Opinion: The Road to 2007
By William J. Canary
I>President
merican Trucking Associations
American Trucking Associations’ ongoing campaign to mitigate the impacts of EPA’s ill-conceived consent decrees is well-documented. Though our primary goal has been to mitigate the impacts of the consent decrees on motor carriers, our focus is far greater. Our campaign strives to bring common sense, objectivity and integrity back into the government decision-making process. This especially holds true with technology-forcing regulations, such as EPA’s upcoming 2006-07 diesel engine emissions rule, which stands to place a far more onerous burden on the nation’s motor carriers than what we will see this October.
ATA is not opposed to government actions that improve safety, health or the environment. In fact, we applaud and support those efforts. However, all government actions should be equitable, cost-effective and well thought out. Government action in this case fails on all three fronts. ATA’s campaign, therefore, looks to educate policymakers
t all levels of government in the hopes of mitigating this problem.
he facts speak for themselves. In all arenas, our concerns have focused on five key areas: economic, fuel, reliability, residual values and environmental benefits.
The economic concerns associated with post-October truck purchases are based upon much higher engine costs than originally estimated. In 1997, EPA stated that October 2002 engines would increase costs by only $664 per vehicle. Industry estimates today place cost increases at $11,057 to $15,892. These figures are 12 to 18 times higher than the 1997 EPA estimates. In addition, EPA has since increased its engine life cycle costs to $8,943 per engine. One can see the economic dilemma facing our industry with nonconformance penalties as high as $12,210 per engine on older engines sold after Oct. 1.
These escalating costs and concerns over uncertain long-term performance of October 2002 engines are leading truckers to “pre-buy” trucks. New truck order slots through October 2002 are currently filled, and used truck pricing is also firming due to stronger demand. As part of our campaign, ATA conducted a survey of 815 motor carriers, which confirmed the current pre-buy and a probable low-buy in 2003. ATA has stated that dramatic drop-offs in new truck demand will likely force layoffs in trucking-related industries. Our worst fears are now beginning to materialize. In its Aug. 12 edition, Transport Topics reported that Detroit Diesel Corp. plans an extensive layoff of employees, as truck buyers have placed few orders for October 2002 engines. More bleak employment news may begin to surface shortly.
Our industry is comprises mostly small businesses, with almost 45% of motor carriers owning only one truck, and 82% owning fewer than 20 trucks. Net profit margins in the trucking industry are a thin 1.7 cents per mile. While all motor carriers will suffer from paying dramatically higher prices for new trucks, small carriers could find the increased costs threatening their very survival.
In addition, trucking fleets are reluctant to purchase new engines because they have not been made readily available to field-test in advance of the October deadline. While an insufficient number of engines have been made available to some fleets to test, such engines have limited in-use miles. Further, motor carriers will suffer fuel economy penalties of between 3% and 5% when purchasing a new engine. As fuel is often the second-largest expense borne by fleets, motor carriers will take another financial hit.
ased on a lack of hard data, trucker confidence in the reliability of the new engines is non-existent. It is expected that the first generation of new engines will have significantly lower residual values given their lack of testing. Last, and perhaps most noteworthy, the pre-buy has eliminated many of the emission reduction benefits that would have been realized under the terms of the original consent decrees since fleets are avoiding purchasing the cleaner engines and are holding onto their older engines longer.
Some environmental special interest groups have painted our industry as being anti-environment and named ATA as “clean air villains.” Nothing could be further from the truth. The trucking industry is proud of its environmental accomplishments and takes a back seat to no other industry. We’re not at war with the environment. We simply want an engine that has been responsibly tested and proven to work.
ATA serves as guardian to this great industry, with an obligation to both our members and the nearly 10 million hard-working Americans employed in trucking-related jobs. Motor carriers were not parties to the consent decrees yet they will be the ones forced to absorb the financial impact. We will not stand idly by when our industry’s rights are trod upon.
his campaign has only just begun. The road to 2007 is a campaign with a mission to bring common sense, objectivity and integrity back into the government decision-making process — a process that must recognize that trucking is the essential economic backbone of our nation.
American Trucking Associations, Alexandria, Va., is a trade association representing the motor freight carrier industry. ATA owns Transport Topics Publishing Group.
This story appeared in the Aug. 19 print edition of Transport Topics. Subscribe today.
