Logistically Speaking: High Growth or Hijack -- Opposing Views on Obama’s Transportation Bill

Working with competitors can be easier than working with the Federal government.

The Obama Administration is touting the bells-and-whistles in its four-year, $302 billion transportation bill proposal as a plan that will “grow America,” and as with most things disseminated by the Federal government, “growth” is in the eye of the beholder. The Coalition for America's Gateways and Trade Corridors, for instance, a group comprised largely of West Coast ports and organizations, says the bill, if passed, “will create jobs for American workers” while “improving conditions in freight-intensive localities across the United States.”

On the other hand, the American Trucking Associations, representing the nation's trucking industry, says the proposal is “very disappointing” and is basically unacceptable to the trucking industry. The ATA is particularly skeptical that the Administration will be able to raise half of the $302 billion through corporate tax reform, which the ATA doubts would be passed by Congress.

The ATA also feels that the Administration continues to give short shrift to the motor carriers, while favoring the rail carriers. “It is clear that this Administration is aiming to hijack the Highway Trust Fund and convert it into a fund to finance a myriad of projects to benefit interests that do not pay user fees into the Fund,” complains Dave Osiecki, ATA's executive vice president. From the ATA's perspective, the bill largely favors rail and intermodal interests, with barely a nod toward motor carriers, who move 70% of all U.S. freight.

Of course, this wouldn't be the first time that truckers felt slighted by the Feds, as the never-ending debate over truck driver Hours of Service provisions continues to rage. The latest mandate instituted by the Federal Motor Carriers Safety Administration—the “reset” provision that calls for drivers to be off-duty for 34 hours after 70 hours of work—has been particularly painful to the trucking industry, says Will Cotten, director of consulting firm Transportation|Warehouse Optimization. According to Cotten, carrier productivity, measured in miles/week per driver, has dropped by about one-third.

“This is not a good time to be a transportation manager,” says Cotten, adding that 2014 could end up being the year that “the excrement hits the rotating ventilating apparatus.” And unfortunately, like the Hours of Service mandate, many things remain out of a shipper's control, such as insurance costs, fuel costs, training and retaining drivers, and pollution controls. Nevertheless, Cotten notes, shippers can improve carrier productivity in several ways, such as using drop trailers, eliminating waiting, ensuring loads are legal before they leave the dock, and maximizing truck capacity utilization.

At the recent WERC Conference, Mari Bishop, logistics services manager with consumer packaged goods giant Colgate-Palmolive Co., spoke about another transportation best practice, which she refers to as horizontal collaboration, where shippers work with similar companies, even competitors, “to maximize efficiencies and optimize operations.” This type of collaboration, she says, “entails co-loading to get full truckloads, round trips and backhauls, and consolidating full truckloads onto rail.”

Bishop points to a partnership between competitors Nestle and PepsiCo, who were able to ship together and convince their retail customers to trust the process. Their horizontal collaboration, she notes, not only saved the companies money but it also reduced their carbon footprints.

So far, so good. The constraint to this type of collaboration, though, is antitrust, which is why Bishop recommends that an unbiased third party should manage the process. "A neutral trustee needs to put the rules together, finding accounts and making the networks fit together. There has to be conflict resolution so all parties involved know what needs to happen and how to adjust processes throughout the relationship." Horizontal collaboration is still mostly at the pilot stage in the U.S., and Bishop suggests that this is an idea whose time has come and needs to be taken even further.

In any event, according to U.S. Transportation Secretary Anthony Foxx, the Highway Trust Fund will run out of money by the end of the summer, and employing rhetoric that would make his boss, President Obama, proud, Foxx insists that the proposed bill will "support millions of American jobs repairing and modernizing our roads, bridges, railways and transit systems." Whether Congress agrees with that assessment remains to be seen.

 

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