California is doubling down on its efforts to get older trucks off the road. The California Air Review Board (CARB) has been a formidable force in truck and bus regulation in the state, setting a strict set of laws that took effect in 2012, which most notably, set restrictions on the age of semi-truck engines fit for transport. In 2017, there were 80,000 heavy-duty trucks registered in California that were out of compliance with diesel regulation laws. In 2020, that number is estimated to have been reduced to 50,000, but CARB is continuing to close in on the trucks that are still out of compliance.
A new law has been put in place to suspend DMV registration of trucks that don’t meet CARB’s guidelines for emissions, which include minimum standards for particulate matter filters. Cost is a major reason that drivers avoid meeting the standards, which will eventually mandate that every truck entering the state has a 2010 model year engine or equivalent. Many semi-truck drivers had chosen to gamble with operating non-compliant vehicles, in the hopes of skirting the Air Resources Board enforcement arm altogether. This law should rope in the last batch of recalcitrant operators, as driving a truck without registration is hardly feasible.
What This Means for Drivers
Should the law work as intended, it would result in a significant number of owner-operators being forced to spend the money it takes to make their rig compliant, or leave trucking altogether, contributing to the national driver shortage. That being said, there are plenty of resources for finding the capital needed to bring a semi-truck up to standard. CARB offers grants for truck drivers, as well as links to financial incentives on their website.
It should be emphasized that CARB’s environmental guidelines apply to all semi-trucks entering in the state, with temporary passes for out-of-date trailers now being fully discontinued. As a result, it may be a good time to consider trading up to a new, cost-saving model now, when restrictions are just being put into effect and not likely to increase for a significant amount of time.
What This Means for Dealerships
It’s likely that the increasingly strict guidelines for efficiency are contributing to the decline in used truck sales, which are down as much as fourteen percent. New trucks and trailer-service industries could see a boom in the coming year however, with every new batch of trucks that falls out of compliance with guidelines every year. It’s possible that used trucks may not all be defunct as well. With the demand for used semi-trucks in decline, there’s potential for the cost-efficiency of retrofitting these vehicles to be on the rise. Dealers with access to a well-trained shop team familiar with CARB guidelines might consider purchasing used trucks on the cheap, with the intent of bringing them up to date and selling them to value-focused drivers.
Some Good News for Owner-Operators
Pressure has been relaxing in some areas, however. Trailer regulations set to take effect on January 1 of this year have been postponed for at least two years, giving manufacturers time to bring their products up to the new standards, which has the potential to positively impact trailer prices in the future. The changes largely mirror new federal greenhouse gas trailer regulations, which generally concern reducing weight and drag from trailer models. The U.S. Environmental Protection Agency is currently precluded from enforcing the federal standards however, as a case against the changes has reached the court of appeals in Washington D.C. This should give owner-operators some breathing room when it comes to upgrading their equipment.
A special exception for California in the Clean Air Act of 1963 makes it the only state with the authority to set its own regulations. They would be set to enforce GHG trailer standards, but for trailer manufacturers inability to meet CARB’s stringent guidelines in time for enforcement. The suspension is set to be lifted on January 1, 2022, and CARB will continue their work to vet and approve manufacturers in the meantime.
What to Expect Moving Forward
CARB has been clear about its intentions moving forward. GHG regulations for trailers won’t be moved up in timeframe, and manufacturers will get six months’ notice before trailer standards are enforced. California has only tightened its regulations on diesel emissions in recent years, however, and it’s unclear as to whether the current appeal to the EPA that’s paused federal trailer regulation will affect California’s special case for self-regulation. In general, it’s best for drivers to expect enforcement of environmental emission regulations and do the best they can to outfit their vehicle properly if they plan on operating in California. Dealers should look to stay ahead of the curve when it comes to the demand for new semi-trucks and adjust to the declining demand for used semi-trucks accordingly.
Whether you’re a driver that needs help with financing, or a dealer looking to expand your business, look towards Mission Financial to help you find the capital you need. Visit our blog to stay up to date with trucking regulations as they continue to develop.
How Dealerships Can Boost Their Semi-Truck Sales
If you’re involved with a semi-truck dealership, it might be no surprise to hear that used truck sales are significantly down from trends we’ve seen in previous years. In fact, the ACT reported that as of December, used semi-truck sales are down about 14 percent from last year. This has led to many reports of inflated inventory in many different dealerships across the United States, resulting in artificially low prices for many sellers out there.
While this may sound like good news for those aiming to purchase a used truck, it sparks concern for dealerships. This buyers market can be a large hurdle for dealerships to overcome, but one of the main keys to success in this business is tackling industry fluctuations with grace. Here are some potential ideas that you can use to diversify your truck sales and decrease the overstock of used trucks on your lot.
Why Aren’t Used Trucks Selling as Well Lately?
Before we can figure out how to solve the issue, it is important to consider where the dip in sales could be originating from. While the exact reasoning will vary dramatically by specific areas and dealerships, here are some possible reasons you’re not selling as many used semis.
The National Driver Shortage
One of the biggest factors that is likely playing into used truck sales figures is decreased overall sales. There is currently a severe nationwide driver shortage throughout the entire trucking industry. Drivers are retiring at a rate that cannot be replenished by the current number of new drivers making their way into this profession.
Overall, not as many drivers are entering the industry as would be ideal, and this translates to a lower customer pool for dealerships. Because the customer pool is smaller, this issue also creates an increased competitiveness between different dealerships for limited customers. This type of competition is known to drive prices down and minimize profit.
New Trucks Are Getting More Popular
Many dealerships have reported that they tend to sell newer trucks rather than used ones. New trucks are becoming increasingly popular, especially with younger drivers. With so many advancements in trucking technology, as well as the rise of autonomous trucking on the horizon, it’s often too tempting to resist the call of a shiny new ride that has improved features.
The demand for new trucks has risen even more severely with the ELD Mandate in full effect. New trucks are often already equipped, or at least more easily altered to meet the demands of the new logging devices. This added convenience and saved upgrade cost is often a big selling point for the consumer. Since this mandate is fairly recent, it will likely be affecting sale distribution for the remainder of 2020. Don’t be surprised if the customers on your lot are looker for a fresher model than the stockpile of used semis that you have piling up.
What Can We Do About This?
While we can pinpoint a few potential causes of the decrease in used semi sales, fixing the issue is easier said than done. While there will be no magic fix for your used truck sales numbers, there are definitely a few things that you can do to try to encourage a more diverse buying pattern from your customers.
Increase Efforts for Used Truck Sales
Increasing the energy and expenses towards lowering your used truck inventory could definitely aid in dwindling the overstock. If you have an allotted budget that is dedicated to advertising and promotional materials, perhaps those funds can be redistributed more effectively. Try gearing your promotional materials towards this effort. Advertise the excellent selection of used trucks that you have. Promote the bonuses of buying a used truck over a new truck. Customers are also always very cost-motivated, so hyping up the affordability of your used trucks will be key.
Offering Incentives for Used Truck Buyers
If you and your dealership are in a good position to offer certain buying incentives for those looking to buy a used semi, it’s smart to do so in this current climate. Financial incentives will likely be the most effective, so if you can offer special pricing or discounts, that could definitely help you move product. Additionally, you can offer certain non-monetary incentives, such as offering a free or discounted service or add-on item. These sorts of things can motivate buyers who might have otherwise not have been interested in purchasing a used semi.
Diversifying Your Business
Overall, selling used trucks during a time such as this will be important, even if you’re selling enough new trucks to meet your goal numbers. Having a wide variety of sales is good for business in the long term. If you have this type of variety, you are less likely to be hit as hard when the market sways with trends and patterns.
Here at Mission Financial, we understand the intricacies of this industry. If you need help with any sort of dealership lending, small fleet loans, simple interest inquiries, or add-on coverage, we are here to help.
You may have been hearing the buzz about a new bill that is rocking the transportation industry. Assembly Bill 5 has been a massively controversial development for both carriers and drivers. For years, the trucking industry has made a name for itself as a place where independents and entrepreneurs can thrive, but many industry experts are saying that this bill threatens the nature of that current model. Assembly Bill 5, also called the “Employees and Independent Contractor” bill, or simply AB5 essentially reclassifies employees who may have previously been able to call themselves independent contractors.
Recently, it was decided that truckers would be granted a preliminary injunction from the California Trucking Association to cease the enforcement of AB5. While it might not necessarily be affecting us immediately, it’s important to read up on the potential outcome if the current pardon is lifted. This is especially important since the injunction may or may not be final.
Many big employers in the transportation industry choose to classify their workers as independent contractors. This was previously a bonus for workers, as there was increased flexibility for hours and hauls. Companies such as Uber Freight have been providing increased opportunities for drivers while also increasing the pool of potential drivers to combat the nationwide shortage. The enforcement of reclassification will greatly impact how these companies structure their hiring policies. Before we dive into that, let’s nail down the details of the actual legislature.
The Basics of the Bill
Back in September, the bill was signed by the governor of California, Gavin Newsom. It was described as being “necessary and important” for the workers of the area. The intended purpose is to protect workers from being deprived of benefits and other perks that full-time employees are entitled to. If an employee is technically working full time for a carrier, while still technically being classified as a contract worker, the company isn’t obligated to provide them with the benefits of a traditional full-time employee.
This legislation includes a strict basis for the rules of independent contracting. This is called an “ABC” system. First off, (A) the worker is free from the control and direction of the hiring entity; (B), the worker performs work that is outside the usual course of the hiring entity business; and (C), the worker is customarily engaged in an independently established trade, occupation, and business. If a worker fits all of these requirements, they are eligible to be considered independent. This is a much more restrictive system than the one previously in place. It is also the hiring entity’s responsibility to enact these standards, not the responsibility of the employee.
Controversy and the Impact on Drivers and Carriers
This bill would impact the trucking industry severely, as a massive percentage of drivers fall into the category of independent, and they usually also sell their services to carriers, whose main business is transportation. This puts independent truckers in the category of being inside the usual course and disqualified from part B of the ABC system.
So, while the intent of this bill was to get benefits for those employees, many industry experts disagree and argue that these restrictions on independent employees are actually going to severely harm employment levels and driver quality of life. If carriers and employers are forced to start employing people full time that they were previously only contracting, it’s going to be much more expensive for them. This is expected to cause a significant dip in employment opportunities for California drivers since carriers and companies will be hiring less and overall being more selective about who they hire.
This bill could be especially impactful for the trucking industry since California is a huge state for the industry, as it has countless massive ports and facilities. It’s generally a big hub, and previously many drivers have flocked there for these opportunities. Now, industry professionals are not so sure that this trend will continue, as the opportunities might become less plentiful. It is likely that some of the smaller, less stable companies and a large number of owner-operators based in California will not survive this legislation, or at least be forced to relocate to outside of the state of California.
What to Expect Moving Forward
So now we’re all wondering “what’s next?” While we will have to wait and see how legislative bodies respond in the long run, and in the meantime, there are a few things that we know going forward. There was a hearing on January 13th that extended the restraining order granted for truckers against AB5 that was temporarily put in place back in December. The injunction was technically won by advocates from the transportation industry, but there will be a final court case in the upcoming months to reach a final conclusion. The timeline of this process is still up for debate. While the trucking industry is safe for now, many are still left guessing about the future of their business models.
The transportation industry is a complicated tapestry. Fortunately, we are here to provide clarity and to keep you up to date with all of the latest news and updates. If you’re looking to get involved in the industry, Mission Financial can help you get started!
5 Tips for New Semi-Truck Drivers
While being the owner-operator for a semi-truck can be hard work, it can be equally as fulfilling. If you’re new to the industry, you may be asking yourself a lot of questions about what success looks like as an owner-operator. First thing’s first, now is an amazing time to be getting into the booming transportation industry. New retail surges and the growth of online commerce has led to a higher demand than ever, resulting in a national driver shortage. This demand creates better opportunities for drivers, so you’ve made a smart decision by joining now.
Once you get into the business, there are many things that you can be doing to ensure that you flourish in this new role. Here are our best tips to help you achieve the most out of being an owner-operator.
#1: Choose the Right Truck
When it comes to purchasing your first semi-truck, the wide variety of options can definitely be overwhelming. You can go with a new or used semi, and both have their advantages and disadvantages. While a used truck may appear appealing originally due to its comparatively lower price, older trucks are also a liability for repairs. They have older parts and more miles on the engine, so you might spend more on maintenance than a newer truck. Additionally, with the newly enforced ELD Mandate, you may have to do some work to get the logging device that’s installed in the truck up to par.
While newer trucks have a slightly lower liability associated with them, it is easier said than done when it comes to purchasing. You will have to invest more money upfront due to the overall higher cost. If you don’t have a sizeable amount saved up in the bank, a new truck might not be as realistic of an option for you.
#2: Plan for Repairs
Planning for repairs is crucial, and it is a big part of every trucker’s life. If you own your truck, you are often responsible for these costs, so it is important to put money aside consistently to manage these costs effectively. Do thorough research and try to best determine your annual maintenance cost, and then put additional funds aside in case of a breakdown or other unexpected damage.
While each semi-truck is unique in terms of exactly how much care it’ll need, consider the mileage, age, collision and damage history of yours to formulate your savings. Additionally, if you sprung for a new truck that came with a warranty, don’t expect that it won’t necessarily need repairs. Even the newest trucks can have issues that won’t be covered by a warranty. Be sure to take good care of your truck; it’s a major money-making tool. Good care can minimize the overall money that you’d dump into repairs that were warranted by poor maintenance.
#3: Put in the Effort
We all want to have a profitable career. The average successful owner-operator makes anywhere from $1.00-$3.00 per mile, but what exactly does it take to make money as an owner-operator? Well, it mostly just takes pure effort. You have to put in the work to reap the benefits, as most carriers or clients won’t offer a salary payment system. Most drivers are paid by the mile or sometimes by the hour. This makes it so that your pay directly correlates to the type of work that you put in. Don’t expect a big salary in this position if you’re not willing to take on ambitious hauls. If you’re looking to make the big bucks, open yourself up to longer and bigger hauls.
Additionally, taking fewer days off in between hauls will not only boost your profits, but it can make you a more attractive option to potential carriers who are trying to get their cargo moved as quickly as possible.
#4: Seek out Successful Carriers
If you’re in this for the long haul, pun intended, job security is key. Look for an employer that is doing well themselves, as that gives more potential to your future with them. With the national driver shortage, many carriers are struggling, but as a driver, finding ones that still manage to be profitable will open up many more possibilities. Finding employment with a booming carrier translates into more hours and increased job security. Massive corporations such as Amazon, Walmart, and Uber have all been flourishing in this new modern age of trucking and have continuously been hiring while the driver pool of others has been dwindling.
#5: Define Your Goals and Habits
This is a big one. Before you get lost in this complex industry, it is important to figure out which route you’d like to pursue. Decide if you’d like to be signed onto a carrier, or possibly drive independently for a company such as Uber Freight. While there are pros and cons to each, the best choice will depend on what lifestyle you crave. While working independently provides freedom and flexibility, it’s not as consistent or dependable. Consider your unique needs and adjust accordingly.
Getting involved in the trucking industry can be confusing and complicated, but luckily, Mission Financial is always here to help you out. Check out our comprehensive blog for industry news and more tips like these!
How New Legislation May Impact the Commercial Trucking Industry
As we finish out 2019, we gain some additional insight as to how we can expect the transportation industry to look going into 2020. This year was an especially busy year, with a significant uptick around the holiday season. We’re finishing out 2019 with more freight activity than ever. The rise of online retail paired with increased demand for quick and immediate shipping services has fostered a demand for shipping and carrying services at a bigger capacity than in previous years. FedEx is estimating a holiday load of 510 million individual packages to be delivered this year, a staggering figure. The busy holiday season truly exemplifies the growth of the industry as a whole. It is from this that we gauge where we are headed in the future. Here are the big ideas that truckers can expect to be addressing in 2020.
New Overtime Laws
One of the most controversial policies coming into effect in the year 2020 is about overtime regulations and pay. It’s expected to impact the jobs of 1.3 million Americans who might be in for some extra cash. This affects a smaller portion of the community, as it is most beneficial to drivers who are paid by the hour. For reference, most truckers are paid by the mile to avoid inflation of rates during traffic fluctuations. This new change will mostly affect carriers and those working in facilities and ports. This rule would increase the salary threshold for who is and is not exempt from overtime pay. It lifts the threshold from $23,660 up to $35,568, a significant increase.
Additionally, it places regulations on what can and cannot be considered salary. Only up to 10% of commission earnings or bonuses can be counted towards a “salary” when it comes to being eligible for overtime pay. For example, say an employee makes $25,000 annually and brings in about $10,000 of commission. According to this new legislation, you can only estimate their income as being $26,000. This is permanent and not adjusted every three years as it was in the Obama-era counterpart.
And finally, employees must pass something called a “duty test” in order to properly determine if they qualify for overtime pay consideration. This is to ensure that the types of tasks they complete on a daily basis line up with the proper descriptions set by the Department of Labor.
Drug and Alcohol Clearinghouse
The Drug and Alcohol Clearinghouse is a new set of rules and regulations that is scheduled to be implemented on Jan. 6, 2020. This system will work to provide more substantial information to employers about their employees. This Clearinghouse is a modern online database. It provides potential employers to see previous drug and alcohol violations that someone might have before making a decision about hiring them.
Previously, it was very easy for drivers with serious drug and alcohol violations to remain undetected when they looked for new jobs in different areas. The trucker life is fairly nomadic as it is, and the consistent moving made it difficult to keep track of a driver’s history when they moved to a new state. Drivers who have poor criminal records would simply move around frequently to avoid unemployment, but this led to high risk drivers and poor quality control. This database transcends state lines and allows for a more accurate view of potential hires for carriers. It aims to more effectively uphold quality, safety, and legal standards and overall make for a better employee pool for companies to pull from. While this is good, it makes the pool of candidates smaller, which adds to the national driver shortage that the industry is experiencing right now.
The Effect of the ELD Mandate
The ELD Mandate has been in the works for years, but the deadline for implementation is finally upon us. While this originally was supposed to improve safety and productivity, many industry experts fear that it may be doing the opposite. This new regulation requires special Electronic Logging Devices to be installed in all commercial trucks. With new ELDs, you cannot reclassify your drive time and there is a speed threshold sensor to log your drive time only when you’re traveling at five miles per hour or more. This particular feature of the program is controversial with many drivers, as sitting idle in traffic does not count towards your pay scale with this type of logging.
The implementation has been coming since 2017, but the deadline for switching is here and many of us waited until the very last minute to make the switch. Going into 2020, many drivers are going to require training on the usage of these new devices. Training drivers gradually wouldn’t have interrupted productivity in an excessive way, but many companies choose to do it all at once right before the mandate took effect. Industry experts predict that productivity at the start of the 2020 year will be decreased due to the sudden adjustment of many major carriers.
The holiday season is immensely busy for the trucking and transportation industry. With the drastic focus on consumerism that’s associated with this time of the year, retail sales soar in preparation for holiday gift-giving. While most people don’t think twice about where their selected gifts come from, truckers and carriers understand the intense efforts that need to happen before people can get their packages in the mail or pick up their Christmas ham at the grocery store. Many of the purchases made during this season come from around the nation, and even across the world, and the trucking industry makes it all happen. Here is our insight on how this booming industry is impacted by the holiday season.
The Growth of E-Commerce and Retail Sales
With the rise in online shopping jumping 16.9% last year, the demand for drivers is only expected to increase in upcoming years, especially during the holidays. A large amount of the freight during Christmas time consist of gifts and extra retail merchandise that result from deals and sales. The holidays have always been the busiest time of the year, but with the exponential growth of online shopping, it’s not uncommon for many businesses to rely on holiday business to get them through the rest of the year. The extra cargo can mean more truckloads, stricter deadlines, and longer hauls. For consumers, this can be a means of easy and quick delivery of gifts and treats, but for the transportation industry, it means extra work to make it all happen.
Carriers are doing more daily loads than ever and it’s only increasing with each year. In fact, UPS is expecting a five percent year-over-year increase between November 29th and December 30th this year as opposed to 2018 numbers.
FedEx will be shipping approximately 510 Million individual packages from Black Friday to New Years. Many companies choose not to hire seasonal help, especially with the national driver shortage making it harder to find additional drivers. Usually, only the massive scale carriers such as Walmart and Amazon hire huge amounts of seasonal help to make up for the increased loads.
The rise of e-commerce brands such as Amazon have changed the shipping game for everyone. Amazon’s famous two-day shipping has prompted everyone to step-up to the plate and speed up their shipping. Since the boom of Amazon Prime, another powerhouse in retail, Walmart.com, has also begun offering two day shipping. Both have really amped it up recently, offering one day shipping on thousands of items. While this is convenient for the customer, it adds an immense amount of pressure on the transportation companies responsible for fulfilling all of these demands.
Not only is the industry being blasted with retail shipment, but this is also a busy time for grocery shipments as higher quantities of many items are needed to satisfy the demand. Your delicious holiday turkey doesn’t just appear out of thin air, it was most likely delivered to your store by a carrier. The high demand for these types of seasonal items makes for shipment overtime. Food transport is especially busy due to the time-sensitive nature of transporting food in a short enough window of time to maintain freshness, which is a tricky balance to find when you’re short on drivers or facility workers, as most major providers are lately with the employment shortage.
Pressure on Carriers
Many companies who previously only operated during the daytime may switch to being 24 hour operations to accommodate the massive hoards of product that need to be transported. This effects drop-off and pick-up timed appointments. Smaller or private carrying companies are often left scrambling for workers to work more hours on the road or manage hand-offs at facilities, but many choose to offer various perks to incentivize the occupation of these extra hours.
Potential Bonuses for Drivers
Drivers are in higher demand than ever. To keep up with the demand, many companies are offering perks such as additional overtime pay or a holiday bonus to demonstrate their appreciation. This is especially true if you end up working on any actual holidays such as New Years Day or Christmas. Holiday pay is usually especially lucrative, and while it might seem unappealing originally, many drivers really enjoy it. Driving on a Holiday is supposedly very peaceful, as most businesses are closed and roads are somewhat empty. Additional hours often mean overtime pay as a reward for picking up those longer routes. Overtime pay is often as much as “time and a half” which can greatly boost your overall yield. Keeping drivers motivated and happy will be crucial to fulfilling the heavy demands this seasons.