average truck during that span. The costs of these
unfunded mandates have yet to be recouped, so they
will be passed on to shippers in the form of higher
prices, Hodges told the gathering.
“That’s a bubble on the horizon that’s getting ready to
pop. You’d better get ready for it,” he warned.
The cost of replacing aging truck equipment is another concern. Albrecht said in his presentation that the
average heavy-duty tractor and dry van trailer is older
today than at any time in the past 10 years. What’s more,
new tractors cost $34,000 more today than in 2001, and
maintenance costs—driven by rising materials prices—
continue to climb, he said.
Compounding the dilemma is the imminent shortage
of drivers as the federal government’s new driver safety
measurement program—CSA 2010—forces carriers to
purge their fleets of drivers who are considered unsuitable risks under the CSA guidelines.
Albrecht said the trucking industry has exhausted its
options for mining labor from such depressed indus-
tries as construction. “If people haven’t decided to be
truck drivers by now, you’re not going to pull them out
of the unemployment lines,” Albrecht said. He deemed
the driver shortage an “incredible nightmare.”
The result of all this is that dry van rates per loaded
mile—an important pricing indicator—have begun to
climb. After hitting bottom in 2009, rates rose modestly in
2010 and are expected to spike in 2011, Albrecht said. He
compared the current situation to 2002, when shippers
lost their leverage over dry van rates and prices began a
steep upward climb that continued for the next four years.
So far, the trucking industry is getting by with general rate increases in the 5. 9 percent neighborhood for
2011. For their part, several carrier executives believe
continued technological innovations and productivity
improvements will offset the need for annual rate
increases beyond the mid single-digit range. “There’s a
lot of opportunity to reduce expenses across the supply
chain,” said Jack Holmes, president of UPS Freight, the
less-than-truckload unit of UPS Inc.
Although the extent of the hikes remains a matter of
speculation, this much is clear: Rates have been down so
long that with the economy improving and costs rising,
there is only one direction for prices to head.
“We are telling our customers that the general trend is
up,” said John Wiehoff, chairman and CEO of C.H.
Robinson Worldwide Inc., the nation’s largest freight
broker. ;
—Mark Solomon
5,500
The number of fatalities in the United States during
2010 as a result of “distracted driving,” defined as
either using cell phones or texting while driving.
SOURCE: TRANSPORTATION SECRE TARY RAY LAHOOD, SMC3 WINTER CONFERENCE
Intermec Inc. announced on Jan. 18 that it will acquire
Vocollect, a provider of voice-directed systems, from the
Boston-based private equity firm Riverside Partners.
The boards of directors of both companies have
approved the $190 million all-cash offer, according to a
statement issued by the two companies. The parties
expect to complete the deal by the end of the first quarter of this year. Once the transaction has been completed, Vocollect will become a wholly owned subsidiary of
Intermec.
Intermec offers rugged computers, data collection systems, bar-code printers, and other automatic identification and tracking devices. In announcing the deal, the
company said it expects the Vocollect acquisition will
broaden its warehousing and software-oriented offerings. In addition, it expects the merger to pave the way
for the use of Vocollect’s voice solutions in new markets.
“This acquisition is a major step for Intermec in build-
ing a software-centric solutions business in the ware-
house,” said Patrick Byrne, Intermec’s president and
chief executive officer, in a prepared statement. “The
adoption of voice in the warehouse is developing rapid-
ly, and we expect this technology to provide significant
long-term growth opportunities for Intermec.”
Joe Pajer, Vocollect’s president and chief executive
officer, said, “Working together, we believe we can
accelerate the adoption of voice-centric solutions on a
global basis and create new innovative warehouse solu-
tions capabilities for our customers and partners.”
Upon completion of the transaction, Pajer will lead the
Intermec Voice Solutions business and report to Byrne.
Intermec expects the Vocollect business, which generated about $120 million in revenue in 2010, will grow at
a double-digit pace. Intermec reported revenues of $379
million through the first three quarters of 2010 and
expects fourth-quarter revenues will be in the range of
$196 million to $199 million. ;
—Peter Bradley
