Autonomous Vehicle Sales Likely to Increase

It’s no secret that technology is at the forefront of most industries today, including trucking. With many successful pilot projects already completed, autonomous vehicle sales will likely increase. Many believe that the question is not if, but when.

Jack Roberts of Heavy Duty Trucking (HDT)/Truckinginfo writes:

These days, no one seems to question the inevitability of autonomous technology moving into the mainstream, although there’s little consensus on when exactly it will become widespread. At this point, the main question seems to be which transportation sector will it affect first – passenger cars or commercial vehicles.

A little boost to those who predict commercial vehicles will take the lead in adopting autonomous technology appeared last week via a report by Tractia, a global market research firm that focuses on human interactions with technology, which found that worldwide revenue from sales of autonomous trucks and buses reached $84 million in 2017.

Looking ahead, Tractia’s researchers found that the market will continue to develop at a strong pace over the next few years with more competition within the industry, providing significant opportunities to various industry participants, and reaching global revenue of $35 billion by the end of 2022. During that period, Tractia forecasts that annual unit sales will increase from approximately 343 vehicles in 2017 to 188,000 units in 2022.

“The potential for autonomous trucks and buses is huge and market growth is accelerating, with news of successful pilot projects coming at an increasing pace,” noted Tractia research analyst Manoj Sahi. “Considering the next two to three years as a make-or-break time, several prominent companies are prioritizing investment for large-scale development.”

According to Tractia, the report also looks at key drivers and issues affecting the adoption rate of autonomous technology today, including:

  • What is the current state of technology and market development for autonomous trucks and buses?
  • How will the market evolve over the next 6 years?
  • What are the key drivers of market growth, and the key challenges faced by the industry?
  • What are the bottlenecks in technology development?
  • Who are the important players in the market, and what are their products and services?
  • What are the future pricing trends for different vehicle types?

An executive summary of the report can be downloaded by visiting Tractia’s website.

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Why the Trucking Industry is Worried About NAFTA

One of President Trump’s top priorities is to rework trade deals so that they are fair to the U.S. But, what if leaders cannot reach an agreement and NAFTA ends altogether?

Published by Transport Topics, Connor D. Wolf | InsideSources.com (Washington, D.C.) writes:

 President Donald Trump has pledged to rework trade deals so they benefit domestic workers, but current efforts have sparked concern among industry groups, including trucking.

The North American Free Trade Agreement became a critical component in the national economy when it was implemented in 1994. The trade deal is now facing major changes as partner countries rework its many provisions – a process that has been marred by contentious negotiations and a possible pullout by the United States.

President Trump entering office became the catalyst for the renewed trade talks. He has been highly critical of current trade agreements like NAFTA which he sees as undercutting domestic workers. Industry groups generally agree that the deal should be updated, but have become increasingly worried about the direction talks are going.

“Compared to when we started I have to say I’m a bit more pessimistic,” American Trucking Associations chief economist Bob Costello told InsideSources. “I thought it was a great idea to update NAFTA. I think everyone was under the impression that it would be a lot easier than it’s been, and therefore I think reality has set in and we’re probably a little bit more pessimistic. But by the same token, I don’t think it’s all done either.”

The fifth round of negotiations in Mexico City, Mexico, ended with lingering tensions when they closed Nov. 21. The next round of negotiations is scheduled to begin Jan. 23 in Montreal, Canada.

NAFTA has been a major point of contention since it was first implemented over two decades ago. Critics have argued the trade deal has benefited large corporations or foreign workers at the expense of domestic workers. But to industry groups, the trade deal has been vastly more beneficial than not.

“From our perspective, NAFTA has been a win-win,” David French, senior vice president for government relations at the National Retail Federation, told InsideSources. “It has been very successful agreement by most measures. The flaws in the agreement can be fixed by negotiating. You’re not going to get the best agreement by threatening to pull out.”

NAFTA was negotiated as a free trade agreement between the United States, Canada, and Mexico. The agreement reduced or eliminated tariffs and other trade restrictions to open up more access among the partner countries. It was able to increase trade dramatically in the region.

“The vast majority of products that go over the southern border and the northern border involve trucks,” Costello said. “That’s generated $6.5 billion in revenue annually for our industry, and that means we’re employing over 46,000 people who’s jobs sorely depend on NAFTA, including over 31,000 U.S. truck drivers.”

President Trump hopes to use trade and other reforms to encourage domestic production – which could result in more jobs. But some domestic production faces barriers that other countries don’t have. Restricting foreign trade in certain circumstances could hurt both domestic companies and consumers by limiting the flow of goods they might rely on.

Mexico, for instance, is the only place in the world that can grow avocados year round. The country, as a result, supplies 45% of the global avocado market. Texas A&M University found in 2015 that avocado imports have helped to create roughly 19,000 domestic jobs along with $600 million in tax revenue.

“We really want no changes, no changes to trade,” Ramón Paz, strategic advisor at The Avocado Producers and Exporting Packers Association of Mexico, told InsideSources. “If we go back before NAFTA, we had a tariff of about six cents per pound. If they reapply that tariff it would have a cost throughout the supply chain. There would be changes for the growers and the shippers and everyone. But in the end, the most affected party would be the consumers.”

Industry groups and companies elsewhere have also been vocal in expressing their concerns and hopes throughout the renegotiation process. About a hundred companies urged federal officials in a letter Nov. 14 not to make major changes to trucking provisions. Food and agriculture groups also sent a letter Oct. 25 warning that withdrawing would cause significant problems for their industries.

Industry groups have been particularly concerned about the rhetoric coming out of the administration. The president has also proposed several contentions proposals which partner countries are unlikely to agree with. U.S. Chamber of Commerce President Tom Donohue called some ideas “poison pill proposals” which threaten to undermine talks.

“We’re hopeful but some of the rhetoric out of the administration hasn’t been helpful,” French said. “We’re hopeful the administration is just playing a game to achieve maximum leverage in the agreement but is ultimately interested in constructing a solution rather than tearing the agreement apart.”

U.S. Trade Ambassador Robert Lighthizer detailed during a congressional hearing June 22 that the administration plans to renegotiate trade deals to be fairer and more efficient, enforce trade deals more aggressively, and increase domestic exports. Those goals have been consistent talking points as the administration has discussed trade.

The disagreements and heated rhetoric have fueled concern throughout the economy. Many businesses rely on the massive trade deal which makes them vulnerable depending on how the negotiations end – while creating uncertainty in the process. Alliance of Automobile Manufacturers federal affairs vice president Jennifer Thomas notes that there are two bad outcomes that could potentially come from these talks.

“It’s hard to see how we end up in a good place at this point,” Thomas said. “At this point, we’ve been envisioning two scenarios. One where we’re looking at an unworkable NAFTA because we have an erroneous rule of origin that we’re having to meet, or that there is no NAFTA.”

Trump has said he is trying to make a better trade deal but is willing to pull out if not possible. Investment bank Goldman Sachs announced late last year that it expects the administration to ultimately withdraw from the trade deal. Industry groups warn that there would be immediate economic harm if the administration does decide to step away.

“We’re growing more concerned by the prospects of the administration using the treat of a withdrawn as leverage in the negotiations,” Thomas said. “And I think that if the president were to trigger a withdraw, there would be immediate ramifications. It’s hard to see how we could pick of the pieces at that point.”

Thomas adds withdrawing could undermine other achievements like tax reform which helps the business community. She also notes that withdrawing could create a lot of uncertainty across many industries. Costello warns that it would be disastrous for the trucking industry – which plays a critical role in trade.

“The NAFTA renegotiations are critical for our industry,” Costello said. “If it were to go south and we pullout, it would be disastrous for us. We obviously have a big stake in it and as a result, I’ve been following it closely.”

The American Action Forum, a center-right nonprofit, released a report Dec. 11 claiming that withdrawing from the trade deal could jeopardize 14 million jobs. The report also found that withdrawing could expose businesses to $15.5 billion in new tariffs and increase consumer costs by at least $7 billion.

The NAFTA negotiations are still ongoing so there is still hope for the business community. Reuters found in a survey Jan. 19 that the majority of economists expect the U.S. to stay in the deal – but there is still the issue of what the finalized reworked deal will look like. Industry groups are generally open to updating the trade deal – but are concerned over what the outcome will be.

“I think that we’re concerned about the direction that administration seems to be taking the talks,” French said. “I think that everyone agrees with the goal of modernizing the agreement. But too many times in the last several months the White House has suggested that maybe the outcome will be to pullout of the agreement, and that’s not a constructive approach.”

The national economy has changed in dramatic ways since the trade deal was first implemented. Technology, like new forms of communication, have shifted markets and opened up new avenues for international trade. The internet, for instance, has provided a whole new way to shop and conduct business.

“We went into this process thinking it was just going to be a modernization of NAFTA,” Thomas said. “We realized that this was going to be more than that and then we saw the contentious proposals that were tabled in the fourth round. Our industry [automobile manufacturers] really feels like we’re in the crosshairs at this point.”

Costello points to a cross-border trucking program that could be in jeopardy as the talks progress. The federal program allows Mexican truck drivers to make long-haul deliveries in the United States. The program is intended to reduce contentious interactions at the border – but it has also faced opposition.

“We’ve been supportive of the Mexican truck program,” Costello said. “It’s now an open door policy for all Mexican truck drivers to come across the border. But it is good and has the potential to be better. It’s a relief valve to clear congestion at the border.”

Trump was also able to upend another major trade deal before it was fully implemented by withdrawing from the Trans-Pacific Partnership (TPP). The agreement would have been the largest regional trade deal in history at roughly 39% of global GDP.

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What We Know About the ELD Mandate So Far

It’s no secret that adjusting to the new ELD mandate has been difficult for many drivers and companies. This article shares and analyzes a few takeaways you should be aware of going forward. However, hopefully, as time goes on, companies will learn to smooth out the process for all parties involved.

Heavy Duty Trucking (HDT)/Truckinginfo.com writes:

Since enforcement of the electronic logging device mandate started in mid-December, J.J. Keller reports that it is seeing problems with confusion whether a device is an ELD or a grandfathered automatic onboard recording device, as well as complaints about vendor support, and more drivers running out of hours due to delays.

 J.J. Keller Senior Editor Mark Schedler reports that its compliance experts are seeing four recurring themes:
  1. Drivers are not sure if they have an AOBRD or ELD in the truck, and enforcement isn’t certain either, due to the variety of devices now in operation.
  2. ELD-related citations are being issued in several states for AOBRDs, even though drivers were compliant with Section 395.15, which is the AOBRD regulation.
  3. Carriers who chose vendors with insufficient levels of customer support are feeling the pain in the form of frustrated drivers and a potential loss of equipment productivity.
  4. Drivers are running out of hours due to delays at customers, traffic, and major accidents, and/or are not getting credited with a full break because of starting on-duty time just minutes too soon.

Schedler offers a closer look at each of these:

1. Know the requirements of the device in the truck

This may sound basic, but drivers must be certain of which device they are using (AOBRD or ELD), and understand the requirements for the respective device. If you or the vendor didn’t provide adequate instruction on the actual device in the vehicle, this can — and is — resulting in miscommunication with enforcement.  

2. Incorrect citations and data transfer failures

There are reports of drivers with AOBRDs being cited (but not fined) for ELD-related violations. The violations have been primarily for “failure to transfer data,” when, in fact, AOBRDs are not required to transfer data – they only must display or print the required hours-of-service information. If your driver was incorrectly cited, the citation should be contested via the DataQs process, even though there is no CSA point impact until April 1, 2018. A pattern of ELD-related violations will be looked upon unfavorably in court and by insurance companies, regardless of CSA point values.

There are also several reports of data transfer failures with purported “ELDs.” However, drivers were not cited and were permitted to use the device as an AOBRD if the display was compliant. The root causes of the data transfer problems were likely ELD-related versus FMCSA system-related. Different enforcement districts may choose to correctly cite for the failure of a purported ELD to transfer data.

Data transfer issues and any other ELD malfunctions must be repaired within eight days. You can file for an extension with the state FMCSA office within five days of the malfunction. If the vendor is unable to provide a compliant device, other actions to consider are reporting the vendor to the FMCSA and/or switching vendors.

3. Vendor support may be insufficient

Along with having a compliant device, customer support is one of the most important aspects of the vendor decision. Carriers are now experiencing the reality of their vendor’s customer support. There are 175 vendors and 278 models on the FMCSA ELD registry to choose from, and many do not have a strong track record in the AOBRD/ELD business. Blogs are filling up with unhappy stories of broken vendor promises and long waits for customer service responses.

Driver frustration with ELDs and AOBRDs can be reduced by a vendor with 24/7 support. If adequate time wasn’t devoted to training on data transfer procedures, edits, unassigned drive time, and other areas, a solid vendor can assist with this task. If things are bad enough, you might have to think about switching vendors.

4. Avoid and address potential hours issues

The hours-of-service regulations have not changed, yet there has been an increase in the reporting of drivers running out of hours before reaching a safe place to park. The burden is on the back office to consider drivers’ available hours and the expected hours for a trip, including potential delays at customers. Dispatching procedures must provide guidance on how to handle situations when there isn’t enough capacity to handle “priority” loads. Drivers cannot make the problem disappear.

Create, if you don’t already have, a safety procedure that addresses situations where a driver could be forced to leave a customer without enough hours to make it to a parking location. Personal conveyance or “off-duty driving” cannot currently be used as the back-up plan. If drivers run out of hours and must leave a location after failing to gain approval to park there, the electronic log must reflect the actual “on-duty driving” that occurred.

Instruct drivers to enter detailed annotations with the reason for any exceptions used or hours-of-service violations. Trends of violations are an audit concern, but an occasional well-documented instance of being over hours shows that you aren’t allowing continual unsafe practices.

The start date for full enforcement is fast approaching. Effective April 1, drivers will be placed out of service and Compliance, Safety, Accountability (CSA) points will be assessed for ELD-related violations.

Truck orders close out 2017 at 290K units

We all know the equipment needs for the trucking industry are growing.

Commercial Carrier Journal (CCJ) writes:

Class 8 truck orders closed out 2017 on a tear according to ACT Research, reaching 37,200 units and topping 30,000 orders the third consecutive month.

December order activity jumped 15 percent over November totals and were 77 percent higher versus a year ago, hitting their highest level since the 40,000-plus orders seen at the close of 2014.

“ELD implementation is now in full swing and will continue through the initial enforcement phase of April 1 of this year,” adds Jonathan Starks, ACT chief operating officer. “This is contributing to the tight capacity environment and is combining with strong freight activity to move freight rates higher. Our forecast continues to call for an increase in production for 2018, but market expectations are varied for 2019.”

The North American equipment market continues to show strength entering 2018, with Class 8 orders for the past 12 months totaling 290,000 units.

 

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