Will Wage and Hour Rumbles... Affect You?

sdaniel · Nov 7, 2014

Who is holding a gun to your head to work any where you do not want to work? There are companies that are worth working for! Never been trapped in a job. Always was able to choose who I worked for. We have always had this power . Don't like their pay package and or treatment don't work there. If enough stop working there , and most all others will not work there . That said CR England has no problem filling seats. As sorry as they are. Seemly a endless supply of unknowing lining up .

Victor_V · Nov 7, 2014

To summarize a little bit of trucking history here...

The government moved to regulate shipping rates in the 1800's during the rise of the railroads when the railroads were given huge amounts of land (their 'right of way') but didn't necessarily want to stop at podunk whistlestop (your small town, for example) to pick up freight or passengers.

The government, in exchange for these huge swaths of land, dictated freight rates, authorities, rights of way and required stops at various Podunks along their right of way.

From 1935 to 1980, that same paradigm was applied to trucking through the I.C.C. (Interstate Commerce Commission). The ICC dictated, yes, dictated freight rates, granted authorities, and required that if you obtained an authority you would pick up freight from Ma and Pa in Podunk and get it to its destination at a freight rate set by the ICC.

Since company A went to LA, it might have interline arrangements with company B up in Reno or Las Vegas, and that meant company A could pick up freight for Reno or Las Vegas and vice versa. I worked for an outfit like that and every night two sets of doubles would meet in Ludlow, CA--now, that's really Podunk, USA, mind you--swap sets and go home.

That went on for 45 years until 1980. Then all Hell started to bust loose as trucking firms could go anywhere and compete with anybody, at least interstate. Took a while longer to do away with state regs. The result was a 44% DROP in driver pay, the failure of some of the biggest trucking firms in the country, the rise of freight brokers and lease operators.

The reason all this matters (even if it doesn't really matter to you) is that paradigm shifts, structural changes, landscape changes in trucking have effects that ripple on down for years and keep on rippling.

Like the dramatic drop in driver compensation after 1980...

Victor_V · Nov 7, 2014

The one word that best describes trucking since deregulation is 'turbulent'.

That hasn't stopped, either.

More what the IRS (US Internal Revenue Service) says about the history of trucking. http://www.irs.gov/Businesses/Trucki...ry-of-Trucking

1999-2000
Used Truck Price Crisis
From the fall of 1999 thru the spring of 2000 the entire trucking industry faced a virtual crisis of falling used truck prices that threatened to undermine the economic viability of the nations fleets, truck manufacturers and truck finance companies.

After several years of strong new-truck sales, capped by the record-breaking pace of the past two years, a wave of good, low-mileage tractors flooded the market and depressed prices to the lowest level seen in years.

The falling value of their huge investments in equipment left about two-thirds of the trucking companies in North America practically bankrupt under accounting rules. Bankruptcy filings were rampant. This issue was even more important than skyrocketing fuel prices and the ongoing driver shortage.

2000
April, 2000 the Internet-telecom-IPO bubble burst. The high-tech implosion sent Wall Street into a bear market and the economy flirting with recession.

The year of 2000 was at times tumultuous for the trucking industry. Sky-rocketing fuel prices, protests and blockades by independent operators, battles over US taxes, plummeting new truck sales, and questions over the direction of the Canadian economy all played a role in casting uncertainty over the market.

Even thru all of these problems the market managed to continue to produce more freight and more activity for truckers.

By the summer of 2000 companies began to worry about replacing their aging fleet of vehicles. But the midrange engines, mandated to be sold by October 2002, were for the most part untested.

The industry did not trust them, they were expected to cost more initially and miles per gallon was expected to suffer. Companies went on a binge, buying up low mileage used trucks and tractors in an attempt to avoid buying new trucks with the 2002 engines.

Companies lengthen their equipment trade cycles to avoid the 2002 engines until they are proven. Used truck prices began to climb out of the cellar.

National average cost per gallon of diesel fuel in 2000 is $1.3191
Click to expand...

Victor_V · Nov 7, 2014

Largest US Carrier to Go Out of Business--Consolidated Freightways

More what the IRS (US Internal Revenue Service) says about the history of trucking. http://www.irs.gov/Businesses

2001
The U.S. economy entered a recession in March 2001, after an unprecedented 10 years of growth.

Following the devastating September 11th terrorist attacks on America, the Dow is sharply lower, the economy is sinking fast, layoffs are surging, and defense spending is up.

Demand for heavy trucks softened.

This combined with rising trucking company bankruptcies again glutted the market with used trucks. There are usually 30,000 used, class 8 trucks on the market. In November to December 2001 there are reported to be as many as 100,000.

An over-abundance of used trucks, together with a softening of the economy and rising diesel fuel prices choked off demand for new trucks. These factors, in turn, created falling profit margins.

Toward the end of 2001, the trucking business is showing signs of better health after a painful two-year slump that put hundreds of thousands of drivers out of work. But it is consolidation, not a surge in demand that is behind the rebound. Analysts and executives are hesitant to draw overly optimistic conclusions about a broader economic recovery. Still, carriers that survived are hauling more freight, getting better rates and reporting higher profits.

National average cost per gallon of diesel fuel in 2001is $1.42.

2002
The collapse of the largest carrier ever to declare bankruptcy was announced on Labor Day. It cost the Teamsters more than 15,000 jobs. It will take several years to sell off the companies terminals and vehicles.

There are 330,000, or 13 percent, fewer trucks today than there were two years ago.

Large companies have been able to gain market share and even raise rates despite sluggish growth. Truckers that rely more on the retail sector have fared better than those dependent on the manufacturing sector.

Companies have been able to squeeze profits out of less revenue by using better technology to keep costs down. Better logistics software has enabled companies to more efficiently coordinate the movement of trucks around the country.

National average diesel fuel price per gallon in 2002 is $1.32.

Note: In 1983, Consolidated Freightways spun off, guess who??? Con-way. The same Con-way of Quezada v Con-way!! Ya gotta love it! Big bankruptcy meet big settlement...
Click to expand...

G/MAN · Nov 7, 2014

I can only think of a couple of drivers that I can remember in the early 70's who worked for a union carrier. One worked for Roadway and the other with Overnite. At least I think they were both union back then. I knew few drivers who were union in the early 70's. I doubt the figures you quoted about the number of union drivers prior to deregulation, Victor. Most union drivers have always worked in the rust belt. Companies were doing lease purchase in the 60's. It has become more prevalent in the last few decades. Most drivers that I knew during that time who wanted to own a truck got their own financing from their bank. I don't recall any who did a lease.

Even prior to deregulation there were those who were considered "outlaws." They could cut rates and slip under the radar. Deregulation did reduce the cost of getting ones authority and created more competition. Prior to deregulation it could cost thousands of dollars to get authority.

Victor_V · Nov 7, 2014

Engel's source is Barry T. Hirsch, "Trucking Regulation, Unionization and Labor Earnings: 1973-1985," The Journal of Human Resources, 1988. http://www2.gsu.edu/~ecobth/JHR_Trucking_Regulation_Summer88.pdf

Hirsch has info on the cost of authority prior to and after deregulation, too. "... fell from $531,000 in 1977, $370,000 in 1978, to only $55,000 in 1979... (...in 1982 dollars) ... [the] volume and price ... collapsed after 1979..."

G/MAN · Nov 7, 2014

Prior to deregulation it could cost $5,000 or more to obtain authority. Often those seeking motor carrier authority would buy someone else authority rather than going through the process of applying themselves. The way authority was set up then was that your application had a waiting period where the application was advertised and if anyone whom you may be competitors with objected to your getting authority, you may not be able to get authority. That changed with deregulation. They still go through the same process, but it is rare for authority to not be granted after deregulation.

Victor_V · Nov 7, 2014

Those figures ARE for TRADED authorities. After 1980, some states still regulated intrastate trucking until the Trucking Regulation Reform Act, think it was 1994, that deregulated intrastate, too.

Victor_V · Nov 7, 2014

Consolidated Freightways ~ Con-way

Any conspiracy theorists out there?

Look at these dates:

1980, Motor Carrier Act of 1980 (deregulates interstate trucking)

1983, Consolidated Freightways spins off Con-way

2000, CF last report of a profit in 3rd Quarter (http://money.cnn.com/2002/09/03/news/companies/confreight/index.htm)

2002, CF announces bankruptcy on Labor Day, tells drivers not to report to work and informs investors stock of 3rd largest US LTL carrier is worthless. Investors lose out.

Did you know that CF had a manufacturing division that became Freightliner?

True. True. True.

2014, billion-dollar Con-way has $457-million in cash... oh, yeah, and preliminary approval on a settlement in Quezada v Con-way to need to report it on 10-Q to SEC.

Victor_V · Nov 7, 2014

Did CF's smart money go with Con-way in 1983 and did they bleed CF after that until it finally reported its last profit in 2000??? Closed in 2002. Loss of 15,000 union driver jobs over night. Stock slid from $6 share September 2001 to below $1 at close. Last reported loss, $4.74/share for all of 2001. That's per share. Plunge began in March, 2002 and trading at 71-cents went trading halted. http://money.cnn.com/2002/09/03/news/companies/confreight/index.htm

Inquiring minds want to know...

What a difference a decade or so makes, eh?

Contemporary news reports at LA Times, NY Times and CNN/Money don't mention a benefit to Con-way in CF closing. They mention Yellow, ABF and Roadway... all union.

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