Slow economy, safety regs top trucking sector concerns

For the second consecutive year the economy has ranked as the top concern listed in the “Critical Issues in the Trucking Industry” report issued by the American Transportation Research Institute (ATRI).

The ATRI, the not-for-profit research institute commissioned by the American Trucking Associations, surveyed more than 4,000 trucking industry executives to compile the annual report. The sluggish economy, proposed new safety rules (Comprehensive Safety Analysis 2010, or CSA 2010) and overall government regulations were the top three concerns, respectively.

“Concerns over the fragility of the economic recovery continue to impact business and industry,” noted the introduction of the report. “The situation for motor carriers is exacerbated by the prospect of increased regulation and the potential costs associated with impending and as yet undefined regulatory mandates.”

It’s not all bad news on the economy concern, however. The 2010 survey found 35% of respondents ranking the economy as the top concern, a decrease from the 51.6% who listed it as a concern in 2009.

The report noted: “This decrease likely reflects the improvements experienced in the economy over the past year and speaks to the impact that increasing freight demand is having on individual priorities. Economists at ATA note that truck volumes are beginning to rebound, the oversupply of capacity is diminishing, and driver availability is tightening.”

Officials at Fort Smith-based Arkansas Best Corp. understand why the economy is the top concern. Arkansas Best is the parent company of ABF Freight System, a less-than-truckload carrier that employs about 9,500 nationwide. It’s been a rough ride for the company during the past three years. The company posted a 2009 net income loss of $127.52 million, compared to a $29.168 million gain in 2008. (The 2009 income loss includes a non-cash accounting charge of $64 million for the impairment of goodwill.) Total revenue in 2009 was $1.472 billion, a 19.6% dip from 2008 revenue of $1.833 billion. This year is not much better. During the second quarter, the company posted a net income loss of $7.4 million, an improvement compared to a $15.4 million loss in the 2009 period.

“Certainly the sluggish economy is something that has impacted us,” said David Humphrey, vice president-investor relations and corporate communications for Arkansas Best. “We are hopeful that our nation’s economy will continue to improve and that our company will benefit from increasing levels of freight moving through our network at compensatory prices.”

Making its debut in the 2010 top 10 list was CSA 2010, with industry execs worried about the “expansive nature” of the proposed new rules and the “uncertain impact” it will have on the industry.

The Federal Motor Carrier Safety Administration (FMCSA) — a division of the U.S. Department of Transportation — began in April to phase in CSA 2010 with the goal of “reducing large truck and bus crashes, injuries and fatalities on our nation’s highways.” The effort, which began in May 2005, will use a new safety measurement system to monitor the more than 500,000 active commercial motor carriers — trucking companies, bus companies, etc. — and the about 7 million commercial drivers in the U.S.

Humphrey said company officials are keenly interested in CSA 2010.

“We have been actively involved in the preliminary development and review process of CSA. ABF is very focused on safety and I believe you recall that late last month ABF became the only six-time winner of the ATA’s President’s Trophy which is the highest safety award available to motor carriers,” Humphrey explained.

Government regulation — the 3rd ranked issue — at all levels is a problem, according to the survey.

“While interstate motor carriers are primarily regulated by the U.S. Department of Transportation, a host of local, state and federal regulations are increasingly imposed on the industry, increasing compliance costs with little to no commensurate return, in some cases, for safety or productivity,” the ATRI noted.

Rounding out the top 10 list are: Hours-of-Service regulation; Driver shortage; Fuel issues; Transportation funding/Infrastructure; Onboard truck technology; Environmental issues; and, Truck size and weight.