July 20, 2013

Safety rules for truckers have price tag

The drop in productivity means billions of dollars to the industry, which says the cost 'has to be passed on.'

Bloomberg News

(Continued from page 1)

click image to enlarge

In this 2011 file photo, an Oakhurst truck driver prepares to head out for deliveries. 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.

Jill Brady / Staff Photographer

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 chief executive officer of Maverick USA, a trucking company based in Little Rock, Ark., said June 18 in testimony to the House Transportation Committee.

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 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.

"We're going to have to change some routing, change the network, which is going to change some drivers and handoff points," Jensen said in an interview. "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."

 

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