Purchasing Magazine has been talking with shippers and carriers from every region of the country about the biggest issues they face. From e-mails, faxes and discussions, including talks at the recent National Small Shipments Traffic Conference Inc. (NASSTRAC) meeting in Naples, Fla., here's a rundown of their most commonly cited concerns (in no particular order)—

• Fuel costs. Gasoline prices have been rising sharply and, come summer when refineries operate at their highest utilization rates, pricing is expected to go even higher. With inventories low in almost every region of the country, even the perception of tightening conditions might lead to precautionary buying and further upward price pressures. Crude oil prices are still extremely high, nearly triple what they were in early 1999 and, consequently, high fuel costs are digging deep into shippers' pockets.

In terms of surcharges, a good benchmark for shippers is Viking Freight, a FedEx company. Effective Monday, April 30, 2001, the fuel surcharge was 2.5% on Viking shipments less than 20,000 lb, and 6.0% on 20,000 lb or more.

"The cost of fuel and associated charges greatly concerns me. There does not seem to be any real activity that will significantly help the situation in terms of technology or alternative resources," says Jim Pino, distribution and logistics manager in Modine Manufacturing's aftermarket division.

"There is no end in sight for fuel surcharges. In fact, fuel prices will never get back to 'normal' prices. We might soon see the surcharge go away because $1.50 will become the new benchmark for diesel prices. Shippers will be paying for the higher cost of fuel in their adjusted base rates," suggests Brice Peters, Melton Truck Lines.

• Compliance fines charged to suppliers, but caused by carriers. Bob Feaver, director of transportation services for Esselte Corp., says, "I would like to know what role the major LTL carriers plan to take in resolution of compliance fines being charged to suppliers for transportation failures caused by carriers. This has turned into a cottage industry for some of my major retail accounts. I do not want to purchase their guaranteed delivery services and pay additional charges. Why should I pay premiums to have them deliver to their own service standards?"
• Insurance crisis. Lack of market liquidity, undercapitalized companies, high costs and business failures are all contributing to a hardening of the insurance market in the shipping industry. Shippers are justifiably nervous about soaring rates that may significantly affect their total spends. "We are paying 400% more for our deductible and about 30% more on premiums this year," says Peters of Melton Trucklines. The problem: Insurance company stockholders are demanding bigger returns while insurers are being hit with higher, multi-million dollar claims from carriers. (In today's litigious society, multi-vehicle accidents typically generate multiple lawsuits against carrriers.) "There is too much exposure for most insurance companies to continue offering policies, so many have exited the industry and the ones that remain are naming their prices, increasing trucking companies' costs and helping to put smaller and poorer companies out of business," Peters notes.
• Off-hour deliveries. Shippers have been paying weighty charges for delivery during the earliest hours of the morning and there is no relief in sight. "I would like to know how [my carriers] are adjusting their operations to accommodate accounts that require off-hour deliveries between four and five a.m. without incurring additional charges," says Linda Brownworth, manager of transportation services, Esselte Corp.
• Shipping in a soft economy. According to an April release of indicators from the Department of Transportation (DOT), rail car loadings were down more than 3% in fourth quarter 2000 compared to the previous year, transportation industry profits fell 17% between the third and fourth quarters of 2000, medium- and heavy-truck sales were down 32%, and commercial waterway tonnage was down 10% in March.

"The economy may be a little soft, but our customers still have short leadtime must-arrive-by dates ... even if orders are not as frequent or as large," says Al Giunchi, director of distribution logistics at Hartz Mountain Corp. "We are always concerned about the financial health of our service providers," Giunchi continues. "I get calls every day from carriers requesting loads and my carriers are receiving buyout requests [from other ailing carriers]. We tell these 'out of the blue' carriers that we have a tough time keeping our current providers busy with shipments. None of the asset-based carriers are blowing our socks off with their rates, but brokers are another story. We help our carriers out because, during good times, we are the customer that gets that last-minute trailer or driver," Giunchi adds.

"A tight economy equals limited capital dollars," adds Pino of Modine Manufacturing. "Thus, we have less to invest in technology, infrastructure and other improvements to our supply chain."

• Pending legislation. There is plenty of transportation legislation on lawmakers' plates, both nationally and locally. On July 19, 2000, after earlier approval by the Ground Transportation Subcommittee, a bill calling for mandatory national federal fuel surcharges for truckload carriers and their drivers was approved by the House Transportation and Infrastructure Committee. NASSTRAC and other shippers continue to voice opposition to this legislation, which is now in the House.

The House and Senate have also reached an agreement regarding the DOT's appropriations bill. The agreement allows the DOT to continue work on new hours-of-service rules for truck drivers. However, the DOT cannot issue final rules before October 2001. The proposed new rules would require drivers to rest for 10 consecutive hours in every 24-hour period, as well as take two additional hours off during the remaining 14. Weekends, or their functional equivalent, are also reserved for rest; compliance would be monitored through black boxes in truck cabs.

At the local level, Pino says, "We must fight city/town legislation trying to restrict truck traffic and commerce to specific times of day, specific roads, etc."

• Driver supply. Driver supply remains an area of concern for shippers. Not too long ago, consideration was being given to whether or not 18 year olds should be able to drive 18-wheelers to help alleviate the labor shortage problem.

With the aforementioned legislation still pending, the driver supply shortage is expected to remain a problem for the foreseeable future. As Kevin Mendel, general manager, collaborative transportation for Best Buy, puts it: "The driver shortage issue is less of a concern this year, but the DOT hours currently under debate would change the way we do business today, in the form of pickup timing, rating, etc."

• Capacity. The manufacturing slowdown, which started in third quarter 2000, has taken thousands of trucking companies out of business. Once manufacturing picks up again, there is concern that there won't be enough trucks to cover all the freight, especially in the flatbed sector where Schneider National recently announced shutdown of its flatbed division. Mendel says, "We have concerns, specifically in collect freight. This is a very large growth area for us, and we are busily looking for additional capacity, not for right now, but for coming years."