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Hard Road Ahead for the Trucking Industry

The NJBIZ Interview – Myron ShevellMyron P. “Mike” Shevell is an elder statesman of the transportation industry who has 55 years of experience running companies. Shevell, 72, is chairman of the Shevell Group, a trucking and real estate concern that operates 10,000 trucks in the United States, Canada and Puerto Rico. He is chairman and CEO of Elizabeth-based New England Motor Freight, the Shevell Group’s flagship company, and is also chairman of the New Jersey Motor Truck Association and vice chairman of NJ Transit. Shevell spoke with NJBIZ Staff Writer Shankar P. about the road ahead for the trucking industry.

NJBIZ: Tell us a little about your companies.

Shevell: On July 1, we completed 30 years after I bought New England Motor Freight (NEMF) from Farmland Diary. The Shevell Group is now made up of about 50 real estate holding firms, and six transportation firms—Eastern Freight Ways, Apex Logistics, New England World Transport, New England of Canada, NEMF and New England World Transport Carrier Industries. We have about 5,000 employees, of which between 1,500 and 2,000 are in New Jersey. We have locations in Elizabeth, South Brunswick, Edison, South Plainfield and Pennsauken. Our group’s annual revenue is north of $415 million.

NJBIZ: How is business?

Shevell: Business is not good. Business is flat. First of all, there is a major upheaval in the housing industry that affects so much of our business and all other businesses. Building materials of all kinds are in a depressed state. People are not finding the money to remodel their homes and do the things that they would normally do because now their mortgage obligation has become a very difficult thing because of the subprime mortgage problem that has now come about. Our industry [trucking], the railroad industry and, to some degree, the airfreight industry are the catalysts that show what business conditions really are. The situation is going to get worse.

NJBIZ: There is talk of a serious shortage of truckers.

Shevell: It’s not a serious shortage, it’s a crisis. There is a shortage of 40,000 truck drivers in New Jersey alone. And it’s going to get worse as new regulations come in for homeland security at the ports. Probably half the drivers that are running in and out of the ports are illegal immigrants. Once the new rules are put into effect, I don’t know who will move the containers.

NJBIZ: When does this take effect?

Shevell: It was supposed to be last March, but it was stalled. The law had been passed and was signed by the president. So this is a matter of time and this is going to happen. We also have a shortage of mechanics —they are almost extinct now. At our group, we have our own 200-and-some mechanics, but we don’t have any of them trained to take the engines apart for the newer generation of trucks. If these new trucks get on the highway and start breaking down—let’s say, you are someplace in Maryland or up in Maine—I don’t know who is going to fix them.

NJBIZ: What happens if trucking and logistics companies are compelled to employ legal workers?

Shevell: It will push up everybody’s costs. You got the driver crisis, and then we have the [truck] crisis. A truck that cost $55,000 in 2001 costs close to a $100,000 today because of compliance with the new emissions standards. It also impacts fuel efficiency. We were doing around seven miles a gallon, depending upon the terrain, the load factor and the wind; now we are down to 5.5 miles a gallon. And I’ve got to tell you something else. Most of the shippers are not aware of these issues. Some of them live in a dream world.

NJBIZ: New Jersey’s logistics industry must have a lot to be happy about with the ports and the fact that the state is a distribution hub for the Northeast.

Shevell: It does, but the tax structure hurts this very seriously. New Jersey’s ports have competition they didn’t have in the past. For example, the port in Norfolk, Va., that has just come online has huge, deepwater ports that can handle the megaships, both in terms of unloading but also with the highway system to move them.

Now you take New Jersey. To upgrade our highway system, we were supposed to start building a Portway freeway about 12 years ago. The only thing that has been built is the Doremus Avenue Bridge [in Newark]. If you are going to get in there with 1,000, 2,000 or 3,000 containers on the megaships, I don’t know how you are going to discharge them. I don’t know how you are going to get them out of the port.

NJBIZ: As chairman of the New Jersey Motor Truck Association, what are some of the policy reforms you are pushing for?

Shevell: We want to get the roads and better highways so we can move our equipment much freer. We talked about building a freeway just for trucks, which was supposed to be the Portway, and we were to have some lanes just for trucks. But the cost is so prohibitive that none of this is taking place. We had the blessings of everybody, but you’ve got to have the money to do it.
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