Historically, economic factors primarily drove up cost pressures on motor carriers. But now-- and going forward for at least the next several years if not beyond-- that key driver will be governmental regulations.
That’s the staunchly held view of economist Noël Perry, senior consultant with FTR and principal at Transport Fundamentals LLC. During the latest “Freight Focus” webinar hosted yesterday by the research and forecasting firm FTR, Perry detailed the rocky regulatory landscape ahead that fleet owners have no choice but to traverse.
In laying out the rules-oriented environment trucking is now embroiled in, Perry cited the negative effect of the extensive coverage of the recent horrific New Jersey Turnpike crash, after which a Walmart driver was charged with one count of death by auto and four counts of assault.
“Now [any effort to change FMCSA rules] will be viewed in light of the accident in New Jersey,” Perry observed. “Clearly, that driver had a lapse in attention. Safety advocates will use that fact as the basis for making a common-sense argument against rolling back Hours of Service [HOS] rules.”
He suggested that trucking regs are also on the front burner simply because “most auto drivers are afraid of large trucks, which makes [highway] safety a political argument” as well.
“The other argument is about how these rules affect motor carriers,” he continued. Then Perry stated that, historically speaking, “safety rules have very little effect on trucking profitability. That’s because very carrier shares the same cost burden and then they pass the additional costs onto shippers.
Perry reminded his audience that “looking back, changes in regulations and public policy [such as building the Interstates] made trucking more profitable.
“But by 1995,” he stressed, “the arguments for allowing larger trucks and for reducing regulations lost steam. Ever since the changes made to HOS in 2004, the impact of regulations on motor carrier has become negative” cost-wise.
Perry then discussed over 20 regulations that should be kept track of by fleet owners. They fall into four categories, with some overlaps:
- Six that will reduce the potential driver pool, including the mandated drug/alcohol database, tighter training standards and lack of immigration reform to date
- Six that will reduce the actual driver pool, including CSA scores, drug/alcohol clearinghouse and entry-proficiency rules
- Ten that will increase turnover or make hiring drivers less productive, including CSA scores, healthcare rules, changes in minimum insurance and the Motor Carrier Protecton Act that will “cause more brokers to fail”
- Ten that will decrease operating productivity, including HOS, speed control, electronic stability controls, prohibition of coercion and electronic driver logs (EDLs)—which Perry called a “wild card” as their implementation “will show law enforcement in real time whether drivers are adhering to various laws”
“The cumulative effect of all these regs will be massive,” stated Perry, “as their implementation will [over the next several years] double the million drivers fleets already need to hire.”