Fleets Say Drive-Time Cut Would Boost Freight Costs

This story appears in the Aug. 9 print edition of Transport Topics.

While the trucking industry waits for the Obama administration to complete its review of a new hours-of-service proposal, executives with some of the nation’s largest fleets warned that a cut in driving time would result in higher consumer costs, reduced efficiency and increased pollution.

If DOT or Congress “reduces the hours of service from 11 hours a day of driving, to say, nine . . . they are actually reducing capacity by the equivalent of 250,000 trucks,” said Stephen Russell, chairman and chief executive officer of truckload carrier Celadon Group Inc. “That’s going to cause pricing to go through the roof.”

Late last month, in compliance with a federal court settlement with Public Citizen and the Teamsters union, the Federal Motor Carrier Safety Administration sent its new HOS proposal to the White House for review. The rule is expected to be made public later this year.

The current rule allows for 11 hours of driving within a 14-hour period, followed by a 10-hour rest period. In June, Public Citizen put forth a suggestion that driving time be cut back to eight hours within a 12-hour period.

Jack Holmes, president of UPS Freight, the less-than-truckload division of UPS Inc., said he is concerned fleets would have to hire more drivers, and put more trucks on the road, if driving time is reduced.

“If you have a proposal that results in more trucks on the road, it would certainly seem to be flawed,” Holmes said.

Randy Mullett, director of government relations for Con-way Inc., said “the less hours when people are out on the road equals less productivity and less use of your assets.”

A reduction in hours will be costly for trucking, he said, but it was not yet entirely clear how costly.

“What is difficult to figure is how much extra capacity does it require for additional equipment,” Mullett said. “Does it change the ratio of tractors to trailers? I don’t think we have a good handle on that yet.”

Celadon’s Russell said higher costs ultimately would get passed through to the consumer because “nobody’s going to eat it.”

“It is going to drive pricing through the roof, and whatever every Tom, Dick and Harry buys, whether they’re buying American cheese or buying products from anywhere . . . it’s going to cost more,” he said.

Holmes said when a new rule is published, fleets will have to review not only routes but entire transportation networks to see if changes need to be made to minimize the effects on customers.

Mullett agreed, saying that it is possible that “some things that are next-day [delivery] now may become two-day.”

However, he was able to find a small upside for Con-way if there is a change.

“From the Menlo point of view . . . it might be a whole bunch of work for us, so every cloud might have a silver lining,” Mullett said referring to Menlo Logistics Worldwide, the company’s logistics division.

David Abney, UPS’ chief operating officer, said the company believes no change in the rule is needed.

“The safety numbers since the change was made in ’04 back that up,” Abney said. “If we felt that was an issue, it wouldn’t take the government saying that they needed to reduce the hours; we would the appropriate steps ourselves.”

Despite the uncertainty, Mullett said it was too early for Con-way to spend time worrying too much about what might happen.

“We feel like that we’ve got the right people and systems that we can respond to a change,” he said. “We’re hoping that it is not one that’s really costly or disruptive to the industry.”