34-hour restart provision, or a combination thereof.

6 b) Two-eleven will likely be the year of the black box (or more formally, the electronic on-board recorder). You can’t talk about HOS these days without including EOBRs. That’s because both the U.S. and Canada are in various stages of finalizing mandatory EOBR usage to better monitor hours-of-service rules, whatever they may end up being. America’s interim proposal so far only targets repeat violators but, like what Canada wants, a broader mandate for all truckers is what we should see by the end of the year or in early 2011.

This one, though, is far from settled. The EOBR proposal is already being challenged by owner-op groups who insist that most EOBRs don’t accurately record drivers’ hours and they infringe on privacy. Some suppliers, meanwhile, are still scrambling to market a low cost device that can meet all the complex regulatory demands.

7. POP GOES THE DIESEL

A buck forty. That’s what a gallon of diesel was costing you two years ago. Keep reminding yourself of that as you watch the pump price go higher with every passing day. We’re not up to that level yet and neither do diesel-price watchers think we’re going to get there. Yet.

Bob Tebbutt of Peregrine Financial makes his living betting against the vagaries of the crude by selling diesel futures and options on diesel futures.

He says the increased demand of recent weeks is clearly coming from the commercial users, such as trucks and trains. Which is a good thing. Means your business is up.

"While we do not expect prices to rise back up to the highs seen in July of 2008 we do see good reason to expect a trend that will take diesel prices higher over the months ahead," he told us.

When you’re talking long term, the International Energy Agency (IEA) has told the world that global oil prices could surpass $200 a barrel by 2035 as supplies are strained by rising demand in — you guess it, India, China, Brazil and other emerging markets. That’s more than twice what we’re paying now.

By 2015, prices will likely be in the $100 range, the IEA predicts. They were hovering around the $80 mark at the time of this writing.
All the more reason truck builders, carriers and public agencies have to take more serious looks at alternative fuels.
So in 25 years, you can expect more carriers to have much higher rates. And their bosses to have much higher blood pressure.

8. SEEING THE TRAILERS FIRST

There’s an old Desi Arnaz/Lucille Ball movie, "The Long Long Trailer." Just toward the end of the adventure, Desi says to a guy at a park. "Been married long?" The guy: "31 years." Desi: "Many fights?" Guy: "Nope." Desi. "Want to keep it that way?" Guy: "Yes" Desi: "Don’t buy a trailer."

He was talking about a mobile home but still, in the eyes of too many people, long combination vehicles (LCVs) are fightin’ words.

They are here to stay but some folks on the sidelines have decided to target them as if they were unsafe or environmentally unsound.

(They’re both safe and very environmentally sound, among other attributes.) Watch as anti-trailer politics make strange bedfellows, as Conservative MP Dean Del Mastro has cited the fact that the Teamsters share his anti-LCV sentiments.

Ironically, Del Mastro started publicizing his "Trains Belong on Tracks" campaign days after the Ontario Ministry of Transportation (MTO) reported that the pilot program in that province was such a success that it will likely be expanded next year.

Economy’s moving – with a speed limiter

As always, even in the face of two years’ worth of record low numbers of OOS designations in the annual Roadcheck blitzes, your industry will continue to attract naysayers and people who just won’t ever like big trucks.

Here’re a few facts to keep at the ready in case you need them: They’re not heavier: Weight restrictions on LCVs make them suitable for freight that cubes out rather than weights out. They’re better for high-value retail goods. (The stuff the anti-LCV people typically have in their homes.) They are among the safest vehicles on the road and operate under extremely restrictive conditions (they can’t travel in winter, for instance) and academic studies in the U.S. have shown LCVs provide significant improvements in transportation costs, congestion, improved distribution and driver availability. And they save oodles of fuel.

9. BORDERLINE CRAZY

Just when you think things are settling down, along comes some Yemeni fool with exploding toner cartridges. And thus border security must remain on the qui vive.

Your servants at the Canadian Border Service Agency (CBSA) are trying to accommodate the need for increased security at the same time as they’re streamlining the customs-clearance process and figuring out ways to run leaner.

Most recently, CBSA developed the Advance Commercial Information (ACI) program to get a closer look at suspicious shipments while letting the safer, low-risk (read: the vast majority of) freight get through lickety-split.

To make things work even more smoothly, a recent step was the introduction of the emanifest program. This fall, after a couple of false starts, CBSA opened up its own electronic data interchange (EDI) system to transmit manifest information to the border before the trucks arrived. It’s open, that is, to carriers who have completed registration and have tested their systems to ensure they’re compatible with the border people’s.

Expect to see the e-manifest implemented across the board throughout 2011. After it’s up and running, if you can’t arrange to have all your documents at the border an hour before your truck gets there, they’ll just have to wait.

Sound complicated? It is. Lucky for you there’s an entire cottage industry springing up to help you get ready. Just Google e-manifest.

Meanwhile, Detroit entrepreneur Matty Maroun will keep his lock on the primary Windsor-Detroit crossing for the time being. The Michigan Senate cancelled a voting on the development of a new crossing at that border.

Canadian border watchers are hopeful the discussion gets revived soon but we only got that opinion before the Republicans captured so many seats in the U.S. elections in November. It’s another border issue you’ll just have to wait at.

10. TO BUY OR NOT TO BUY

If you spend the next couple of months looking out at the trucks in the yard wondering whether to replace them, take some satisfaction knowing you’re not alone. Is this a good time to be selling used?
Or buying new?

Says Jon Starks, the director of transportation analysis at FTR Associates, "Demand went down so deeply [over the past two years] that the idled truck overhang rose to record levels. This problem will take several years to correct and should keep new vehicle demand well below its recent high in 2006."

As for used trucks,the consensus outlook is for modest growth.

"With such a large overhang of idled equipment, we expect residual values for traded trucks to remain soft well into this recovery. These lower trade values will help to keep the lid on a stronger rebound for new trucks."

Kenny Veith, president and senior analyst with ACT Research, says the gap between new and used is itself a barrier to growth. "At this point," Veith says, "the gap between new and used class-8 pricing and discretion on the part of truckers vis-à-vis the ­sustainability of the economic cycle appear to be the biggest impediments to a near-term major cyclical turn in demand.

"It was not too many years ago when truckers pre-bought ahead of EPA’07 only to find out that they were also pre-buying ahead of the freight downturn that began at the end of 2006. After spending the past four years in an over-capacitized industry, we suspect truckers are not in a hurry to relive those mistakes. That said, once truckers are convinced that the economic cycle has taken hold, we look for the class-8 cycle to begin in earnest."

Adds an optimistic Starks: "Most industries, after a 70-percent decline [2006-2009] would be sifting through the ashes by now. Instead not one single major manufacturer has folded and they are preparing for a 25-percent improvement in 2011 after nearly the same gain for 2010."

11. OUR SPEED-LIMITED ECONOMY

Eric Lascelles, the chief economist and rates strategist with TD Securities, told a November meeting of the Toronto Trucking Association (TTA) that he really doesn’t expect the economy to return to something resembling normal until maybe 2012. A year later in The States.

When he says back to normal in this case, he means "back to normal as conventionally defined, with appropriate levels of unemployment."
"I don’t have a crystal ball," he caveated, before adding "I will say it’s going to be a pretty rough ride over the next six months."

Lascelles said the GDP is currently growing at "stall speed’ and that "stagnation cannot be ruled out."

Economists, he said, know that "economic recovery after financial crises tend to take twice as long."

The bright side — and there was one — is that the banks will not repeat their credit craziness again. Also, Canada’s net debt:GDP ratio is the best in the G7. We have a healthy banking sector, a credible central bank and solid lending regulations. Advises Lascelles:

"Canada’s debt burden is pretty good, but hardly perfect and Canada will need to stick fast to its reputation as fiscal conservatives."
And, he said, "corporations are weirdly optimistic."

The list of roadblocks to recovery is long. Serious government debt, unprecedented political involvement and, he added, the fear of lawsuits. After the credit crises, banks and other financial institutions will be extremely litigation sensitive.

"Fear of lawsuits is putting a speed limiter on the recovery," Lascelles said.

Like we said, "Happy New Year."


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