A new administration may mean major change across supply chain

For many who ship, haul, warehouse, and distribute goods for a living, the legacy of the past eight years will be that of an administration aggressive in its oversight, labor-friendly in its legal thinking, and frustratingly deficient in fulfilling its vow to make infrastructure a critical part of the economic apparatus.

The administration that takes power a little more than two months from today is likely to work from a different blueprint. President-elect Donald J. Trump has made the nation's infrastructure a "front-burner issue" along with immigration, health care, and tax reform, according to James H. Burnley IV, transportation secretary during the Reagan Administration and a longtime Washington attorney. Labor laws that have impacted the transportation and logistics industry may be interpreted in a manner that doesn't sit well with unions and their advocates accustomed to tailwinds during the Obama Administration, he said. Trucking companies and commercial drivers, many of whom feel they've had a collective bull's-eye on their backs from well-intentioned but costly and onerous safety regulations, may see some relief should the new administration decide that current and proposed regulations be scuttled.

The incoming and outgoing administrations have different ideas about how the world works, and it is apparent that changes—perhaps radical ones—will take place once President-elect Trump is sworn in. It should also be remembered that for the first time since 1928 a Republican president would start his term with GOP majorities in both the Senate and the House.

The Trump administration has proposed to invest $550 billion in the nation's infrastructure, double that of his opponent, Hillary Clinton. On its transition web site, the administration offered no specifics on how it would be done or paid for. What is evident, according to Burnley, is that the president-elect is open to different and unorthodox ways of getting things done, and that mindset could extend to infrastructure investment. It is unlikely the Trump administration will push for an increase in the federal motor fuels tax—which hasn't been raised since 1993—given that tax increases are anathema to Trump. Besides, many states are already hiking fuels taxes to pay for their own infrastructure improvements.

What may get a closer look in a Trump White House is legislation introduced more than three years ago by Rep. John K. Delaney, (D-Md.) to create an infrastructure fund seeded by the sale of $50 billion in bonds with 50-year maturities. U.S. corporations would be encouraged to buy the bonds by repatriating, tax free, part of their foreign earnings, in return for ownership of the bonds. The fund would then leverage the $50 billion investment to provide many more billions of dollars in infrastructure loans or guarantees.

Since that time, other bills following the same template had been introduced in Congress, but never went anywhere. The concept also curried favor with the Obama administration. If such a bill is taken up in the 115th Congress, it will likely be folded into comprehensive tax reform, according to Burnley, who was one of the earliest and most vocal supporters of Delaney's bill. Delaney easily won re-election Tuesday night.

What no one disputes is that the nation's infrastructure—which broadly defined encompasses transportation, water, and broadband—is in dire need of more funding and visibility. The U.S. currently spends 1.3 percent of its gross domestic product on infrastructure, about 43 percent of what was spent on it in the early 1980s, according to data from CG/LA Infrastructure Inc., a consultancy. There is no dedicated infrastructure budget, and no cabinet level agency to oversee programs, the group said, affirming its belief that infrastructure hasn't been a top priority for this or any administration.

Whether it be driver "hours of service" regulations; Compliance, Safety and Accountability (CSA) Rules; a requirement that every truck be equipped with electronic logging devices; or testing drivers for sleep apnea and substance abuse, the past eight years have witnessed a seemingly never-ending series of unfunded mandates for motor carriers and drivers to comply with.

Given all of the mandates were aimed at promoting highway safety, it may be bad form for the Trump administration to try to scuttle them. But that may not stop a Republican Congress from doing so. Kathryn B. Thompson, former Department of Transportation general counsel in the Obama administration and today a Washington-based attorney, said truck safety would not be a high priority in a Trump administration. Thompson added, however, that Congress is likely to throttle back some safety regulations, and that President Trump will sign "any bills that come across his desk" that fulfill Congress' intent.

The most likely targets, she said, are the hours of service rules, and the most controversial aspects of CSA, a grading system for carriers and drivers that has been embroiled in legal and regulatory battles for years.

One safety measure likely to survive intact is the electronic logging device (ELD) mandate requiring that all fleets, including owner-operators, install the devices by the end of 2017. The mandate, which was recently upheld by a federal appeals court, has the support of big truckers and will save money over time as well as enhance safety, Thompson said. Burnley added that Congress or the Trump administration may delay the implementation date, but neither will gut the rule.

The last few years have seen transport union interests prevail on several fronts. In a high-profile case, the ground-delivery unit of Memphis-based FedEx Corp. agreed in mid-2015 to pay $228 million to settle a suit filed by drivers in California who alleged the unit improperly classified them as independent contractors. A 2014 law in New York State made it more difficult for businesses to classify a commercial driver as an employee. Then in May, the Department of Labor (DOL) ruled that employers must grant overtime pay to full-time salaried workers making less than $47,476 a year. The current rules, slated to disappear on Dec. 1, cap overtime eligibility to salaried workers making less than $23,600 a year.

The public warehousing industry, which employs many salaried workers at the affected thresholds, has argued the new policy will raise costs and hinder job creation. Joel D. Anderson, former president of the International Warehouse Logistics Association (IWLA), which is fighting the measure, said there is a strong chance the new administration will gut the rule. The key will be Trump's pick for Secretary of Labor, Anderson said.

Although a number of the pro-union rulings have emanated from the courts and state legislatures, critics contend that the impetus comes from a labor-friendly DOL as well as the National Labor Relations Board (NLRB), an independent, three-member panel nominated by the president to safeguard employees' right to organize and to decide whether to have unions serve as their bargaining representative with their employer. While employer interests understand the NLRB is structured to protect workers, they are hopeful the Trump administration will choose board members who will restore some balance between the twin imperatives of labor and management.

As a candidate, President-elect Trump voiced strong opposition to the pending Trans-Pacific Partnership (TPP), the largest regional trade agreement in history, calling it a job-killer for American workers. Yesterday, it was reported that Sen. Chuck Schumer (D-N.Y.) told labor leaders that Congress would not approve the 12-nation pact during the lame-duck Congressional session that convenes next week, ending the last legislative chance of saving the pact.

As president, Trump would have the authority to negotiate a new trade agreement. However, given his statements on the stump and animus toward past trade deals such as the North American Free Trade Agreement (NAFTA), it is unlikely to happen.

In an impassioned plea highlighting TPP's benefits and the risks of scuttling it, Michael F. Ducker, president of FedEx Freight, FedEx's less-than-truckload (LTL) unit, said U.S. businesses would lose out on the opportunity to sell to a market of 480 million consumers living in the TPP-signatory nations outside the U.S. As an example of trade's importance to the U.S. economy, Ducker noted that plantings on one of every three acres of America's farms would yield crops that are designated for export.

TPP's rejection will not improve the lot of U.S. workers whose jobs may have been lost to foreign competition, Ducker told the Journal of Commerce Inland Distribution Conference in Memphis, Tenn., on Wednesday. In fact, those workers may be further disadvantaged as other nations begin to negotiate their own pacts without U.S. involvement, he said.