Can a Growing Economy Offset New Regulatory Costs?
Disclaimer: The views and opinions expressed in this article are those of the author and ATRI and do not necessarily reflect those of C.H. Robinson.
The American Transportation Research Institute (ATRI) collects massive amounts of both trucking industry and government data, anonymizes it, and then analyzes the data in myriad ways. For instance, with our “operational cost” analysis we can see that per-mile and per-hour fuel costs are reaching all-time highs, and may exceed 2008 costs in the next year. We can also see that driver wages and bonuses are climbing for veteran drivers—both because of the driver shortage and the need to keep “safe” drivers from heading to greener pastures.
Here’s even more good economic news in the research. Truck tonnage has been up four straight years in a row. The American Trucking Association’s (ATA) long-term analysis, supported by Global Insight data, shows the trucking industry’s share of tonnage will continue to erode the other modes’ market share.
Unfortunately, our research analyses also document the unintended consequences and cost impacts of new regulations.
CSA. ATRI didn’t make a lot of friends in Washington D.C. last year when we statistically documented flaws in the new CSA safety management program. At least two to three of CSA’s BASIC scoring formulas have an “inverse” relationship between crash risk and scoring. That is a scientific and savvy way to say the relationships between high (bad) BASIC scores and future crash risk are seriously flawed. This is particularly clear in the Driver Fitness BASIC, where both the percentile score and alert score appear to support the notion that “the worse your safety score, the safer you are.” We’ve had carriers ask us what they should tell the 96% of all shippers that are now checking carrier CSA scores for safety risk. The short answer is: No idea.
At the end of the day, the most challenging BASIC to deal with may be the Crash BASIC, in which the carrier or driver could have zero negligence and each and every crash will further deteriorate your safety score. One of our case studies includes a carrier who has had three DOT-reportable crashes in 18 months, none of which were caused by the carrier or driver (one was caused by a county sheriff who illegally turned in front of the truck). The carrier’s Crash BASIC is now teetering near threshold, and there’s nothing that can be done to protect the carrier from scrutiny by inquiring enforcement, customers, and the insurance agents.
Hours of service (HOS). ATRI’s latest HOS analysis researched the impact of the new 34-hour restart provision, using more than 40,000 unique general population truck driver recorders. In contrast, FMCSA used 1,000 drivers from marginal carriers involved in compliance reviews. Not surprisingly, ATRI’s data analysis came to different conclusions than did FMCSA, including a difference of nearly $400 million in costs versus benefits. Please visit ATRI’s website for detailed information.
Most importantly, ATRI analyzed critical productivity and safety benefits that the government did not consider. For starters, more than 80% of drivers experienced a loss of miles and/or pay. Some as much as 10% or more in lost wages. Worse, the new regulations that require two consecutive breaks over the 1:00 a.m. to 5:00 a.m. period appears to create staging that moves large trucks into morning peak-hour congestion in much higher levels than previously experienced. This increase in car-truck exposure wasn’t calculated in the benefit-cost analysis of the HOS regulations, but is a real cost that will primarily be borne by the industry.
The only short-term solution on this horizon is to continuously promote regulatory cost-benefit analyses that focus on direct costs and benefits, and which actively look for the unintended consequences. Hopefully this practical approach can take root quickly, and support rather than hinder our newly growing economy.