Bob Voltmann, president of the Transportation Intermediaries Association (TIA), made an interesting presentation a week or so ago during a conference call hosted by Wall Street investment firm Stifel, Nicolaus & Co., regarding a variety of challenges facing the transportation industry in the near-term – notably how to fund a long-term highway bill.
Yet it’s the regulatory changes now heading full bore at the trucking industry that really have him worried – especially in terms of how they might upend the tightly-strung supply chains that support economic growth here in the U.S. and around the world.
For example, take the final rule regarding electronic logging devices (ELDs), which is expected to be issued this fall and be fully implemented by 2017. Voltmann (seen at right) explained that to date many larger carriers went ahead and adopted ELDs on their own to get ahead of that mandate; a decision that is now completely altering conversations between them and their customers regarding on-time delivery expectations.
“In meetings with shippers about service failures, they are not called ‘service failures’ anymore – because these are service levels they can no longer legally achieve,” Voltmann said on the call. “So even if think your carrier is operating legally [within the hours of service (HOS) rules] ELDs are going to be a game changer.”
That’s not the only issue ELDS are creating for trucking and those that rely on the industry to haul their freight, he stressed.
“If we continue paying drivers by the mile, they will only have a finite number of hours to make all of their money,” Voltmann noted.
“One other thing is for sure – there will be no more fudge factor. If a driver is out of hours, they will be out of hours, whether in [a shipper’s] driveway or 15 minutes from home.”
That’s why he thinks the federal government’s policies in the trucking space are exacerbating problems in the main, not solving them.
Here are a few other items from Voltmann highlighted in his regulatory rundown:
- TIA is advocating for the creation of a National Motor Carrier Hiring Standard, one that would require that motor carriers be properly registered, carry adequate insurance coverage, and would carry something other than an “unsatisfactory” safety rating as defined by the Federal Motor Carrier Safety Administration (FMCSA). This would take the guesswork out of determining whether a carrier is safe or not to hire.
- Yet any such standard would rely on some major refinements to FMCSA’s Compliance Safety Accountability (CSA) program, namely that enforcement is applied equally in a standard way across all the 50 states while clearly defined “safety fitness” ratings are spelled out for carriers.
- Yet the final rulemaking designed to clearly define such “safety fitness determinations” via CSA – a rulemaking originally targeted for issuance later this year – is now expected to be delayed, leaving shippers and others “in the awkward and potentially dangerous position of having to assemble the pieces of the carrier safety mosaic on their own,” Voltmann said.
- The relaxation of the 34-hour restart provision within HOS put in place at in late 2014 expires at the end of September. If that rule gets “snapped back” into place, trucking productivity could drop 2% to 3%.
- Though the much talked about speed limiter mandate is unlikely to be fully implemented for three to four years, the preliminary rulemaking is likely to be published during the final three or four months of this year. The concern is that mandating speed limiters could create enough incremental constraint on the industry to cause further reductions in trucking capacity.
Yet the 900-pound elephant overshadowing all of those issues remains how to craft a long-term highway bill – and Voltmann is highly pessimistic that it will happen.
“The last fully funded transportation bill occurred back in 2005 and since then we’ve had 33 short term extensions including MAP-21, which was only a two year [funding] mechanism,” he explained. “The current extension expires at the end of next month (July) and will need to be amended again one more time.”
Why can’t Congress get a long-term highway bill enacted? Simple, Voltmann said: while everyone wants to build more highway infrastructure, no one wants to pay for it.
“The President proposed a $478 billion six-year bill but [offered] no funding,” he added. “The Senate is working on a five year bill but they don’t have a funding mechanism, while the House still working on its version.”
One roadblock, in Voltmann’s eyes, revolves around the lack of earmarks, believe it or not.
“When Congress did away with earmarks … it also took away a personal stake in transportation,” he said. “Like so many reforms, the consequences were not considered at time. If there is no gain for each individual member’s district, there’s no congressional pain, and thus no reason to take on the pain of a [fuel] tax increase.”
By TIA’s estimation, some 50 members of Congress are dead set against tax increases and they are enough to scotch any highway bill that calls for a tax increase.
Voltmann believes fuel taxes are the simplest and cheapest tax collected at any level of the federal government, but fuel taxes are declining as people drive more electric vehicles and more fuel efficient vehicles overall.
“Truckers support raising fuel taxes, [transportation] intermediaries support it, but unfortunately, members of Congress not support it. So I’m not hopeful we’ll get a [long-term] transportation bill. I’m afraid we will remain struck in ‘continuing resolution’ land,” he stressed. “And the closer we get to 2016 [presidential] election time, the less chance there is of this [long term highway bill] getting done.”
Not a pretty picture, to say the least. But those are just some of the difficult waters trucking must navigate in the coming months. The question will be how difficult they end up truly being.
And though that's a rather gloomy note to end upon, my friends, it's where I'll be stopping for a brief stretch to take a little vacation. I'll return to this space later in the month. Until then, stay safe out there on the roadways!