Good things are worth waiting for, a conclusion reached by most of the logistics industry when President Bush finally signed the Highway Bill into law in late July—nearly two years after it was due. The final bill not only guarantees that $286.4 billion will go toward maintaining and improving the nation's transportation system over the next six years, but it also deleted a controversial provision that would have mandated fuel surcharges in the trucking industry.
The fuel surcharge provision was mostly the brainchild of the Owner-Operator Independent Drivers Association, which argued that the surcharge was necessary to force larger truckers and brokers to pass along to smaller operators the fuel surcharges they collect from shippers. However, shipping groups like NASSTRAC and the National Industrial Transportation League put up a powerful fight against the proposal.
John Cutler, the Washington-based general counsel for shipping groups like NASSTRAC and the Health and Personal Care Logistics Conference, says that many shippers already have fuel surcharge agreements in their individual contracts with shippers. A federal mandate likely would have resulted in shippers paying for fuel increases twice.
"The idea of making it mandatory was very troubling," says Cutler. "The legislation required it only in truckload contracts, but who knows if things would have stayed that way. Trucking is largely a deregulated industry, and it seemed inconsistent with deregulation for the government to identify one segment to provide protection against inflation. The provision protected truckers at the expense of shippers and consumers, and that seemed wrong to us."
HOS still in flux
The fuel surcharge victory was offset by Congress' failure to address the hours-of-service (HOS) rules for truck drivers. That means the Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) must issue a new HOS ruling by the end of September. Truckers and shippers thought they had a new set of rules in place at the beginning of 2004, but a court challenge last year has thrown the regulations into a state of flux.
The FMCSA implemented new hours-of-service rules last January, the first major change to the rules in six decades. But those rules were challenged by several organizations that promote highway safety, led by Public Citizen. The rules were eventually vacated by the U.S. Court of Appeals in Washington, requiring the FMCSA to revisit several sections. The ruling created considerable confusion until Congress passed a temporary extension of the new rules in September 2004. That extension expires at the end of this September or when a revised rule takes effect, whichever comes first.
The court called the HOS rules "arbitrary and capricious" for their failure to consider their effects on driver health. Among their provisions, the rules allow an increase in driving time to 11 hours a day from 10, while at the same time limiting drivers to a 14-hour work day, down from 15 hours, followed by 10 hours off duty. Drivers resting in a sleeper cab can divide their 10-hour required rest period in two. Drivers are limited to 60 hours on duty in a seven-day period or 70 hours in eight days, but can restart the clock after 34 hours off duty.
The court said that the agency had not sufficiently explained the effects the rules would have on driver health. Shippers fear that if the 2003 hours-of-service rules are made more restrictive, they'll be taking a double hit—their costs will go up and service quality may go down.
"While Congress included several initiatives that we believe will improve highway safety, we are disappointed that they failed to codify hours-of-service regulations," says Bill Graves, president of the American Trucking Associations. "We remain concerned that Congress' inaction on hours-of-service will negatively impact overall highway safety and force the revision of a rule that took eight years to write and is successfully serving its intended purpose."
While the revamping of the current HOS rules could contribute even further to the truck driver shortage, some relief is presented in the highway bill in the form of $5 million for new driver training and recruitment. The funds come at a time when the trucking industry is experiencing a nationwide shortage of 20,000 professional long-haul truck drivers. The ATA projects that figure will increase to 111,000 drivers by 2014.
ATA is also concerned that the highway bill continues to allow a limited number of tolls on existing interstate highways. Graves says that ATA believes that tolls are an inefficient funding mechanism that double-taxes motor carriers and causes substantial diversion of traffic to other, less-safe roads.
Expect delays
Overall, most industry observers grade the bill in the B range, although Tim Lynch, president of the Motor Freight Carriers Association, says that too much funding went to pet projects and not enough was done to address highway congestion. He says that the government and industry need to address how funding will be achieved for the next highway bill.
"We need to take a serious look at the whole revenue stream to support the highway program," he says. "Tolls or other fees were not fully addressed in this legislation but they've been put out there seemingly as calling cards to be seriously looked at. Our highway needs and congestion needs are larger than [the budgeted $286.4 billion]. We need to look at where the bottlenecks are. If we have significant congestion in 10 to 20 major metropolitan areas, we need to focus some resources there, particularly if we ask the users of the system to pay for it. Not addressing this will hurt productivity and the competitive position of U.S. manufacturers."
Gartner, Inc.