IBJNews

Trucking firms brace for impact of new driver-rest rules

Back to TopCommentsE-mailPrintBookmark and Share

 New U.S. safety regulations requiring truckers to work shorter shifts may cut productivity, worsen a driver shortage and boost freight costs for the $8.4 trillion in goods hauled each year by American big rigs.

That is to be balanced by a decline in deaths and injuries from crashes and savings in health-care costs as the regulations improve driver safety, according to federal regulators.

The rules that took effect this month may reduce productivity by about 3 percent, translating into $18 billion in additional costs for an industry with annual revenue of around $600 billion, according to Bloomington-based freight data and forecasting firm FTR Associates. Training and transition expenses may add another $320 million to truck companies’ annual tabs, according to an estimate by the Department of Transportation.

“That cost of transportation has to be passed on,” said Charles W. Clowdis, a Nashville-based director of transportation advisory services at IHS Global Insight. “If I run a company, it means I’ll have to have more drivers doing the same thing, which means I’ll have to raise my rates, and that’ll raise the cost of the goods I’m transporting to the consumer.”

Companies such as Indianapolis-based Celadon Group Inc., YRC Worldwide Inc. and Werner Enterprises Inc. will be scouring an already tight labor market in trucking for additional help as the rules reduce the maximum number of weekly hours drivers can spend on the road to 70 from 82.

The rules also mandate a 34-hour rest period each week that would require the nation’s 1.6 million long-haul drivers to be off two consecutive nights. And the regulations mandate a 30- minute break after eight hours on the road.

Celadon announced earlier this year that it plans to build a $5.7 million driver training facility in Indianapolis to help with driver recruitment.

Accident projections

About 1,400 crashes, 560 injuries and 19 deaths each year will be prevented, said Marissa Padilla, a spokesman for the Federal Motor Carrier Safety Administration. The regulation will bring about annual savings of about $470 million from improved driver health and $280 million as a result of fewer highway accidents, the Department of Transportation said July 1.

Truck-related fatalities rose 2 percent, to 3,757, in 2011 and injuries increased 10 percent, to 88,000, according to data compiled by the National Highway Traffic Safety Administration. Those levels were below the annual average 4,296 of deaths and 74,800 injuries over the decade ended in 2011. Fatigue was a factor in about 13 percent of serious crashes involving large trucks, according to a July 2007 study by NHTSA and FMCSA.

Joan Claybrook, consumer co-chairman of the Advocates for Highway and Auto Safety in Washington, D.C., and a former NHTSA administrator, said the regulations don’t go far enough and that truckers should be limited to 10 consecutive hours behind the wheel and a continuous 48-hour rest period per week.

‘Five cents’

“I don’t know any consumer who wouldn’t rather pay an extra five cents for a can of beans in order not to have a driver fall asleep,” Claybrook said.

The International Brotherhood of Teamsters, which negotiates time behind the wheel and mileage rates, said the 34-hour weekly rest period is too brief for the 600,000 people it represents in the industry.

“There’s concern that we’re sharing the road with drivers who are not as well-rested or as alert as they should be,” Fred McLuckie, director of federal legislation and regulation for the Teamsters in Washington, said. “What price do you put on safety?”

Trucking accounts for the biggest share of freight transportation in the world’s largest economy in terms of value and tonnage, according to a 2009 Transportation Department report, the latest available. Trucks moved about 71 percent of the total value transported. In terms of volume, they hauled 9 billion tons, a 69-percent share.

‘Extremely efficient’

“Our economic system has been blessed by an extremely reliable, extremely efficient truck system,” said Larry Gross, a senior consultant at FTR in Bloomington. “People will end up paying more for trucks.”

Some Federal Reserve districts have highlighted the effect on labor from the regulation. Businesses in the Federal Reserve Banks of Richmond and Cleveland districts said the regulations may make it harder to find truck drivers, the Fed said June 5 in its Beige Book business survey. The Cleveland Fed noted that the rule’s impact on operations, productivity and pricing is the “biggest concern facing trucking companies at this time.”

“The industry will lose some degree of operating flexibility,” Steve Williams, former American Trucking Associations chairman and CEO of Maverick USA Inc., a trucking company based in Little Rock, Ark., said June 18 in testimony to the House Transportation Committee.

Labor market

Adding more drivers to payrolls will be a difficult undertaking. The industry was 158,000 drivers short of what it needed to meet demand in the second quarter, according to FTR.

The shortfall probably will widen by the end of this year to 251,000 truckers, the biggest deficit in nine years, and reach a record 338,000 by the end of 2015, according to FTR’s Driver Shortage Surplus gauge. The economic expansion and higher turnover help explain the industry’s labor shortage.

“Every cost gets passed down,” said Sean McNally, a spokesman for the ATA, an Arlington, Va.-based industry group. “As the labor market tightens and as demand for drivers goes up, typically wages go up as well. The competition is already fierce for good drivers. This is only going to increase that competition.’

United Parcel Service Inc. will face higher costs on long- haul routes as it will require new drivers to comply with the requirements, according to Tom Jensen, the Washington-based vice president for transportation policy for the world’s largest package-delivery company.

Routing changes

“We’re going to have to change some routing, change the network, which is going to change some drivers and handoff points,” Jensen said. “Costs would occur where we now have to have three drivers move freight across the country instead of two because we’re shortening shifts. We’re going to have to add some drivers to long haul runs.”

Derek Leathers, president and chief operating officer at Werner Enterprises in Omaha, Neb., said “these are the kinds of costs that will inevitably be passed on to the consumer. They’re going to have to be.”

ADVERTISEMENT

  • Re:DOT Enforcement
    You can't "pad" e-logs, which most companies are going to. Paper logs are going away for ever sooner than later.
  • DOT Enforcement
    How are these new rules going to get enforced. When was the last time you saw a State line truck check station open after the sun went down ? Answer is never. Pad the log sheet and you are home free.
    • Reply to Rick
      In response to Rick's comments, several companies are working on the technology you mentioned, but they don't have the bugs worked out yet. Google "Volvo failed crash test" to see a test that Volvo hyped up of their accident avoidance system, only to have the car crash into the truck in front of all the press. No other car-maker has perfected it yet either, though so of the cruise control systems on luxury cars slow the cars down as they sense an object ahead.
    • Technology
      Rick: The technology is already in use, just watch some luxury car commercials. However, it is expensive, is not designed to be retrofit on the millions of existing cars and trucks without it, and brings some of its own safety issues. Furthermore, it does not prevent a sleepy driver from going off road or accross the median. To do that, you need to spend multi-billions in upfront and maintenance costs to convert the highways for its use.
    • Why not try technology too?
      While these rules seem to make sense why is it when we can detect radar, have satellites that give us directions yet NO ONE has developed a simple system to judge distance from objects/vehicles and compare closing rate to prevent accidents. It seems simple. Calculate the speed of the vehicle, the distance between it and the object in front and calculate the correct distance and govern the speed to maintain a safe distance based on traffic and road conditions. This just doesn't seem like rocket science.

      Post a comment to this story

      COMMENTS POLICY
      We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
       
      You are legally responsible for what you post and your anonymity is not guaranteed.
       
      Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
       
      No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
       
      We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
       

      Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

      Sponsored by
      ADVERTISEMENT

      facebook - twitter on Facebook & Twitter

      Follow on TwitterFollow IBJ on Facebook:
      Follow on TwitterFollow IBJ's Tweets on these topics:
       
      Subscribe to IBJ
      1. I am not by any means judging whether this is a good or bad project. It's pretty simple, the developers are not showing a hardship or need for this economic incentive. It is a vacant field, the easiest for development, and the developer already has the money to invest $26 million for construction. If they can afford that, they can afford to pay property taxes just like the rest of the residents do. As well, an average of $15/hour is an absolute joke in terms of economic development. Get in high paying jobs and maybe there's a different story. But that's the problem with this ask, it is speculative and users are just not known.

      2. Shouldn't this be a museum

      3. I don't have a problem with higher taxes, since it is obvious that our city is not adequately funded. And Ballard doesn't want to admit it, but he has increased taxes indirectly by 1) selling assets and spending the money, 2) letting now private entities increase user fees which were previously capped, 3) by spending reserves, and 4) by heavy dependence on TIFs. At the end, these are all indirect tax increases since someone will eventually have to pay for them. It's mathematics. You put property tax caps ("tax cut"), but you don't cut expenditures (justifiably so), so you increase taxes indirectly.

      4. Marijuana is the safest natural drug grown. Addiction is never physical. Marijuana health benefits are far more reaching then synthesized drugs. Abbott, Lilly, and the thousands of others create poisons and label them as medication. There is no current manufactured drug on the market that does not pose immediate and long term threat to the human anatomy. Certainly the potency of marijuana has increased by hybrids and growing techniques. However, Alcohol has been proven to destroy more families, relationships, cause more deaths and injuries in addition to the damage done to the body. Many confrontations such as domestic violence and other crimes can be attributed to alcohol. The criminal activities and injustices that surround marijuana exists because it is illegal in much of the world. If legalized throughout the world you would see a dramatic decrease in such activities and a savings to many countries for legal prosecutions, incarceration etc in regards to marijuana. It indeed can create wealth for the government by collecting taxes, creating jobs, etc.... I personally do not partake. I do hope it is legalized throughout the world.

      5. Build the resevoir. If built this will provide jobs and a reason to visit Anderson. The city needs to do something to differentiate itself from other cities in the area. Kudos to people with vision that are backing this project.

      ADVERTISEMENT