Letters: Size & Weight, Carrier Rates

These letters appear in the Jan. 18 print edition of Transport Topics. Click here to subscribe today.

Truck Size & Weight

In the “Letters & Comments” section of your Jan. 4 issue, BNSF Railway Group Vice President Stephen Branscum sought to clarify a comment from a recent conference, published in a story in Transport Topics. In his letter, he cited as accurate “BNSF’s willingness to work with shippers and American Trucking Associations to develop progressive changes to TS&W rules for the betterment of our nation’s transportation system . . .”

That was an encouraging sentiment but, sadly, it lasted about two seconds. Mr. Branscum then quickly reverted to form, attacking the trucking industry, which, oddly enough, is one of the railroad’s largest customers. He criticized the industry and existing government policies, claiming: “The current system of taxation is subsidizing trucks . . . and provides a competitive advantage to the trucking industry, to the detriment of our nation’s roads and overall transportation system.” He also stated that trucking did not pay its fair share of infrastructure costs. These comments are all the more interesting, coming from an industry that is currently seeking a federal investment tax credit.

It’s disappointing to see the railroad industry unable to overcome old habits. Slamming the trucking industry with the same tired rhetoric does nothing to bring meaningful progress to the infrastructure problems we collectively face as a nation and an integrated transportation industry.

His comments, at best, are disingenuous. When you consider the billions of dollars trucking pays annually through registration fees, fuel, sales and excise taxes, tolls and other assessments — monies intended for bridge and road maintenance and capacity in-creases — Mr. Branscum’s argument doesn’t wash. The larger issue is how some of these funds are being co-opted for uses other than modernizing and repairing our highways. Today, about 25% of every gasoline or fuel tax dollar collected from highway users is diverted to non-highway use — projects such as heavy and light-rail mass transit, bridle paths, bicycle trails and Frisbee parks.

The economic success of the United States cannot be decoupled from our transportation systems. It takes all modes of transportation to move America, and it takes a vibrant, well-designed and well-maintained critical infrastructure to provide the foundation for our nation to compete in the global marketplace. Each mode of transportation plays a role. Shippers ultimately determine the mode that provides the best value proposition.

It should be incumbent upon transportation service providers to work together to improve our nation’s infrastructure. Trucking provides exclusive service to about 80% of our nation’s cities and towns. If the rail industry were to double its intermodal capacity overnight, it would remove only an additional 1.5% of trucks from our highways. Those are inconvenient truths for the rail industry.

The Highway Trust Fund and its funding mechanisms perform as designed and ensure that highway users pay their fair share toward the costs of maintaining and improving our infrastructure. What needs to be addressed are those policy decisions that prevent 100% of these funds from being applied to where they are most sorely needed — our highways.

David L. Miller
Senior Vice President
Global Policy and Economic Sustainability
Con-way Inc.
Ann Arbor, Mich.

Carrier Rates

Carriers and third-party logistics providers — and, as a result, drivers — are in the fight of their lives this year. Granted, part of the problem can be blamed on the recession, but there is no doubt in any driver’s mind that at least 50% of the problem is that 3PLs and carriers are trying to cut each other’s throat.

Diesel prices did not come down when rates plummeted, nor did the cost of insurance, payroll, expenses and utilities — and I bet those who own big companies did not lower their personal salaries, either. I know a few who claim they did, but how many of them still got a bonus?

They want to book the freight at a lower margin and tell the customers they can do it at 5% less than last year, when many expenses were lower across-the-board. Taxes keep going up year after year, but do drivers get cost-of-living raises? No, they don’t. You cannot keep lowering prices and keep providing the same levels of service. It just does not work.

I’m sure some government office could tell us how many carriers have gone under and how many trucks are off the road this year. I’ve heard it’s upwards of 40%, and still more have shut down since. Look how fast Arrow Trucking closed up shop. You don’t close doors that fast and hurt that many people unless something is very wrong internally, like lowering rates so much you can’t afford to pay the bills anymore.

It costs money to live. Many drivers are calling brokers and being told it’s 90 cents a mile — less in some cases — to move a load. Many drivers are starting to tell the 3PLs to go to hell because they can’t run their trucks that cheaply. Figure in all a driver’s expenses — diesel fuel, maintenance, repairs, inspections, food to eat, insurance, truck payments, trailer payments and quite a few more — and they also have personal lives to live.

Do any carrier owners or 3PLs believe for a minute that 90 cents a mile will cover all those expenses? Do they have any real reason to wonder why truckers are going out of business and won’t be there when more trucks are needed?

If there truly has been a 40% loss or more, customers will be sorry that carriers and 3PLs did not take care of drivers at the rates needed to move loads.

Too many carriers and 3PLs are competing when they should be trying to work with one another — and you don’t need unions for this, either. There should be a minimum rate to move to a given zone, and if it is the rational and reasonable number, no load ever should be booked for any less and the amount per mile should go directly to the truck. If carriers or 3PLs want a margin, they add it on top of that minimum.

If carriers and 3PLs want to compete with each other, they should use their own margins and stop cutting into the monies the trucks need to operate their business.

Part of me hopes we get back to 2005 freight volumes, and then carriers and 3PLs will understand fully what they did to us all. Those already out of business know exactly what I’m talking about, and I hope those still in business don’t have to learn the hard way. Customers should be charged a fair margin for a fair job done.

Daniel Mitchell Jr.
CR Danstar Transportation LLC
Somerset, Wis.