Regulation Overload: Truckers Still Not Happy With Safety Rules

The trucking industry seems to be holding steady for now, in the wake of a dramatic increase in driver-safety restrictions that some predicted would significantly impair productivity and exacerbate a nationwide trucker staffing shortage.

But trucking companies say it’s too early to gauge the impact of the regulations, and that damage to the industry is still on the horizon. 

It’s been about 10 months since the trucking industry came under the jurisdiction of new hours-of-service rules put into effect by the Federal Motor Carrier Safety Administration, a division of the U.S. Department of Transportation. And, since before the rules went into effect July 1, 2013, they have been a point of contention within the trucking field and the United States government, with the rules’ supporters deeming them necessary for highway safety and opponents claiming they deliver an unwarranted blow to an important and vulnerable industry.

The hours-of-service rules state drivers can be on the road for a maximum of 11 hours in a 14-hour workday, following 10 consecutive off-duty hours; they must take a minimum 30-minute break during the first eight hours of a shift; and their maximum average work week is capped at 70 hours, down from the previous limit of 82 hours.

Also, drivers must be off-duty for 34 consecutive hours, to include two periods between 1 and 5 a.m., in order to reset a driver’s weekly driving limit. 

“The most problematic aspect to the new rules has been a decrease in productivity in some instances,” said Stephen Ferguson, president and CEO of Comstar Enterprises Inc. of Springdale. “Loads are not all shipped from 0700 [hours to] 1700 [hours]. Transportation is a 24/7 operation.”

If truckers must work fewer hours, that means you need more truckers to haul the same amount of freight, said Russ Aikman, director of marketing and public relations at Fort Smith-based ABF Freight System Inc. 

“The effect is small now, but more severe, long-term repercussions could come if the trend continues,” Aikman said.

Some industry analysts attributed third-quarter 2013 drops in productivity among major carriers, including J.B. Hunt Transport Services Inc. of Lowell, to the hours-of-service rules, according to an online Forbes magazine article. 

J.B. Hunt, one of the largest trucking companies in the country, reported a 3-percent drop in productivity (measured by revenue per truck, per week) for the third quarter of 2013 and a 5.7 percent drop in the first quarter of 2014. However, a company news release attributes the productivity decrease to other factors, including work disturbance connected to several winter storms during the time period.

 

Staffing Shortage

Ferguson said the FMCSA rules fan the flames of an ongoing trucker-shortage crisis, caused by an aging trucker population (the average driver is 55), wage competition from other industries and negative stereotypes associated with the profession.

Nationwide there are about 25,000 unfilled truck driving jobs, according to the American Trucking Associations.

The U.S. Bureau of Labor Statistics projects that 330,000 new truckers will be needed by 2020.

“The new DOT regulations have definitely forced more drivers out of the industry,” Ferguson said. “Regulating the hours they are able to work has directly impacted their annual income and made it a less desirable profession.”

The annual loss of driver wages is estimated between $1.6 billion to $3.9 billion, according to TireBusiness.com, a Crain Communications publication.

Analysts also expect freight volumes, which were flat in 2013, to rise slightly in 2014, and that could be enough to create a need for more drivers, according to Tire Business.

Comstar, which has 25 employees and about 100 trucks, is fully staffed right now, Ferguson said. But “it is difficult to find and keep qualified drivers. Especially, in this area, for a company our size … We are competing against some of the largest transportation companies in the country.

“The long-term repercussions could be extremely severe. If we do not find a way to solve the driver shortage,” he added. “Keeping our equipment manned with qualified drivers is critical to our success.”

Although Aikman recognizes the national shortage, noting some companies face 100 percent turnover rates each year, ABF Freight is not having that issue, with an annual turnover rate of 7 percent, he said.

 

Rule Remonstration

A large part of the trucking industry, including the American Trucking Associations, strongly opposes the tighter rules and has taken the FMCSA to the District of Columbia Circut Court, where the ATA appealed the court’s decision three times, but to no avail. There are bills in both the House of Representatives and the Senate that aim to either abolish the hours-of-service rules or postpone them until the studies justifying the changes have been evaluated by the Government Accountability Office.

However, even some trucking industry insiders say the regulations are strict, but necessary to ensure compliance. Companies can be fined $11,000 per offense and individual drivers can face penalties of up to $2,750 for breaking the rules.

Insiders say, in the past, drivers would do whatever they could — including taking illegal drugs — to drive for days at a time without stopping and log as many miles as possible.

According to the FMCSA, the rules will prevent 1,400 crashes, save 19 lives per year and, in the long term, save hundreds of millions of dollars in health care costs.

Members of the trucking industry disagree.

“We do not think the new restrictions were necessary to ensure safety,” Ferguson said. “Not all people are the same. We all have different habits, sleeping patterns, etc.”

And the debate should continue, as there are more trucking regulations — regarding, in particular, environmental issues — in the works for this year and beyond.

 

Industry Health

In regard to the argument that the new rules punish an already flagging industry, indicators do show the trucking industry continued to decline last year, as it had the last few. However, clearly defined and agreed-upon conclusions about the overall health of the industry are spotty and varied.

Sageworks, an industry data source, reported revenue growth for privately owned trucking companies decreased 2.5 percent in 2013, according to Forbes.

The Producer Price Index for freight by the truckload also dropped -0.25 percent, according to the U.S. Bureau of Labor Statistics.

During the first quarter of 2014, J.B. Hunt reported a 4.9-percent decline in profit from the previous year.

However, some companies have fared well the past few months.

“We had a successful 2013, with revenues over $20 million and managed to earn a small profit for the first quarter of 2014,” Ferguson said.

It is expected that truck freight volume this year will grow about 3 percent and maybe more, because sales of heavy-duty trucks were up 56 percent in January from the previous year, which was the best month since 2007, according to Tire Business. February sales, the highest since 2006, were a 27-percent improvement from the same month in 2013.

As the freight market strengthens, the shortage of drivers will bump up freight prices an estimated 4 percent this year, and fleets will be able to pay their drivers more, according to Tire Business.

 

A Different Industry

While trucking experts have a hard time agreeing on the health of the industry, it might be even more difficult to accurately pinpoint the cause of any losses or gains, as there are so many factors at play.

“The transportation industry is far from the industry that it was five or 10 years ago,” Ferguson said.

Drivers are expected to keep up with changing technology, Ferguson said. Also, equipment costs have increased significantly and expenses such as fuel, tires and insurance have also increased through the years.

In response, some companies are relaxing the job prerequisites for its employees. Some major companies, including J.B. Hunt, are turning to intermodal transportation — using more than one mode of transport, include rail and air.

Some carriers are thriving in the new climate. P.A.M. Transportation Services Inc. of Tontitown, a small trucking firm, has reported strong gains in the last two quarters, according to Forbes magazine. It appears to be picking up some business from rivals that are less well-equipped to withstand the tighter restrictions.

Some small companies are going out of business and others are merging with larger corporations. For example, WSE Transportation LLC., based in Elm Springs, recently merged with its sister company MCT Transportation LLC. The company is owned by Comcar Industries of Auburndale, Fla.

“The Great Recession has certainly changed the marketplace, and regulation changes will forever be altering the landscape,” Aikman said. “There is a new normal in the marketplace where competition is fierce and there is a constant need to adapt to changes.”