The recession may be receding into the rear view mirror, but that doesn't mean the freight community's worries are behind it. In fact, for at least one segment of the business, the worst may be yet to come. Just as the freight recovery gets under way, the nation's truckers find themselves facing a host of new challenges that could put a serious crimp in their operations. And that's a concern not just for the folks who run trucking companies, but for the folks who use their services as well.
The source of their worries? A legislative climate that carriers say is downright hostile to truckers. "There is a certain amount of anti-truck rhetoric in Washington today," YRC Worldwide COO Michael Smid said at the NASSTRAC conference in April. The result has been a flurry of regulations and proposals aimed at making trucking operations safer, greener, and more union friendly. They include the Federal Motor Carrier Safety Administration's upcoming Comprehensive Safety Analysis program, proposals to further restrict truck drivers' hours of service, proposed "cap and trade" legislation, efforts to fund highway improvements via increased fuel taxes, and various initiatives viewed as concessions to organized labor.
Trouble is, the regulations would do more than just make truckers greener, safer, etc.; they would also drive up their costs—and by extension, the rates shippers pay. "There are at least five issues at play," Mike Regan, president and CEO of the consultancy TranzAct Technologies, warned at the NASSTRAC conference. "If they swing the wrong way, your rates will go up."
And these rate increases could be substantial. According to some of the conference speakers, any one of these initiatives alone could result in a rate hike of 2 to 4 percent. If they were all to hit at once in a so-called "perfect storm" scenario, freight rates could shoot up as much as 15 to 20 percent.
If this scenario plays out, don't expect shippers to go down without a fight. Speaking on a shipper panel at the conference, Candace Holowicki, manager of logistics for building products maker Masco Corp., noted that while she understood the need for carriers to cover their costs, her budget may not support double-digit rate hikes. "I envision a lot of trouble explaining to my management why we need all these rate increases," she said. "I'm trying to be an advocate for both sides of this, but I can't give everyone a 20-percent increase, so don't ask—the money's not there."
Regan warned shippers, however, that "just say no" won't be one of the options. Refusing to accept the hikes won't make the problem go away, he pointed out. "Whether it's in your budget or not, you are going to have to pay it. If you don't, your freight simply isn't going to move."
No one wants to see that kind of standoff. But resolving the problem won't be easy given the anti-truck sentiment on Capitol Hill. The trucking industry makes an easy target for politicians, said FedEx Freight President Bill Logue at the NASSTRAC conference. "It's a very visible thing because there are so many trucks on the road." Nothing will change until policymakers stop viewing those trucks as a threat to public health and safety, and start seeing them for what they really are: a vital part of the nation's economy.
Both Logue and YRC's Smid emphasized the importance of getting that message across to members of Congress and their aides (who are, after all, the people who actually draft the legislation). "A lot of education is needed," Smid said. "There are people working on those congressional committees that if they had their way, there would be no trucks at all. They have very little idea of what trucks carry or the role they play in the economy."
That's where shippers come in. The industry has a monumental public relations task ahead of it, and truckers can't do it alone. Make sure your elected representatives know what they need to know. Explain that the old saw "Freight don't vote, people do" no longer holds true. Let them know that freight interests do vote, and when they do, they back candidates who "get" why trucking is important to us all and will act accordingly.
* This article has been revised to include more information on the specific proposals that have trucking companies concerned.