We hear a lot about a changing business environment these days. But the fact is, change is the business environment. If you take a close look at our industry over the past 5 years, you’ll discover an endless stream of product, technological and service changes. From virtually every company. The challenge fleets face, however, is not to survive change. But to create it, manage it, master it and profit from it. And doing that requires an awareness of the direction and the forces of change driving our industry.In order to better understand those directions and forces, we spent some time with Tom Donohue, President and CEO of the American Trucking Associations (ATA).

Here are some of his observations.

"For many years, trucking was caught in a state of perpetual adolescence. That’s because the industry was regulated on a state-by-state basis. That meant technological innovation didn’t come as quickly as it should have. Markets were protected. Good service was provided, but not nearly as good as the service that became available as our industry got more competitive.

"In the last 15 years, we’ve gone from being a protected industry to a highly-competitive industry that operates globally.

"Right now, our advantage over other competing economies is our ability to move goods better than

anyone else in the world. We have a phenomenal transportation system. It is second to none in the world. We have better roads, good railroads and even good seaports.

"That’s why our industry has half a million companies in it, employs 11 million people and does $350 billion dollars of business annually.

"But because of competition, globalization, increasing technological sophistication in both equipment and systems—as well as problems that have arisen—it is also an industry in an active state of change.

"If not, you’ve got to realize that the industry itself is dramatically changing from one positive perspective: there’s going to be a lot more business in the future.

"Between now and 2004, ATA forecasts indicate that we’re going to carry a billion tons more freight. We’re going to drive 29 percent more miles.

"We’re talking about eradicating the lines between LTL and truckload, and massive increase in the logistics business — asset-owned and non-asset-owned.

"We’re talking about gearing up to move freight all around the world with HUGE expansions of exports from the U.S.

"So when we’re making all these changes, we need more trucks and trailers to do it. But to be successful, we will need more productive, more carefully-utilized and more carefully-purchased equipment. And we’re going to need to give better service at a lower end-to-end price.

"I don’t like the word ‘control.’ I think the shipper is going to look for ways to have more dependability and service. He’s also going to look for ways to know his JIT inventory system will be serviced. He’s going to look for ways to know that his complicated, worldwide manufacturing system will be held together by an efficient transportation system.

"No question. Think of a plant that gets rid of most of its in-process or raw material inventory. The shipments had better be there or the plant will shut down. And, you had better deliver the goods at the other end.

"First, our dwindling supply of drivers. Why? Well, they weren’t born! There’s been a major demographic dip of males between 21 and 35 that we used to hire off the farms. There aren’t as many farms anymore and people aren’t learning how to drive when they’re 10 or 12. So what do we need to do?

"We need to recruit, find and train drivers. And pay them a fair wage so the profession is rewarding. That cost can be passed on to the shipper.

"The second issue is government regulation. (By the way, for the record, the ATA is THE safety organization. If you look at the numbers, we continue to drive down the rate of fatalities while we significantly drive up the miles.)

"Current OSHA and EPA regulations need more examination.

"We’re worried about OSHA and their ergonomic rules—in terms of the cab, work habits of drivers and accidents. We need to pay closer attention to the causes and effects of driver fatigue. And, we have to look at hours of service rules and regulations in the context of our modern highways. We need to build more highways, not just repair those we have. After all, we will have much more traffic in the future.

"Otherwise, we’re going to strangle an industry that is critical to the very economic prosperity of this country.

"We’re also concerned about the EPA and their tendency to keep changing regulations. EPA reports show massive improvements in clean air quality. Trucks are now a minor factor, because we’ve gotten down to very, very small percentages of pollutants.

"But we need a reasonable look at the clean air issue and regulations, or the future of diesel fuel may be in danger. If current regulatory trends continue, the amount of money we’ll need to spend on fuel refining, better engines and better operating techniques will drain our potential profits.

"And, that is money we will have to pass on—an equivalent, in my opinion, of 40 to 45 cents a gallon increase. That’s too much.

"Our industry will move the freight. The question is, at what speed? At what level of dependability? With what efficiency? On what kind of roads? What level of congestion will we create when we use more trucks instead of using trucks more efficiently?

"Our industry is going to be a lot more consolidated and more specialized. There’s no question we’ll have hundreds of thousands of trucking companies. But within specialized groups — refrigerated, car hauling, flat bed, etc — they will become more consolidated and more specialized.

"By doing that, they can get the economies of scale they need to serve core customers, respond to government regulations and use equipment efficiently.

"Our business is going to be more global, as exports increase. So if a shipper tells a trucking company, ‘This load has to go to Puerta Vallarta.’ The trucking company won’t say, ‘Sorry, we don’t go to Mexico.’ Instead, they’ll offer to find someone who does.

"But if the industry is going to become more inter-national, it also will become more intermodal. But in a different way than you may think. We’re going to use more boats, trains and airplanes—and trucks. With an increasing demand for more efficient, faster delivery, trucks will be even more important as a key ingredient of the air, rail and boat business. After all, we can see that at work now. A lot of air shipments are actually shipped by truck because of next-day or JIT delivery requirements.

"The industry will become more logistics-based. Logistics is critical to any shipper or manufacturer who wants a smooth transportation system. As shipping becomes more intermodal, more complex and more dependable, effective logistics management—internally or independently—will mean life or death for companies. (After all, JIT programs mean to the minute—not to the day, the hour nor the week.) And, we now have the logistics expertise and computer software to make major progress in transportation management.

"The industry will become much more technology-driven than ever before. You’ll see technology from computer-controlled engines to tracking and packaging identification, to communications and EDI.

"The fact is, technology will improve everywhere in the industry.

"Technology and trucks are going to get so complicated—so system-oriented—so integrated with one another. And that leads to another question—are we going to continue to do our own maintenance? Or, are we going to send it back to the factory or a regional shop where they have all the electronics stuff?

"We’re going to have plenty of freight. We’re going to have to find a lot more workers—and that is already a problem. We’re going to get all the sophisticated technology money can buy. We’re going to get better management. We’re going to operate more safely.

"But the single biggest problem we face, is how will we meet the sophisticated demands of our shippers and still deliver profitably.

"To do that, change must be the environment. Not just what people must face in the environment. We must change business strategies. Our views of regulations and their ultimate costs. And be more sensitive to customer requirements.

"It’s that simple. And that complex.