Trucking: Nevada’s most connected industry

Nevada’s blooming economy is putting new pressures on industrial transportation.

Just ask Paul Enos, the confident and gregarious CEO of the Nevada Trucking Association, the non-profit organization charged with representing the interests of the transportation industry in the Nevada Legislature. He has a passion he turns into advocacy.

“The big issue in the legislature this time, for trucking, is the same issue everyone else has: taxes. Any tax on gross receipts is going to be tough on our industry,” said Enos.

“We’re not saying no to new revenue; were asking how can we get it in a different way? We support a tax plan in the Assembly that proposes an increase in the modified business tax. We think that’s a much more stable way to get additional revenue.

“The weight trucking should bear should be commensurate with the rest of the business community, although, when you look at the governor’s plan, trucking faces the eighth-highest rate among the state’s economic sectors.

“ Our (industry’s) margins are very slim so that makes it tough on labor-intensive industries like ours. The trucking industry touches every other sector in the economy, so we want to see all the other sectors doing well, that’s why we want to have one rate across industries that does not single anyone out. One thing all business wants is stability.”

Other than taxes, the biggest impacts on trucking now are a result of the resurgent economy. The good news of increased economic activity in Nevada and across the nation has a dark side that comes as the result of the deflation of the industry. Fleets and the workforce both shrank during the recession and now, production is putting on the pressure in a number of ways.

“We’ve had capacity issues for quite a while,” said Enos. “Nationally, we have big issues at the ports where we’re not getting the huge super-containers unloaded efficiently enough. Often, drivers at ports are forced to wait hours and hours to get loads on and off their trucks. Federal laws prescribe how long a trucker can drive and be on duty. So if you’re waiting 10 hours, and you’re faced with 14 hours on duty, that puts a lot of negative pressure on our drivers.”

There’s a number of issues at the ports, but the most urgent is labor, and the slowdowns due to labor disagreements over automation, said Enos. One big question is how much automation should go into those jobs. Then there’s the infrastructure. The biggest ships, which now will be able to reach East Coast ports due to the Panama Canal expansion, will put new pressures on them.

“When you have more freight, you need more trucks and the pipeline is only so big,” he said. “Rail used to take some of that capacity but we are also seeing a shortage of locomotives at the ports because existing trains are now moving oil. Because we don’t have a pipeline to move oil, we’re using locomotives. There are always those kinds of ramifications that are much more further reaching than you may imagine.”

Probably the biggest issue is the graying of the transportation workforce, said the trucking chief. The challenge then becomes how the industry will find enough people to drive those rigs.

“Our drivers are a lot older than the average worker and we’re having trouble finding those younger people who want to adopt trucking as a career,” said Enos. “Government and insurance companies put stringent regulations on who we can hire and that makes the tough job even more difficult.”

In Nevada, how will companies deal with the driver shortage? Enos thinks the industry must take steps to change both the perception and the reality, of the trucker’s lifestyle. “We’re trying to reduce some of those pressures by asking questions like how do we get our drivers home every night? The days of the ‘long-haul’ driver, who spends a month on the road without seeing his family, I think those are waning,” he said. New practices in supply chain management are bringing many benefits, among them, making long hauls shorter. Enos added. “These kinds of changes will make a career in trucking more attractive to a new generation of drivers who are more electronically savvy and help the industry to find ways to pay better and give drivers more time at home with their families.”

Enos said that because trucking is so central to Nevada’s economy overall, these issues have much wider impacts. “When you look at economic output in Washoe County and our top industries, warehousing is number one, trucking is second and warehousing doesn’t happen without trucks.

Then food is number three, couriers and messengers is number four, that’s FedX and UPS.” That’s three out of the four top industries in the state related to trucks, and you can include food in there, too.

“Washoe County is amazingly dependent on trucking.” In Nevada, 94 percent of all freight moves by truck as compared to 69.1 percent nationally.

“Think about it: we don’t have seaports or a lot of rail service here, or a river like the Mississippi or the Great Lakes to move goods over. Here, it’s like… trucks or burros? So our state is very tied to the trucking industry. How do we address these issues? More productive trucks.”

So, efficiency is key. Are alternative fuels a big piece of that? “It’s more about how do you get more freight on a truck,” said Enos. Nevada is special in that operators are able to move more with one tractor here than in most states because the state allows triples (semi rigs with three trailers) on the highways.

It means fewer emissions and less exposure to accidents and, yes, companies are looking at alternative fuels.

National carriers are leading in development of those vehicles. UPS uses 48 different kinds of fuels. “They are a laboratory for the industry and when other outfits see it work, they’ll start asking if that can work well in their operations, too,” said Enos.

“It’s fun. We’re not a stagnating industry. Smokey and the Bandit is so not the case anymore. We apply science to transportation logistics with GPS tracking, and new hydraulic systems that are now built into trucks so that if it seems likely they are going to roll over, the problem can be automatically corrected to prevent accidents. We are employing technology to be sure we move freight efficiently and safely.”

Electronic logs are mandated this year and await the final rules from the federal safety regulators. Enos sees that as a very positive way of increasing productivity while also reducing exposure to fines and increasing safety.

“Every driver we talk to who is using them doesn’t want to go back. It makes their lives easier. The biggest number of ‘hours of service’ violations are ‘form and manner’ — those that are about the data entry in the log books. Those infractions are dropping dramatically with electronic logging.” It also makes it easier on the regulators for enforcement.

How have fuel price trends affected the industry?

“Lower prices have been great for profitability,” Enos said, “but have put extra pressures on those that serve the oil industry.

“They need more trucks to bring in pipe, cement and sand needed to develop the resource and so it’s a double-edged sword.” In 2008, many truckers were caught flat-footed because they had no mechanism in place to pass higher fuel costs on, so they had to eat those costs, said Enos.

There were a record number of bankruptcies because they just couldn’t afford to drive anymore — both large companies and independents.

“Now, we have a better understanding with the shippers who better realize how fuel fluctuations impact the industry, and are more accepting of the fuel surcharges that pass along both costs, and savings, than they have been in the past.”

Have lower fuel costs brought more truckers into the industry? Enos thinks it’s more about demand and that is growing rapidly.

“The reality is, people getting into the business have less to do with cost of fuel and more to do with what is happening in the factories, in construction, in mining, in all these other sectors that require trucking to move their freight.

“We are dependent on what those other industries do and there are double-edged swords everywhere to consider.”