The trucking industry presents a rich example of the intersection between the public’s demand for safety and consumers’ demand for low-priced goods delivered when they want them.
The essence of the trucking intersection is the presence of very large vehicles mixed among the very small vehicles motorists drive. Even the dumbest motorist knows that when an accident involves a large truck and car, the car loses. The result is a strong and well-understood public demand for tight trucking regulation, a demand the railroad lobby and political class gleefully leverage.
In trucking’s hyper-competitive market, truckers furiously drive as many miles per day as possible to lower costs and increase revenue. Shippers leverage this competition, creating a cost-driven market that shamelessly abandons contractual agreements in search of a few more cents per mile of savings.
This competition leads to two practices that strain the public’s tolerance for sharing the highway with big trucks. Both involve the pressure to drive long hours. The most common problem is extending the duty day to make a tight delivery, stop at a preferred rest stop, or pick up a conveniently located load. Most days, drivers may work less than the legal maximum, but on special days they drive extra, just like we occasionally work well into the night.
The second problem is the more flagrant violation of Hours of Service rules to accomplish things never possible under the normal rules.
For example, moving a load from Los Angeles to Denver, a 1,000-mile trip, would take a truck more than 13 hours, even at 75 mph. A team can do it legally. A solo driver cannot. Yet the team-based expedited carriers complain that their prime competition is single drivers.
It’s a Drag
Those pressures create the concept of ‘regulatory drag’—the productivity hits from increased regulation.
In some eras of regulatory stability, little changes. We had that through the 1990s and 2000s. However, during the Obama Administration, the safety lobby and its allies in the regulatory agencies proposed almost 30 significant regulatory changes negatively affecting either productivity or the supply of drivers.
The coming dearth of new regulations is due, in part, to a sea change in the direction of regulatory policy. The Trump Administration is solidly in favor of reduced regulation, either through its elimination or a more limited interpretation of existing regulations.
There are three effects of this change. First, the Federal Motor Carrier Safety Administration is making slow progress on two major changes on the horizon: the Drug and Alcohol Database and a comprehensive slate of driver training requirements. Both are scheduled to begin in late 2020, but even during a regulatory-friendly administration, new regulations are often delayed. I expect more delays under Trump’s leadership.
Second is the issue of lenient interpretation, or enforcement, of current regulation.
Third is the chance of regulations being eliminated either through legislative or administrative action.
After nine years of regulatory changes almost every year, we are looking at no new regulation until 2021 or 2022. The sharp change in the regulatory environment will change the market direction: downward in price and upward for better capacity utilization.