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American Trucking Associations President Chris Spear said the trucking industry continues to show resilience despite challenges in the U.S. economy, marked by two straight quarters of negative gross domestic product and interest rate hikes by the U.S. Federal Reserve that aim to slow decades-high rates of inflation.
“We’re starting to see a lot of the impact of the Federal Reserve decision to raise interest rates, and the impact it is really having,” Spear said during an appearance on the Transport Topics Newsmakers video program that will debut Aug. 11 (register here to watch). “We have 40-year highs in inflation, nearing 10%, and record highs on fuel. Even though it’s coming down, it’s still over what it was a year ago, and it’s certainly going to be impactful on our industries and our ability to serve and help climb out of this. The Fed tried to tap the brakes to slow the economy, and instead we’re hitting the emergency brake, we’re sliding around corners. That creates a lot of uncertainty, not only in trucking, but the entire economy.”
ATA Chief Economist Bob Costello has put at 50-50 the probability of a U.S. recession during first-quarter 2023, a view that Spear noted incorporates a wide range of influences.
“You have to look at a collective number of factors, and I think that’s what Bob and his team have been really analyzing,” Spear said. “There are so many factors within the economy that remain very strong and are resilient against these factors — such as inflation and fuel costs — that it gives us a little bit of hope we can come out of this very quickly. But we still have at least three to four quarters before we see anything positive in that sense.”
Spear also said he is watching closely the implementation of California’s Assembly Bill 5, which reclassified an estimated 70,000 drivers who were independent contractors to now be considered W-2 employees of trucking companies. The U.S. Supreme Court in late June declined to hear a challenge to the law.
“I continue to say that Sacramento is the breeding ground of all bad policy,” Spear said of the California capital. “I haven’t seen a thing come out of that town that has helped our industry or our economy. They continue to set standards that not only impact California but spill over to that region and the entire country. We’re recipients of that because we are interstate commerce.”
Spear expects further court action on how the law will be implemented, as he maintained that it was written “deliberately vague.”
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“It’s vague for a reason, and it’s intended to be litigated,” he said. “If you’re an employer and you’re hiring and employing independent contractors, our advice to them is to get counsel, retain counsel and prepare for this. You do not want to be caught off guard.”
Spear expressed hope that California Gov. Gavin Newsom and state officials would use discretion with enforcement of the law, and provide the industry time to sort out potential ramifications. Especially, he noted, with ongoing supply chain snares and stress along the West Coast ports. “This would be a very hard time to inject another layer of bureaucracy on top of our industry’s ability to keep the supply chain moving,” Spear said. Along the East Coast, Spear is optimistic that the trucking industry will prevail in a legal battle against a truck-only tolling plan in Rhode Island. A federal bench trial on the program concluded June 13, and both sides have since had time to file final paperwork before U.S. District Judge William Smith issues a decision. That’s expected later this year. “We anticipate the judge’s intention is to make a decision by September, and we are very optimistic,” Spear said. “This is bad policy and it’s unconstitutional.”
Spear noted that ATA and the Rhode Island Trucking Association have been fighting the tolling plan for more than four years and were pleased to finally have the case before a judge.
“I think we held our ground,” Spear said. “The judge had a lot of hard questions for the state, and they were unable to answer them. One of the biggest indicators that I came away from during the trial was the fact that our witnesses did not get cross-examined. Our witnesses were that well-prepped.”
Spear noted that Rhode Island could appeal if it loses in court, but stressed that the national implications of the case have warranted the yearslong battle since other states could be mulling similar plans. “If he rules in our favor, it will be a huge victory,” Spear said.