The prospects are much better for trucking companies than they were two years ago. Yet those responsible for running those companies still have concerns about competitive and regulatory issues.
A panel of four trucking executives speaking at the annual NASSTRAC conference in Orlando, Fla., this week outlined some of the issues they're watching closely.
Rob Estes, president of Estes Express Lines, said he expected 2012 to be a good year for his company.
"We're emerging from the most challenging time in my 35 years in the business," he said. The recession, he said, forced less-than-truckload (LTL) carriers like his to look for ways to become more efficient. Trucking companies that survived the recession are stronger now as a result of these operational improvements.
However, the competitive landscape still remains difficult, according to Estes. "We're competing with thoroughbreds now," he said.
Jack Holmes, president of UPS Freight, the LTL arm of UPS Inc., said he appeared on a similar panel five years ago and the other panelists' companies are now out of business. He agreed with Estes that efficiency efforts have made the industry's survivors stronger.
Some of the issues facing carriers, Holmes said, include managing growing freight volumes from Mexico as customers bring some sourcing back to North America, discerning how the Panama Canal could affect shipping patterns, managing the flow of goods from ports as a new generation of large vessels comes on line, and adapting to changing distribution models from many customers.
He told the group that UPS Freight has shifted the way it works with third parties, aligning itself with those it considers strategic partners and severing relations with 100 or more of those who treat trucking service as a commodity.
He also urged shippers to keep an eye on developments in hours-of-service regulations. While the recently revised rule allows a driver to work for 11 hours, Anne E. Ferro, the administrator of the Federal Motor Carrier Safety Administration, favors rolling that back to 10, he said. That could prove a major disruption to distribution networks, as those networks are largely designed to align with how far freight can move in a day.
REGULATORY CONSTRAINTS
William J. Logue, president and CEO of FedEx Freight, the LTL arm of FedEx Corp., contended that while some level of regulation is important, the industry is now overregulated in some areas. "That strains our ability to make progress," he said.
He added that the industry and the nation have to continue to seek ways to reduce dependence on foreign oil. He said FedEx Freight would soon be testing tractors powered by liquefied natural gas. But part of the solution, he said, could come from productivity improvements if Congress would allow them.
In particular, he said, allowing carriers to haul double 33-foot trailers would increase productivity substantially. (Those trailers, called pups in the industry, are now limited to 28 feet.)
However, there is virtually no chance of such language becoming law, especially after the nation's leading trucking trade association urged members of the House of Representatives to remove a provision calling for longer, heavier equipment from any final House draft of highway funding legislation.
Logue called on Congress to break the more than two year logjam over highway funding. But he appeared pessimistic about prospects for a bill this year. "We don't have willing partners right now," he said. "We keep putting Band-Aids on it." The current extension of transport funding programs runs until June 30; it is the ninth extension since the last law expired in September 2009.
The costs of congestion and delays caused by infrastructure problems, Holmes added, are carried not just by truckers, but also by shippers and ultimately consumers.
Roy Slagle, who became president and CEO of LTL carrier ABF Freight System Inc. in January, also cited the highway bill as a key priority of the industry. "The trucking industry is willing to pay more in taxes to support repairing our infrastructure," he said. "I'd ask you to engage your members of Congress on this."
But Estes warned that proposals to pay for improvements through new tolls instead of higher fuel taxes could harm the industry. He pointed to a proposal to add tolls to Interstate 81 in Virginia that would increase carrier costs by 31 cents a mile as one such threat.
