As economic pundits sit around debating whether the US economy is in a Recession or not, it has been obvious to those who watch the transportation industry that a freight recession has been underway for a number of months.
For many taking that view, there are also some longer range predictions that the malaise will be over before the end of this year; that housing and other industries will begin recovery in the latter part of the third quarter; and further that modes like trucking will begin to rebound slightly ahead of the more general recovery.
One of those anticipating just such a rebound is Edward M. Wolfe, senior managing director and the Airfreight & Surface Transportation Analyst for Bear Sterns. In issuing his annual overview last month, he titled the presentation, “In Like a Lamb, Out Like a Lion” and fully expects transport to lead the economy back in 2008.
Meanwhile, while waiting for the boost, the trucking industry is dealing with a number of chronic problems will still exist, even if and when business gets better. For the past three years, the American Trucking Associations has commissioned the American Transportation Research Institute (ATRI) to survey the industry and define the major matters being addressed by carriers. Its Critical Issues in the Trucking Industry—2007 was issued in October last year. Even in this short period of time, some of the Top 10 issues have changed their place in the order, moving up or down the list. Here’s a look at those 10 issues as defined last year with additional insights by ATRI’s vice president, Research, Daniel Murray.
1. Hours-of Service (HOS). While this was the top issue last October, edging out Driver Shortages which had previously been number one, its importance has diminished over the past few months. “I think HOS is a relatively stable issue and I would expect that would drop at least several places on our survey,” observes Murray. “This really came out during the height of the instability—court cases, interim rules and even congressional action. There were so many unknowns regarding HOS at the time that I now think we can go back to running companies with HOS in the background.”
The most recent District Court ruling preserving the 11- and 34-hour provisions of current regulations, the HOS controversy may be put on hold for quite a while.
2. Driver Shortages. Though this was a major matter in last October’s survey, with the lessening of demand for freight transport there has been less need for drivers. As always, it’s not just the need for drivers, but the requirement for those with good driving records and skills.
“Talk about a dull edged sword,” says Murray. “There’s an easing on the driver shortage issue because of how bad the economy is. But we all assume that’s a temporary situation.” As the overall economy recovers and demand for more freight movement ratchets up, so will the need for more drivers. It’s an issue that’s not going to go away.
3. Fuel Issues. The reason for this issue being third in October was given as the ability for carriers to recover some of the expense through fuel surcharges. Of late there is increasing focus at many levels on developing and using alternate fuels, ranging from ethanol to hydrogen and everything in between.
4. Congestion. This issue has moved up considerably from year to year as a headache for those using the highways. ATRI points out that average truck speeds and system reliability within many urban areas continues to decline. While several suggestions are offered to attempt to find initiatives to begin solving the problems attendant to congestion, there is obviously no panacea.
5. Government Regulation. While those surveyed in the October report weren’t specific on the matters that caused them concern, the sheer number of them were a burden. “When we went into the issue of Government Regulations,” recalls Murray, “as we surveyed this was a time of major rule making—everything from HOS to EPA engine standards for 2007, driver education. There’s even niche stuff, at least investigation of roll stability mandates on vehicles. They had done that on automobiles and everyone knows they are doing the same on large trucks.”
6. Tolls/Highway Funding. As the survey was conducted last year, the industry perceived an increase in the number of tolled roads in the US and the potential for what was characterized as the “balkanization of the US transportation system.”
Murray notes that as this Presidential election year moves on to November, Congressman James L. Oberstar, the powerful chairman of the House Transportation and Infrastructure Committee, is frustrated because he hasn’t heard the word “transportation” come up once from either set of candidates. “He’s getting really nervous,” claims Murray, “since there will be a new administration. One way or the other a new funding bill is coming to guide us for six years and no one seems to be carrying the torch on this one. All the more reason I think highway funding is going to become more prominent than less.”
7. Tort Reform/Legal Issues. “If there weren’t so many zealous lawyers, this might not be as major an issue,” says Murray. “When you look at government statistics, automobile drivers are responsible at a minimum—the smallest number we’ve ever seen—for more than 55% of all truck-automobile crashes. When the automobile driver is responsible for the vast majority of these accidents but the tort law allows you to sue the person with the deepest pockets, it’s very clear that no matter how hard we work to reduce crashes and minimize the truck driver’s responsibility, we’re going to have law suits. It’s essentially an equity issue and tort reform would fix that.”
8. Driver Training/Driver Education. This made the Top Ten list for the first time in last October’s survey report. In the short run, this issue will become more prominent. It will be extremely critical when the industry finally pulls out of this weak economic period. Murray speculates that there will be new regulations detailing minimum driver training qualifications. They will require substantial accreditation, including 120 hours of classroom and 44 hours behind the wheel.
“Trucking companies will have to become accredited schools if they do anything with entry-level drivers,” he says. “It’s sort of the perfect storm. When the next economic up tick hits, there’ll be a major driver shortage again and we’re building a system that almost will not allow us to bring new people into the market. So I expect this issue to go up a notch or two.”
9. Environmental Issues. Anti-idling regulations and other emission reducing efforts are having a strong influence on carriers. “I suspect the thing that’s put Environmental concerns in the Top 10 is its complexity,” says Murray. “For instance, we have air quality issues requiring 200 or 400 pound anti-idling devices which ironically may improve their quality but diminish fuel efficiency. The heavier the truck gets the less efficient it is. So you have almost conflicting Federal policies between fuel efficiency and air quality.”
10. On-Board Truck Technology. Last October’s report was the first in which this issue made an appearance in the Top Ten. “The majority of respondents were not talking about technology mandates,” claims Murray, “but proactive technology solutions. We have tens of thousands of road stability devices hitting the marketplace: lane departure warnings, some of the new collision warning systems, integrated systems. They are bought because they can give really quick paybacks on efficiency and safety. That’s one of the few items on the list because industry is excited about some of the new on-board technologies.”
Looking to results of the next study, Murray says he thinks, “safety, highway finance and congestion are going to be right at the top in 2008 and they are all inter-related to each other. With the new transportation bill in the works, I think we’re going to see some programs that deal with truck funding and truck safety mandates.”