Author: Vitaliy Dadalyan

6 Jul by Vitaliy Dadalyan Tags:

Class 8 Truck Demand Hits 4-Year Low

Class 8 truck order numbers have hit a 4-year low, with demand remaining depressed so far in 2016, according to preliminary numbers released by ACT Research and FTR.

“The Class 8 market is stuck in a holding pattern, at the bottom end of this cycle. Fleets are cautious as freight demand has cooled off this year,” said Don Ake, vice president of commercial vehicles at FTR. “There are enough trucks to handle freight right now with carriers in a wait-and-see mode, before adding trucks or replacing older units.”

FTR projects Class 8 truck orders for the month of 13,000 units. That represents an 8% drop compared to May and a 34% decline compared to last June.

This month's order activity was the lowest monthly total since July 2012 and the worst June since 2009.

“This is what the summer looks like in a market down cycle, so we can expect this level of activity for a couple more months,” said Ake. “We do anticipate higher orders later this year. However, the volume of orders will be determined by the strength of the economy and freight activity at that time.”

Class 5-7 medium-duty vehicle orders also fell in June and are projected to hit 15,200 orders for the month, according to ACT Research. Unlike Class 8, which has struggled to get going in 2016, the drop in medium-duty orders was attributed to the strength of the market in previous months.

“The pull-back of the past two months follows a three-month stretch from February to April in which medium duty orders were booked at a volume well ahead of demand,” said Kenny Vieth, ACT's president and senior analyst.

Related: It's Wait and See for Fleets in 2016

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6 Jul by Vitaliy Dadalyan Tags:

Large Truckload Fleets See 13% Drop in Turnover

Driver turnover at large truckload fleets fell by a significant amount in the first quarter of 2016, according to American Trucking Associations.

Turnover at large truckload fleets fell by 13% in the first quarter to 89%, hitting the lowest level in nearly a year. In 2015, turnover at large fleets averaged 93% for the entire year.

“While still fairly high, the decline in turnover is reflective of the softening in the freight economy during the first quarter,” said Bob Costello, ATA chief economist. “Should the freight economy witness an uptick during the second half of the year, we should see both turnover and demand for drivers rise as well.”

Turnover fell by only 1% at small truckload fleets in the same period of time, dipping to 88%, That was was the lowest decline since the third quarter of 2015. And it is up from last year's averages, which stayed around 79% for all of 2015.

Turnover at less-than-truckload fleet remained much lower than at truckload fleets, falling three points to 8%, the lowest point seen since the second quarter of 2013.

Related: In Search of Drivers

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6 Jul by Vitaliy Dadalyan Tags:

Diesel drops 0.3 cents this week

After steadily increasing all spring, diesel prices have been steady so far this summer—although they're holding are at the highest level of the year.

The average U.S. retail pump price for diesel slipped 0.3 cents in the July 4 report by the Energy Information Administration (EIA), to $2.423 per gallon. The price has changed less than a penny over the past four weeks.

Regionally, only the Rocky Mountain area posted an increase, up seven-tenths of a cent to $2.436.

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6 Jul by Vitaliy Dadalyan Tags:

Q&A: Cleaning up trucking’s data garbage

Ensuring that data is “clean” is going to be critical to ensure that the “machine learning algorithms” now being increasingly used throughout the trucking industry to manage everything from fuel spend to vehicle lifecycle costs, argues Kurt Thearling, vice president of analytics for WEX Inc.

Fleet Owner recently got a chance to ask Thearling to extrapolate on that and other “machine learning” questions related to motor carrier operations.

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6 Jul by Vitaliy Dadalyan Tags:

Fairbanks offers Talon series highway scales

Fairbanks Scales offers its Talon Series Highway Vehicle Scales with Intalogix technology.

“Boasting the longest-lasting construction of any steel deck scales in the industry, the Talon is offered in two capacities to meet unique application requirements,” the company said. “The Talon HV design is a durable and dependable design for most applications. For ‘extreme' volume weighing applications, the Talon HVX is designed to withstand these duty-cycles.”

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5 Jul by Vitaliy Dadalyan Tags:

What the Labor Department’s New Overtime Rules Mean for Trucking

In May, after years of build-up, the United States Department of Labor published new regulations that will affect who may be paid a salary and who must be paid by the hour. The changes, which take effect December 1, 2016, dramatically change the landscape for employers.

But first, what has not changed? While many employers do not realize it, the law has always required that employees do certain types of work before the employer is allowed to pay them a flat salary without paying extra for overtime. Generally, those duties fall under the headings of administrative, executive, or professional work.

Without going into a detailed analysis of what kinds of jobs fall under those categories, broadly speaking these employees are supervisors of two or more employees, managers of operations who use their own judgment and discretion to make important decisions, or employees whose jobs require some advanced educational degree. Being an office worker or carrying a Manager title, for example, does not necessarily mean one may be paid a salary.

If an employee has the right duties—say, a Safety Manager who researches, designs, and implements an overall driver safety program—then the employer may pay him or her a salary, as opposed to an hourly rate of pay that fluctuates based on hours worked. This is where the new regulations come into play. Until December 1, that salary may be as low as $455 per week, or $23,660 per year. On December 1, that amount will jump all the way to $913 per week, or $47,476 per year.

So, unless a person is paid a salary at the rate of at least $47,476 per year, he must be paid by the hour and must be paid 1.5 times his hourly rate when he works over 40 hours in a workweek.

There is only one slight twist: employers may use bonuses and incentive payments (including commissions) to satisfy up to 10 percent of that $47,476, if these extra payments are paid at least quarterly. Stated otherwise, if an employer pays a bonus or commission at least quarterly, and the bonus or commission payments add up to at least $4,747 over the course of a year, then the employer need only pay a salary of $42,729. Note that this rule is not satisfied if the employee merely has the opportunity to earn that $4,474, but only if the employee is actually paid the $4,474.

As a reminder, the new regulations did not do away with the requirement that employees perform what has always been considered exempt work. Therefore, to be exempt from overtime, the employee must do the administrative, executive, or professional work that has always been required AND must receive the new enhanced salary—either (1) at least $47,476, or (2) at least $42,729 plus an annual total in bonuses or commission, paid quarterly or more often, to reach the new level.

The upshot of the new law is that employers need to look at every salaried individual paid less than $47,476 per year and ask whether he or she should receive a raise to that new level or should become paid on an hourly basis. As simple as the new threshold is to understand, the decisions it requires of employers are not easy.

For example, consider a dispatcher whose pay is $45,000 because he is a ten-year employee and a newly hired dispatcher whose pay is $37,000. Raising the pay of the senior employee who is only $3000 away from $47,476 and converting to hourly pay the employee who is nearly $11,000 away seems financially sensible. However, that approach would mean two employees with the same job, doing the same work, would be paid under different schemes. The newer dispatcher would need to keep time records while the other would not—disadvantage for him. However, the senior employee might be asked to work all of the overtime, for no more pay—disadvantage for him. Obviously, what might look like an easy fix can carry complications for employee relations.

Moving an employee to hourly status, of course, means his or her pay will fluctuate as he or she works more hours one week and fewer hours the next. If overtime is well-defined and predictable, an employer can calculate an hourly rate that will yield the same overall pay the employee now receives. However, the more that overtime changes from week to week, the more difficult it will be to make the conversion to hourly pay without affecting overall compensation. And, of course, controlling the hours of employees who work remotely requires careful management.

There is some good news for employers: examining the impact of the new salary threshold can create an opportunity for employers to address what might be existing problems. In looking at whose pay needs to change, employers might find that employees are presently misclassified. That is, some current employees might be receiving a salary without doing exempt work. Where those mistakes exist, they can now be corrected—with an explanation that the change is triggered by the new regulations' enhanced salary threshold.

Overall, these DOL-mandated changes will require good communication with employees to explain the reasons for the changes and, for some workers, the impact of moving from salaried to hourly status. In the end, employers and employees both will need to accept some degree of uncertainty and be flexible as a new pay scheme takes root.

Reposted with permission from the law firm Smith Moore Leatherwood. Alexander Maultsby is with Smith Moore Leatherwood, specializing in transportation issues.

Related: Driver Pay Analyst: No Silver Bullet to Solve Driver Shortage

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5 Jul by Vitaliy Dadalyan Tags:

Diesel Prices Plateau While Oil Markets Evaluate Brexit

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Source: EIA

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Source: EIA

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The price of diesel fuel remained relatively unchanged for the third straight week and the energy markets are still feeling the effects from the United Kingdom's vote to leave the European Union, according to the latest numbers from the Energy Department.

The average price of on-highway diesel fuel dropped by 0.3 cents last week, settling at $2.423 per gallon. The price is 40.9 cents than it was in the same week a year ago.

There are usually significant differences in fuel price fluctuations region to region but prices were slightly down in nearly all areas. The largest decrease in prices was in the New England region at 0.9 cents per gallon while the largest increase in prices was 0.7 cents in the Rocky Mountain region.

The average national price of regular gasoline was down last week by 3.8 cents, hitting $2.291 per gallon. The current average price is 50.2 cents cheaper than it was in the same a week in 2015.

When separated by region, the largest decrease in prices was in the Midwest with an 8.3-cent drop for the week. The smallest change in prices were on the West Coast where prices fell 0.5 cents.

The price of crude oil was down on July 5 as energy prices have felt the effects of the UK's vote to leave the EU, according to a CNBC report. The worry is that the, economic downturn in the UK would slow the global economy, reducing demand for oil.

While oil prices had been steadily rising for the past few months on news that oil producers would be reducing the supply of oil, a slower economy could prevent the prices from continuing to increase.

Related: Business Investment Sinks as Durable Orders Decline

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