Trucking, Railroads, and Industry

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The plight of independent truckers

There were quite a few TV shows out there which gave trucking a romantic style of life to live. It was a lot of hard work and not quite like what was portrayed in shows like “Cannonball” or “Movin On.” Just crossing Nebraska would put you to sleep and Cannonball did not have a truck sleeper.

There is a lot of danger involved with being on the roads with trucks other than having them stop and change a tire for someone which was often portrayed. Getting around them quickly, letting them move over, and staying away from them as much as possible is the best I can offer. You will lose with them.

Coming out of Chicago and changing highways in Iowa, I watched one trucker come steaming up on our Passat’s rear end and I finally raised my hands up like being under arrest. He slowed down quickly. As my daughter the teaching nurse said, quite a few are using Meth to make those 60-80 hour runs. That is a different story.

Much of this increased danger is from truckers trying to make a go of it on there own and driving more miles to pay for their leased rig, semis-owned rig and still have money left over to live on. You can not get by on 40 hours on the road per week.

Trucking Evolution

It used to be that truck drivers were part of companies providing the service or were a part of company – owned truck fleets. Both have diminished in size or disappeared.

Companies like Con-way, XPO Logistics, CFI changed names several times as the result of takeovers and mergers. In the past they took good care of their fleets and the drivers as did the company’s who owned vehicles. However, there were dangers such as getting on the wrong side of the dispatcher. Even though they may be employees paid by the mile, one dispute with a dispatcher and the miles offered could drop as Westword details in its story on independents.

So what do you do?

Partnered companies CFI/Pathway would sell them a gussied-up old rig with the idea they can haul for them and make $100,000 to $200,000 a year (maybe!). So they sign on the dotted line and are in business. The companies get rid of old rigs and pass on all the Overhead associated with those rigs and the Overhead of the employee to Mr. Independent Truck Driver. A former employee who becomes an independent contractor.

Myself, I am really, really reluctant to sign on the dotted line for anything which will make me beholden. I gotta have the income first, which I do. Many of these drivers remind me of the tuck-pointers and brick layers I would meet while working with my dad in downtown Chicago pre-Marine Corps and college. They were hard working in an industry which will wear you down and take your health.

The men look for ways to escape like doing side jobs which I did with my dad. Even something as small as side jobs requires a pickup or a station wagon, certain equipment, and a place for storage of ropes, cables, and scaffolds. The pay is good if you work off the books but you still need constant work and “will” still wear down. the dust from Portland, sand, and silicate sand tears into your lungs.

To get a rig, the trucker is not allowed to test drive the rig they are looking at to lease much less see the history. Typically, the rigs need a bit of repair as they come with hundreds of thousands of miles on them. Discovery of issues are found out after it is off the lot and the rig driven. The leasing company can tell you where to take a rig for repairs and amounts you will pay

Conditions to the lease to own may include not being able to drive for other companies. Lease payments are deducted before pay or settlements. Like I have said, this is the passing of Overhead to Labor, in this case the independent operator, and consists of capital and other costs such as healthcare, SS, etc. The companies become little more than investors in a mini-operation

This was a gamble for independent truckers them and most of them lose.

Some Explanation on Today’s Issues

With the passage of the 1980 Motor Carrier Act of 1980 many of the giant trucking firms disappeared. The new system, allowed anyone to haul any good, to any place, for any price. A large companies could now be as small as a couple of dozen rigs,

There are not a lot of trucking companies of the same size and capacity existing today as in the seventies anymore. Much of the freight you see standing in line at Long Beach, Los Angeles, Portland, etc. are not going to the Midwest. That container freight arriving on the west coast going to the Midwest goes over the mountains via railroads. The truckers you see waiting on loads are probably on the way to places like El Paso to cross into Mexico and deliver to US plants there or Mexicali or stay in El Paso.

To get to the US interior, the ocean containers are loaded on railroad flatbeds and carried across the mountains. It is about a week’s travel by the time it hits Detroit going to automotive and the Tier facilities. My planning cycle to ship to Asia was one week plus three weeks plus one week. One week on each side of the ocean and three weeks on the ocean. I would allow one week to get from Detroit to Long Beach. Just reverse it to get stuff out of Asia. That is JIT. And inventory consists of Material cost or money sitting around.

Railroads and Infrastructure

• US containerized imports from Asia set a new monthly record in June of 1.52 million TEU, according to PIERS, a JOC.com sister product within IHS Markit. Total laden imports into Los Angeles and Long Beach in May and June combined rose 36 percent compared with the same two-month period a year ago and 17 percent from the same months in 2019, according to PIERS. US Railroads: BNSF metering space on LA-Chicago intermodal trains (joc.com)

• According to data from the Intermodal Association of North America, the largest share of those record volumes leaving Los Angeles-Long Beach on international intermodal trains is destined for Chicago, with much of it offloaded at Joliet terminals. US Railroads: BNSF metering space on LA-Chicago intermodal trains (joc.com)

• A Midwest-based NVO told JOC.com that carriers have restricted IPI bookings into smaller cities such as Detroit . . . US Railroads: BNSF metering space on LA-Chicago intermodal trains (joc.com) This did not happen as wire harnesses, etc. for automotive are assembled in Asia (another story). There is no way they would transfer to a truck. The big three and Tier ones like Yazaki would be all over this.

• Rail Traffic always moves slowly through Chicago. While it may take 2-3 days to get to Chicago, passage through Chicago is a day from Joliet, IL.

• UP and BNSF railroads embargoed Chicago for a brief period to allow traffic there to clear out. Containers were rerouted to St. Louis and other places. Eventually being trucked into destination (not ideal and costly). US Railroads: BNSF metering space on LA-Chicago intermodal trains (joc.com)

Supplies have exceeded the transportation system’s ability to deliver if and only if the transportation has maximized capacity. For example. Long Beach and LA are operating three shifts. That is great news. Now how do we get past Chicago? And have other companies increased capacity to meet demand on transportation?

Companies and Industries which Continuously Blow Themselves Up

I have worked for the Japanese, Koreans, Germans, and Americans. The first three were really good at telling stories to your face. After a while, credibility disappears.

I like the part where one Czech company contracted by the Germans ran out of capacity to make an essential auto-receiver for keyless-go in autos. My US based German boss tells me to get after them so I do. Meanwhile, my Bavaria-based Germany associates told the Czech company to short the US so they can meet the German company’s demand. That worked once until the Czech company ratted on them and I had a few words with my German associates.

My Korean associates like Americans. I had good relations with them face to face. There was always an undercurrent of not knowing everything and a desire to know all my corporate contacts which I gave them people who had left the companies.

With the Japanese, I took blame for a monsoon in the China sea. I did not know I could plan for such occurrence also. As a minor god, my controls are not extending beyond US borders.

2009, similar chip problem was occurring the same as what we are experiencing today. The result of 2008 and business shutdowns and slow downs. I was working with Germans at the time and was in charge of all purchasing for North America purchasing. I had three German bosses.

Automotive woke up and placed orders for chips. Except, the chip companies had not grown the silicon wafers to make the chips because they had no orders. Wafer growth takes 4-5 weeks. The wafers go fab plants for cutting, fabricating and layering with circuit materials, etc. This process takes time also.

Pre-my arrival, the German company had an inventory of 3 million which with no demand due to 2008, They decided to sell-off. Selling them was a big mistake.

Automotive went back to placing more orders after canceling most of them. And the industry struggled with the same old lead times and capacity issues we are experiencing today. This occurred in other industries as well. The latest shortage is more serious due to the longevity of the pandemic and money chasing inventory.

Supply Chain Summation

No doubt companies are milking the pandemic. Were there any reasons for Biden having to tell Long Beach and LA companies to add more unloading shifts? Increasing shifts partially solves the issue.

What about the Joliet-Chicago bottleneck which still remains problematic. This is an old issue which I was aware of 20 years ago. Railroads have been falling behind decades now. They are an important part of the US infrastructure requiring modernization through investment. Planning for a new railroad center away from Chicago . . . maybe?

Owner-driven rigs associated with companies like CFI are worst than Uber. Transferring debt, capital costs, and taxes to the rig owner-drivers who can not make enough money in a 40 hour week to keep up is a scam. In the end, transportation and supply chains will remain behind.

And the companies which wish to operate offshore with little or no inventory based upon lead times are problematic and need to plan better?