The art of legislating

By William J. Augello Esq. -- Logistics Management, 6/1/1999

In the next millennium, shippers will need to convince upper management that the logistics function is so crucial to their operational success that companies should devote time and money to logistics-related legislative activities.

Shippers have not been as active in this regard as have carriers. The trucking and railroad industries have succeeded in building effective Washington lobbies, and they continue to have a greater influence on Capitol Hill than do shippers. They have accomplished this despite the overwhelming wealth of America's industrial giants.

Shipper groups and trade associations have to be sold on the idea of building a strong transportation lobbying coalition. They may be resistant for several reasons. First of all, conducting a lobbying campaign requires raising substantial funds and commitments for five years or more. Building coalitions of shipper groups also is difficult because each organization's primary interest lies in its own products and their specific problems, such as hazardous-material regulations or food and drug laws. The only common thread among these shipper organizations is that they must get their products to their customers quickly and safely.

Carrier organizations, on the other hand, have a stronger bond because transportation is their primary business. They are willing to devote significant resources to any legislative issue that affects their industry. They know how to build PACs (Political Action Committees), and they know where and how to spend lobbying funds most effectively.

Shippers, by contrast, have never created an industrywide PAC fund specifically for a transportation issue. Although it would be beneficial for shippers to create one, it would be difficult to get corporate funds for it. Transportation is likely to be a low priority after legislative funds have been set aside for product-liability reform, taxation, minimum-wage laws, and so forth. If logistics professionals could organize coalitions of shipper groups and concentrate on industrywide issues, they might find it easier to obtain legislative funding from their companies.

The only bright light on the horizon for shippers is Corporate America's growing recognition of the importance of transportation and logistics in our global economy. Deregulation of transportation industries has produced such impressive savings that upper management is beginning to view this segment of its business with greater respect and attention.

The dark side to this scenario is the growing use of asset-based third-party logistics providers. A carrier-controlled 3PL cannot be expected to develop a passion for legislative reforms that may be in a shipper's best interest but which may not be in a carrier's best interest. A perfect example is the trucking industry's unwavering commitment to replacing full-value liability for the safe delivery of goods with a uniform maximum liability of $2.50 per pound, which shippers adamantly oppose. Whose interest would an asset-based third party represent in this situation? Clearly, a shipper that has entrusted all of its shipping activities to an asset-based logistics-service provider must maintain internal expertise capable of recognizing opportunities to protect and improve its distribution system through remedial legislation.

Who among the logistics professionals of the future will "step up to the plate" to rally support among the shipper community for fairer transportation legislation?

William J. Augello Esq. has practiced transportation law for 46 years. He also is the executive director of the Transportation Consumer Protection Council, an organization that is devoted to protecting shippers and receivers in transportation matters, such as freight loss and damage, undercharges, and contracts. He can be reached at (516) 549-8984 or via e-mail at augello@transportlaw.com.