Opinion: Needed: Mandatory Fuel Surcharge

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B>By Robert A. Hirsch

I>President

ruckload Carriers Association

Robert A. Hirsch TCA President

Fuel prices have reached an all-time high and every expectation is that prices will continue to increase for the foreseeable future. According to American Trucking Associations’ chief economist, Bob Costello, 1,000 motor carriers with five or more trucks are expected to fail with every 10-cent increase in diesel fuel prices. Yet, in spite of these sobering facts, the trucking industry can’t seem to find a way to unite to support legislation that would impose a mandatory fuel surcharge that will ensure that carriers have the ability to reasonably recover operating costs that are dramatically rising and over which they have no control. The existence of this split within our own industry holds out the prospect of making more problematic the passage of legislation at a time when such legislation is so critically needed by so many.

Opponents to a mandatory fuel surcharge argue that the industry is deregulated, that carriers can negotiate individual surcharges with their shippers, and the bankruptcy of some carriers is merely a byproduct of competition within a deregulated market. Such arguments, however, fail to take into account the significantly adverse impact the current situation will have on the stability of our industry’s most important resource — the current and future pool of drivers — if it is not soon remedied. Indeed, even carriers that have been able to negotiate individual fuel surcharge agreements have begun to realize that their negotiated surcharges did not contemplate the rapid and significant fuel price increases now occurring and provided for a “delayed kick-in” of their surcharges for periods ranging between 30 and 90 days.

Because of the industry’s inability to join together and get behind a fuel surcharge, a significant number of experienced owner-operators have already left the industry, and more will leave in the near future if things don’t change. The industry’s loss of experienced drivers is not limited to owner-operators. The time delays contained in negotiated surcharges are forcing carriers to let company drivers go to pay for the increased fuel costs these carriers must bear during the “kick-in” period.

“So what?” you say. “It’s not my problem. I have a surcharge that compensates me.” Or you may be saying, “I don’t use owner-operators.” Or that “I only hire experienced drivers, so it does not affect me that some drivers are leaving the business.”

But it does.

You may recall the 1997 ATA Foundation study that concluded that the industry would annually need to add 80,000 new drivers because of growth and attrition. Even if we say the number is only 60,000 for the foreseeable future, that’s still a lot of new drivers to bring into the industry. Where are they going to come from? Even if you only hire experienced drivers, they had to get their experience somewhere; in most instances, it was from the very same truckload carriers that are now in desperate need of a mandatory fuel surcharge.

While our driver pool continues to get older — the average age of drivers in 2000 was already older than forecast for all workers by 2006 — the government continues to ratchet up the qualifications drivers must meet, further reducing the potential number of candidates from which the industry will be able to draw new drivers. Moreover, the industry’s traditional driver sources — the farms and military — have also been drying up. As a result, we are increasingly looking to the less traditional communities to fill our next pool of drivers, such as the Hispanic and African American communities.

Over the past two years, TCA has been working closely with the National Council of La Raza and the Urban League to develop programs intended to generate a steady and reliable stream of new drivers. Based on our discussions with both organizations, in order for our efforts to succeed, this industry must be able to provide entry-level jobs that are not only well-paying but stable. Getting a mandatory fuel surcharge enacted into law is an important first step and will help not only to keep existing drivers, but also to ensure that future industry needs can be met. That is why it is important for the industry to work together in support of a fuel surcharge.

The trucking industry also faces many other significant challenges, including mounting insurance premiums, the prospect of increased taxes, inadequate number of rest stops, truck size and weight issues, engine emissions, tort reform, hours of service and highway reauthorization. The fact that an issue affects one segment of our industry and not another, or affects one group of carriers more directly than others, does not justify standing on the sidelines. In the end, the ability of this industry to address its issues successfully is dependent on how well the industry is able to act as one — which means finding ways to compromise and minimize the differences.

That is the true purpose and role of a trade association. However, trade associations can be very much like committees. And in that vein, former Supreme Court Justice Arthur Goldberg once spoke of the shortfall that is common to many committees: “If Columbus had had a committee he would still be at the dock.” It’s time to put away our differences and act as one.

The Truckload Carriers Association, Alexandria, Va., represents the interests of truckload motor carrier companies. It is affiliated with American Trucking Associations.

This article appears in the March 10 print edition of Transport Topics. Subscribe today.