New Trucking Rules Could Slam Businesses, Consumers

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Published July 03, 2013

| FOXBusiness

New regulations in the trucking industry are forcing many drivers to pull off the road, and businesses and consumers across the country could end up paying the price.

The rules went into effect on Monday that limits the work week to 70 hours from 82, requires a 34-hour “re-start” period after working 70 hours that must include two 1 a.m. to 5 a.m. time periods, and mandates drivers take a 30-minute break during the first eight hours of a shift.

The new requirements were announced in December 2011, and the industry had 18 months to implement the rule — and it came at a cost. According to Dave Osiecki, vice president for safety policy at American Trucking Association, transitional costs were about $320 million.

While experts disagree on the necessity of more stringent industry rules, they agree on safety being a priority and that trucking is vital to the strength of the economy, so any new rules need to be thoroughly researched and studied for residual effects.

“Trucking is harder to regulate than most industries,” says Henry Jasny, vice president of Advocates for Highway and Auto Safety. “Most freight moves location to location on the back of trucks, but it’s a very varied industry; drivers are not always doing the same thing week to week, or the same schedule.”

The Federal Motor Carrier Safety Administration (FMCSA) estimates the cost of the regulations to be half a billion dollars for the industry, but adds that better driver health will bring a net gain of $200 million. 

“The updated hours of service rule makes three commonsense, data-driven changes to increase safety on our roadways and reduce driver fatigue, a leading factor in large truck crashes," said DOT's Federal Motor Carrier Safety Administrator Anne Ferro in a statement to FOX Busines. "FMCSA developed the rule based on the latest sleep science and sought input from all sectors including small business owners, drivers, shippers, safety advocates and trucking companies."

However, Osiecki isn’t convinced of these numbers.

“This is just another cost that companies have to absorb, and those costs will be passed along to consumers. Small trucking companies might have a harder time absorbing these costs.”

Less Productivity Mean Higher Prices?

Less time behind the wheel, could bring higher prices for consumers.

Leaders in the trucking industry say the rules will reduce productivity between 2-10%. “Now we are moving the same amount of freight with less time on the road, which means companies have to add trucks and drivers, and that comes at cost,” says Osiecki.

Lyndon Finney, editor of The Trucker, says the productivity slowdown will directly impact businesses of all sizes. “If you buy more trucks and hire more people to close the gap, someone has to pay for those new trucks and people. On the other hand, if companies decided to operate at less capacity, that will also increase rates, and who pays for that? The consumer.”

The new rules will affect around 15% of the industry, mainly long-haul drivers that get paid by the hour, and according to research from the American Transportation Research Institute, less than 2% of drivers work around 82 hours a week.

However, Finney says the impact of the required 30-minute breaks every eight hours could also weigh on productivity and wages. “By the time a driver pulls off an interstate, finds a parking space, gets parked, waits the 30 minutes and gets back onto the road again, 45 minutes to an hour has likely passed. That means losing around 45-50 miles a day, multiply that by five or six, that’s 300 miles and for drivers paid by the mile, that financial implications are huge.”

Business

“The tangible goods economy moves on trucks, the tougher you make it to deliver, the harder you are making it on an industry that has already been hard hit,” says Osiecki.

Businesses that rely on trucks to move their products and get their materials might experience a slowdown, particularly manufactures, according to Mitch Free, founder of manufacturing marketplace MFG.com.

“Factories rely on truckers to get raw materials to them, and over time the industry will re-adjust to meet needs, but that comes at a cost that will be passed along to factories, and that cost will be passed along to consumers.” Not having the supplies can cause factories to shut or slowdown and not meet order demand, he adds, which could mean less hours for workers.

“It will take six months to a year to get back to norm after the requirements, the factories will struggle to get the raw material they need to keep workers busy full time and keep their products on retailers’ shelves,” Free says.

He also says small businesses could also feel the pinch from the new regulations. “They rely more on trucking because they don’t have the money to buy a lot of raw materials and supplies and keep an inventory, they rely on those just-in-time deliveries. They don’t have the money or space like the bigger players who may have anticipated the slowdown and stocked up on supplies.”

Delivery demands have increased substantially over the years, with many retailers promising same-day or next-day delivery, adding to the burden of the truck driver. “Societal trends have put more pressure on trucking hours, it’s the fault line that broke causing the earthquake to allow more hours. Everything is being demanded instantly and that causes pressure to move things quicker,” says Jasny.

Time-sensitive shipping items like refrigerated food might also see a rise in prices. “It has to be in a temperature-controlled truck, the food industry, food manufacturing and mechanical industry will have the hardest and most expensive time adjusting.”

Flexibility

Drivers' schedules tend to be dictated by two of the most unpredictable events in life: weather and traffic, and truckers worry the new requirements hinder their flexibility.

“Shipping, receiving and trucking is by no means an exact science,” says Finney. “When a driver leaves Sunday, he might have his whole week planned out, but come Tuesday, something can happen that messes up everything, and under the re-starts rules, they are already into the week and he could just sit and lose hours.”

The re-start provision requires drivers to take a 34-hour break every 70 hours and that downtime needs to include two 1 a.m. to 5 a.m. time periods. “Once that clock starts running there’s no way to stop it,” says Osiecki. “When you are on the clock, the closer you get to the end of the clock the more stressed out you get.”

Drivers like to drive through big cities before dawn or late at night to avoid congestion, but the sleep periods could force many drivers to be headed through as commuters head to work, adding to cities’ traffic problems.

But Jasny points out traffic congestion is a trade off for safety. “Congestion means slower-moving traffic and more-alert drivers so you aren’t getting high-speed collisions, you are getting fender benders, it’s not the worst thing in the world.”

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