The Wisconsin
Trucking Industry Perspective
Prepared by the
Members
of the Wisconsin Motor Carriers Association (WMCA) will be in Washington on
April 24 & 25 to meet with members of the Wisconsin Congressional
delegation.
Although each WMCA member will have his or her own legislative priorities,
this paper outlines some of the current issues for the trucking industry in
Wisconsin.
The WMCA is a non-profit trade association representing the interests of truck
owners within the state of Wisconsin. The association has 1,300 members,
ranging from independent contractors with one truck to companies with
thousands of trucks. The WMCA is affiliated with the American Trucking
Associations (ATA) in Washington and works with the ATA on federal issues. Government
policies are an important factor in the business decisions made by trucking
company officials and we appreciate the chance to provide our perspective. RECOMMENDATIONS
The WMCA makes the following recommendations to members of the Wisconsin Congressional delegation. Background information is provided in the following pages.
THE
IMPORTANCE OF TRUCKING
The
trucking industry provides efficient and safe transportation service to
customers throughout the country. In
the year 2001, trucking handled 87.5% of the nation’s total freight bill, an
increase of 1 percentage point from 1998. In terms of freight volume (tons),
trucks transported 67.6% of the total volume in 2001, an increase of 4.3
percentage points from 1998. Of
the 542,363 interstate motor carriers on file with the U.S. DOT in 2001, 74%
operated six or fewer trucks and 82% had 20 or fewer trucks.
It is interesting to note that 55% of all heavy trucks travel less than
30,000 miles annually. HEALTH OF
THE ECONOMY AND INDUSTRY ARE MUTUALLY DEPENDENT
Wisconsin's economy depends on trucks for freight movement. Trucks carry 83% of all manufactured freight transported in Wisconsin and over 77% of all Wisconsin communities are served exclusively by trucks.
The most important issue to members of the WMCA is a healthy economy.
If new homes are not being built, if consumers are not purchasing goods
and services, if agricultural products are not grown, there is little freight
for the trucking industry to haul. FINANCIAL HEALTH OF THE INDUSTRYThe last year has been very difficult for many trucking companies.
Overall,
the industry continues to struggle as the economy deals with the uncertainty
regarding the scope and precise timing of the long-awaited recovery. The good
news is that industrial production has finally turned the corner and started
improving for the first time in a year and a half. It appears that industrial
production has started to improve. Proposals
to increase federal taxes or adopt burdensome regulations as a result of
agency initiatives or congressional mandates should be carefully evaluated
given the industry's low profit margin, particularly among smaller carriers. HIGHWAY REAUTHORIZATIONThe Transportation Equity Act for the 21st Century (TEA-21), the current highway authorization bill, expires in September 2003. The process for reauthorization has already begun and there will be significant discussions taking place over the next year. Members of the Wisconsin Motor Carriers have the following priorities as we head into this reauthorization process:
DIESEL
FUEL PRICES
Truckers continue to be frustrated as the price of diesel fuel fluctuates
drastically. The good news is
that oil prices fell 24% from August 2001 to February 2002. The bad news is
that prices have been rising recently. Prices rose five straight weeks in a
row between February 25 and April 1 for a total increase of 14.1 cents per
gallon during that five-week period. Fuel constitutes the second largest expense for most trucking companies, behind labor costs. The problem of high diesel fuel prices is even more difficult in Wisconsin because the state diesel fuel tax rate is 31.1 cents per gallon, the second highest in the country. Drastic increases in the price of fuel have been unpredictable and, as a result, are difficult to pass on to shippers. Long-term contracts (and a very competitive market) restrict the freedom of truckers to respond to rapidly escalating fuel prices. Even when a contract contains fuel surcharge provisions, there is a delay before the increased price becomes effective, meaning that truckers never recover a portion of the increase. Members of the WMCA support the
bi-partisan fuel surcharge legislation that has been introduced in the United
States Senate by Senators Kerry (D-MA) and Bond (R-MO).
The Senate bill is S.1914, the “Motor Carrier Fuel Cost Equity Act of
2002.”
Fuel surcharge legislation has also been introduced in the House. However, the Senate version would only require a motor carrier to pay its drivers for increases in fuel prices if the motor carrier is able to collect the surcharge from its shipper. The House bill, on the other hand, would require a carrier to pay the driver even if the carrier is unable to collect the surcharge. While
we hope that you support Senate Bill 1914, our members are also convinced that
this country also needs to become less dependent on foreign oil by opening up
more domestic exploration. COST
OF INSURANCE
The events of September 11 accelerated large
increases in trucking insurance premiums that had already begun in early 2001.
ATA created an Insurance Task Force in November of 2001, which conducted a
survey to quantify anecdotal information on rising premiums. After collecting
more than 1,000 responses, the survey indicated that on average premiums for
primary coverage (general liability) rose 32% in 2001, with post-September 11
renewal increases jumping to 37%.
Because many carriers offset their premium hikes by increasing
deductibles or decreasing the amount of coverage, the survey’s findings
actually understate the average premium increases. Costs for umbrella
insurance increased about 87% in 2001, with increases rising to 120% after
September 11. In
the long term, the Task Force concluded that legal (tort) reform is the most
important goal to deal with rising insurance premiums, especially at the state
level. While insurance claims
against the trucking industry have fallen over the years, the cost per
accident has continued to climb, mostly as the result of large jury awards. WISCONSIN
TRUCK SAFETY
Highway
safety continues to be a top priority of the WMCA. The tragedy of
traffic fatalities hits home for everyone in trucking because the highways are
our workplace. As an industry, we have
as much interest in getting unsafe trucks off the road as anyone else because
it is difficult to compete with companies not obeying safety rules, abiding by
weight laws, or maintaining their equipment. Our
commitment to highway safety is illustrated by the industry sponsored
Wisconsin Road Team that visited with over 14,000 drivers education students
in over 140 schools throughout the state last year, discussing how to safely
share the road with a truck and emphasizing general highway safety tips. The trucking industry will continue to work at reducing accidents, but at the same time, it is proud of an excellent safety record. Consider, for instance:
HOURS
OF SERVICE
The current hours of service rules for truck drivers were originally established by the federal government in 1939, and have remained essentially the same for more than sixty years. On May 2, 2000, DOT issued a 270-page hours of service proposal that met with swift and severe criticism from every segment of the trucking industry. In its comments on the rule, the WMCA indicated that: “We believe that the FMCSA’s proposed hours of
service regulations are complex, restrictive and in numerous ways unworkable
for those businesses utilizing commercial motor vehicles in their business
operations. Although we fully
understand how important highway safety is and remain dedicated to its
principals, we question whether or not the drastic negative impact this
proposed rule will have on an industry so important to the nation’s economy
is appropriately weighed against the perhaps overstated safety benefit.”
In September 2001, DOT contracted with ICF Consulting to perform a new cost-benefit study of a number of hours of service options. The study, expected to take 1 year, will likely be completed prior to DOT’s issuance of another proposal for public comment. Members of the WMCA and ATA are anxious to work with DOT in order to achieve an improved rule that will meet the needs of the American economy and are based on sound science and public safety. The industry wants the rule to:
Thank you for your support during the last congressional session on this important subject. As new rules are proposed and reviewed, we will keep you informed of our reaction to them. DRIVER
SHORTAGE & YOUNGER DRIVER STUDY
The Federal Motor Carrier Safety Administration (FMCSA) has explored the possibility of a “Younger Commercial Driver Pilot Training Program”. Under the proposal, each applicant driver would be subject to a minimum of 48 weeks of intensive classroom training, driving instruction, and supervision designed to lead the trainee to full-time employment as an interstate commercial driver. This training would include mandatory attendance at an approved truck driver training school for a minimum of 22 weeks and 8 weeks of training in a motor carrier's "driver finishing" program. "Driver
finishing" would include instruction and on-the-job training offered by
motor carriers to further develop the younger driver's basic skills, as well
as develop greater maturity and judgment, under the daily direction and
guidance of an experienced driver trainer. This, in turn, would be followed by
18 weeks of team driving with an experienced driver. Younger drivers would be
required to pass the performance standards of the entire 48-week program and
reach the age of 19 before beginning solo driving. The
WMCA supports the pilot program because many of our members are convinced that
any long-term solution to the drivers shortage will have to include a change
in federal law, allowing young adults between 18 and 21 to drive interstate.
Most state laws, including Wisconsin, will already permit truck drivers to
drive intrastate at the age of 18. TRUCK
DRIVER TRAINING FACILITIES
The Waukesha Technical College has proposed expanding the truck driver training facilities that would serve the southeastern portion of Wisconsin. Because of the potential impact on both Chippewa Valley and Fox Valley Technical Colleges, both of those institutions have been invited to participate in the deliberations to date. The expansion would utilize the provisions of the Applied Technology Center Legislation approved by the legislature. That legislation permits a Technical College to expand facilities (with a cap of $5.0 million) without needing approval by the traditional referendum. The WMCA supports the need for expanded truck driving training facilities at the Waukesha County Technical College. The association applauds the effort to expand these facilities in conjunction with providing additional assistance to the existing truck driver training programs at Chippewa and Fox Valley Technical Colleges. Last summer the state legislature approved implementing a state $8 surcharge on all commercial motor vehicle citations as a means of providing additional money to the technical colleges for truck driver training. Additional
federal aid for this project would be helpful in completing the expansion
project. It should be
remembered that truck-driving jobs are good paying jobs and good employment
opportunities for minorities and others that may be unemployed or
underemployed. NAFTA
& THE MEXICAN BORDER
The
WMCA has long viewed free trade as an important tool in improving our country’s
economic growth. Since NAFTA was implemented, trade between the United States
and Mexico has increased from $81 billion in 1993 to $246 billion in 2000,
making Mexico our second-largest trading partner after Canada.
Trucks are essential to movement of NAFTA trade, carrying more than 80%
of the value of freight between the U.S. and Mexico, and more than 70% of
U.S./Canada trade. After
months of congressional negotiations, compromise language allowed the
implementation of NAFTA’s trucking provisions, imposing a stringent set of
safety requirements for Mexican trucks to follow, and requiring DOT to perform
and establish a number of tasks prior to implementation. In
March, President Bush and Mexico President Fox signed a 22-point Smart Border
Plan that will provide for better border security and speed people and
commerce at the U.S. – Mexico border. The U.S. DOT has now released its new
safety and operating requirements for Mexican motor carriers that want to
operate inside the United States. Implementation
of the new trucking provisions is set to take place in the next two months. Our
members have always felt that all trucks entering the United States from
Mexico should meet U.S. truck safety standards. Similarly, many of our members
look forward to new business opportunities in Mexico. Consideration
should also be given to easing the ban on the sale of used U.S. trucks to
Mexico. NAFTA gradually eases
this ban beginning in 2008. However, the average 5-year-old equipment in the
U.S. could not be sold in Mexican markets until 2015. We cannot wait 13 years. Truck surpluses, safety concerns and
air pollution are problems today and must be dealt with in a timely manner. SECURITY
Section
1012 of the USA PATRIOT Act requires that all truck drivers who will haul any
amount of hazardous materials must undergo a criminal and security risk
background check prior to receiving or renewing a license with a hazardous
materials endorsement. The Act established a circuitous background check
process that includes the state licensing agency, the U.S. Attorney General,
and the U.S. Department of Transportation. Although
the trucking industry is keenly aware that additional security measures are
probably required after September 11 to ensure safety within the
transportation system, there is the general feeling that the proposal for
background checks is generally flawed and must be fixed.
Whatever system is developed must be workable and must ensure that truck
drivers seeking their initial hazardous materials-endorsed license, as well as
those seeking renewals, will not be put out of work for weeks as a result of
the lengthy licensing delays that will be created. EPA
ENGINE REQUIREMENTS
In October 1998, the major diesel engine entered into a Consent Decree with the Environmental Protection Agency (“EPA”) which established new emissions standards to be effective October 2002. These new standards are an acceleration of the standards previously set to go into effect in 2004. The Consent Decree was in response to claims by the EPA that the diesel engines then being manufactured contained what the EPA considered to be so-called “defeat devices”. The concern of some WMCA members is the availability of new diesel engines after October 1st, the date at which new emissions standards are scheduled to go into effect. Major truck manufacturers, who typically are provided new engines well in advance of their introduction so that they can design ancillary systems such as the cooling system around the new engines, still don’t have engines. Many major fleets, who usually get prototypes of new engines from manufacturers a year or more before their introduction so that the engines can be field tested and debugged, still don’t have access to them. Meanwhile, the EPA has recently announced proposed penalties that suggest that the additional costs associated with the new engines will be upwards of $15,000 per engine in net present value. Many WMCA members believe that an extension in the implementation date is absolutely necessary. They believe that a phase-in of the emissions standards is appropriate, coupled with a “pay back” of the “emissions debt” created by phasing in the new standard, together with supplemental testing obligations prior to implementation of the new standards set for 2007. This approach seems reasonable to us in that it would continue to move the engine manufacturers toward production of cleaner engines, while preserving the environmental benefits sought under the Consent Decree. We urge the EPA to reconsider its decision to advance the 2004 standards to October 2002. The decision to delay the purchase of new tractors with the required engines will result in mitigating the projected emission reductions. It is time to apply some common sense to this critical issue rather than exacerbate both the heavy-duty truck market and the motor carrier industry which have both suffered from the effects of a major reduction in freight activity. UNIFORMITY
IN STATE REGULATIONS AND TAXATION
An
ongoing frustration for truckers is the lack of uniformity from one state to
another. The WMCA believes that
Congress should enact proposals to eliminate state tax discrimination and
require the states to adopt uniform procedures for the state taxation of
interstate motor carriers. Motor
carriers should have the same protection from discriminatory state taxation as
are currently afforded railroads and air carriers, including access to Federal
courts. |
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Copyright 1999 |
