Transportation policy: Senate hearing focuses on fuel conservataion
Jeff Berman, Group News Editor -- Logistics Management, 5/7/2008
ARLINGTON, Va. and WASHINGTON—A ranking member of the American Trucking Associations (ATA) asked Congress yesterday to support the trucking industry in reducing fuel consumption and addressing the rising costs of fuel.
Testifying before the Subcommittee on Highways and Transit of the House Transportation and Infrastructure Committee, Mike Card, ATA State Vice President and president of Oregon-based Combined Transport, said that rising fuel prices, coupled with the ongoing domestic economic downturn and soft freight transportation market, is having a severe impact on trucking companies.
And with the average price per gallon of diesel gasoline now at $4.149 per gallon and oil at more than $122 per barrel, the topic of fuel and its impact on transportation operations remains at the top of the list for shippers and carriers.
At the hearing, Card requested that Congress do the following: create incentives to speed the introduction of auxiliary power units to reduce main engine idling, establish a 65 mile per hour national speed limit, and support the Environmental Protection Agency’s SmartWay Transport Program.
The concept of lowering truck speeds to conserve fuel and cut down on transportation expenses has received a fair amount of attention and consideration of late, with Con-way Freight announcing in March that it planned to reduce its speed governors to run at a maximum of 62 miles per hour—rather than 65 miles per hour—to improve fuel conservation.
A consumer apparel shipper told LM in an interview earlier today that this concept makes sense on multiple fronts.
“I think it has some plausibility,” said the shipper. “We should look at something like that. Not only does it conserve fuel, but it also improves safety on the roads as well.”
TRUCC Act: Another prevalent fuel-related topic on the minds of many freight transportation stakeholders is fuel surcharges.
Last month, a new piece of bipartisan legislation geared to help owner-operator truckers by passing along 100 percent of fuel surcharges charged to shippers to truckers rather than freight brokers was introduced.
The bill, entitled “S. 2910 The Trust in Reliable Understanding of Consumer Costs (TRUCC) Act,” was introduced by Senators Olympia J. Snowe (R-Maine) and Sherrod Brown (D-Ohio). The senators said in a statement that this bill “would free small business operators and carriers from the stranglehold of unscrupulous brokers and middle-men who charge shippers for fuel costs but refuse to pass those costs on to operators that actually pay for the fuel.”
While this bill would clearly help owner-operator truckers recover fuel costs, it is not nearly as cut and dried, according to various industry sources.
“I believe this legislation is really about the fact that many small and medium size trucking companies have an adversarial relationship with brokers,” said Tim Miller, president & CEO, Intelligent Logistics LLC, a logistics and brokerage services provider. “Some appreciate the fact that brokers can keep their trucks moving, while other begrudge that the broker is making money for doing so.”
Miller added that if the broker is the problem, trucking companies should obtain their own customers with shippers directly rather than rely on the broker. This practice, he said, is somethingtrucking companies do, and only rely on brokers for backhaul when they find themselves in places where they are unable to secure freight directly from a shipper in a timely manner.
“It is an awful piece of legislation,” said Michael A. Regan, CEO of transportation rate analysts TranzAct Technologies.
While the objective of this bill is not necessarily a bad one, noted Regan, he said it fails to understand a few key factors. The first one being how shippers buy transportation through a combination of service and price—with price being a combination of line-haul plus fuel surcharges.
At yesterday’s hearing, Subcommittee on Highways and Transit Chairman Peter A. Defazio took a different slant on TRUCC, explaining that each time the price of fuel increases by five cents a gallon, a trucker’s annual costs increase by $1,000. He cited how in April, diesel prices increased by more than 20 cents per gallon—or $4,000 to an individual truck driver.
“[W]hen a fuel surcharge is assessed, the surcharge doesn’t always make it to the person who is paying for the fuel,” said DeFazio. “It’s only fair that the person who pays for the gas receives the surcharge, just like it’s only fair that when a shipper pays a fuel surcharge to a broker, carrier, or independent driver that they are certain it’s actually paying for fuel. I am confident that most brokers and carriers are honest operators that pass any fuel surcharge to the person who purchases the gas. But there are bad actors out there and that’s why I’ve introduced the Trust in Reliable Understanding of Consumer Costs (TRUCC) Act.”
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If you dont want the load for a price a broker offers, then don't take it.
Jack - 2008-25-6 09:22:00 EDT -
I currently work and represent a highly respected Trucking company based here in Oregons Willamette Valley. Daily I am overwhelmed with the negotiation process of shippers not willing to pay the current fuel surcharges and carriers shutting their trucks down/laying drivers off, and selling their equipment due to the dramatic high cost in diesel - no one wants to pay for. Mr Peter Defazio - Act Now! Propose this damn TRUCC bill and force the dishonest Brokers to hand over ALL the fuel surcharges their shippers are paying in addition to thes trucks base rates. No shipper or broker should be allowed to make money on the fuel!!!!!!!! only on thier base rates to the trucks. Please act quick as there are many crooked greddy persons in this industry who are feeding the cause by destroying the truckers income while padding their pockets. While many more of us honest brokers still exist - we need there to be a law so this industry can try to rebuild itself and keep this country moving instead of putting men out of jobs and us consumers out of money. Pass this into law immediately
The Freight Queen - 2008-29-5 03:48:00 EDT
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