This profile is designed to be a reference resource for existing and prospective small business owners, particularly as they assess how their businesses are operating and developing plans for the future. These examples illustrate various ways in which small businesses are actually operating but are not meant to be instructions that small businesses should follow.

alberghi a PireoState of the Industry

Trucking companies provide ground-based transportation of raw materials, finished and unfinished manufactured goods. According to the American Trucking Association, 5.5 billion tons of freight by local and interstate trucks in 1994, which represented 55 percent of the total domestic tonnage were shipped in the United States. Thirty-seven percent of the 5.5 billion freight was general merchandise and the other sixty-three percent was compiled of bulk goods. In 1997 the percent of total U.S. shipments through trucking rose to seventy-nine percent. This increase was due to the alliances and mergers among trucking companies. The increase has been at the expense of inland waterway operators, pipelines and railways. For the trucking industry there is no physical limits on their route structure unlike that of railroads and inland waterways.

Tschechische Republik HotelsThe trucking industrys market share has been stagnant since 1993. Standard and Poors DRI, the worlds premier economic forecasting and consulting company, anticipated that the industry will lose market share between 1996 and 2006 as trucking revenues grow at a decreasing rate as compared to other transportation means. Businesses are turning away from trucking transportation for the shipment of high-valued items. The simple explanation is there are other means of shipping that are faster and more reliable. A significant amount of the trucking market remains private as more operators believe they have a competitive edge in offering reliable delivery services. Because private companies have high costs, many private operators limit their shipments within a 250-mile radius.

A major trend in the industry is the growth of alliances between trucking companies and rail operators. Railroads allow for trucking businesses to offer long-haul, which has been increasingly difficult to do on their own because of the shortage of drivers. The popularity of Just-In-Time (JIT) promotes frequent shipment of materials and products in smaller lots. There are risks associated with JIT shipments. Because the shippers demand reliability from their truckers, trucking companies need to have information technology that allows them to communicate over the roadways. Direct loading has decreased handling, transit times and the number of damaged goods.

The United States is experiencing a considerably low unemployment rate. This low rate has severely affected the trucking industry. There has been a shortage of drivers for sometime now. The shortage has increased costs and forced operating changes. Fewer people were born in the current generation than were born in the baby boomers generation; thus, trucking companies have had to compete for a driver not only based on wage per mile but also benefits. An experienced driver can now receive between 27 cents and 41 cents per mile, which is an increase of 33 percent since the early 1990s. Major trucking companies, such as J.B. Hunt, believe this will be offset by reduced costs in training, insurance and fuel. Drivers also demand an increase in motel allowances, higher lay over pay, 401 (k) retirement plans, medical and dental coverage and incentive bonuses. This is just to name a few. The companies have had to broaden their recruitment strategies as well by hiring minorities and women. In 1995 only 23 percent of minorities and 4.5 percent of women were employed by the trucking industry. Drivers want to return home more frequently these days. Computer software has aided trucking companies to match drivers with transports moving in the direction of their homes; however, this demand has led to an increase in empty mileage.

Large trucking businesses will face growing demands for a wider range of services including cargo storage, cargo loading and unloading, distribution processing and information handling.

Legislation

The Clinton administrations gasoline and fuel tax, ratified in 1993, added 4.3 cents per gallon on fuel costs. Analysts have estimated this increase to add an additional $3 billion to operating expenses annually. The Motor Carrier Safety Assistance Program has given relevant federal and state agencies greater latitude to hike up annual vehicle inspections. This has resulted in an increase of $6,000 to $9,000 per truck annual maintenance. The Commercial Motor Vehicle Safety Act of 1986 required all truck drivers to pass a single driving competency examination; therefore, eliminating redundant state license requirements. Since the ICC (Interstate Commerce Commission) Termination Act, carriers can now offer discounted rates in exchange for a cap on their liability for lost or damaged goods. The use of standard double trailer combinations using pup trailers is legal in all fifty states. The use of long combination trailers not only reduces cost, but also promotes safety with fewer trucks on the road.

Safety has been a major issue in the trucking industry. Driver fatigue is the top cause of accidents involving trucks. Under the current regulations, drivers are allowed ten hours on the road followed by an eight-hour rest. Drivers can not drive more than seventy hours during an eight-day period. Truckers are working towards changing this rule to: Fourteen on-road hours with ten-hour rest stops and one hundred hours in an eight-day period. This would allow drivers to be on the road the same time each day; thus, reducing fatigue because it is conforming to the natural clock of the body. Black boxes have been installed in newer trucks which monitors the performance of the vehicle. This forces drivers to comply with driving hour regulations.

Environmental

The U.S. Environmental Protection Agencys policies have increased air quality regulations. The new rules require a 50 percent reduction in emissions by the year 2004. The rules specify that nitrogen oxide emissions must be cut from 5 grams to 4 grams in 1998 and to 2.9 grams by 2004. Non-methane hydrocarbons better known as soot are limited to 0.5 gram. Most of the existing diesels meet the soot requirements, but more costly engines will need to be installed to meet nitrogen oxide limits.

Technology

New computer software that can be downloaded via the Internet allows customers to determine shipping costs by keying in the shipping destination and a description of the freight to be transported. The Internet is an excellent marketing technique to promote services and relay reliability. Carriers have started to use electronic data interchange (EDI) systems to allow truckers to "capture" data automatically by scanning packages with special codes. Some companies use their Web sites in conjunction with EDI systems, such as UPS, to allow customers to track the exact location of their goods at any time, schedule pickups, and review signature of the person receiving the freight. This has enabled the industry to increase productivity, reduce paperwork and increase response time to customers.

Early warning systems have been installed in many of the new diesels. This system uses radar technology to warn drivers they are approaching another vehicle too quickly. Other electronic devices allow for automatic payment of tolls without requiring trucks to stop.

Publications

Commercial Carrier Journal Chilton Company
201 King of Prussia Road
Radnor, PA 19087
Phone: (610) 964-4000

Land Line Owner-Operator Independent Drivers Assoc. Inc
311 R.D. Mize Road
Grain Valley, MO 64029
Phone: (816) 229-5791 or (800) 444-5791

Southern Motor Cargo Wallace Witmer Company
1509 Madison Avenue
Memphis, TN 38104
Phone: (901) 276-5424

Trade Associations

ERROR MSGAmerican Trucking Association (ATA)
2200 Mill Road Alexandria, VA 22314-4677
Phone: (703) 838-1700 or (800)ATA-LINE
URL: truckline.com

Independent Truckers and Drivers Association (ITDA)
1109 Plover Drive Baltimore, MD 21227
Phone: (410) 242-0507
E-mail: rbontz@erols.com

Owner-Operator Independent Drivers Association (OOIDA)
P.O. Box L Grain Valley, MO 64029
Phone: (816) 229-5791 or (800) 444-5791
URL: www.ooida.org

Sources

Dragor luxury hotelsHeil, Scott and Terrance Peck, Encyclopedia of American Industries Vol.2, Gale Research, Detroit: 1998 pp. 330-342.

MacFarlane, Theresa, Small Business Sourcebook Vol.2, Gale Research, Farmington Hills: 1999, pp. 1940-1947.

Tardiff, Joseph, U.S. Industry Profiles, Gale Research, Detroit: 1998, pp. 657-662.

U.S. Department of Commerce/International Trade Administration, U.S. Industry & Trade Outlook 99, The McGraw-Hill Companies, New York: 1999, pp. 43:13-43:17.

Author: Arkansas Small Business Development Center, CZ
Source: Arkansas Small Business Development Center
Description: General industry information

ERROR MSGThis article is reprinted from the Small Business Forum, the journal of the Association of Small Business Development Centers, which is published by the University of Wisconsin-Extension Small Business Development Center. For information about subscriptions, reprints or submissions, please write to us at 432 North Lake Street, Room 425, Madison, WI 53706, or call us at (608) 263-7843.