Opinion: Slow Downhill Run Since Deregulation

By Winston G. Chandler

America is riding the crest of an eight-year economic boom. Trucking companies are busy delivering more freight than ever. So why are trucking companies suffering? Don’t kid yourself. We are weaker and more fragmented today than ever.

Any industry that averages a 2% net profit margin and routinely faces a 100% turnover in its workforce is suffering. When everybody is putting his company up for sale amid a flurry of acquisitions, there isn’t much long-term optimism for survival. And when an industry believes its answer to increased profits is to haul more volume at the same price, we have become delusional.

There was a time when the nation’s trucking companies delivered the freight on time and made money doing it. The general public regarded truck drivers as the professionals they were. Owners of trucking companies routinely generated an 8% profit margin. Drivers earned a decent wage and stayed. Trucking companies were protected from shippers that wanted to arbitrarily cut rates. But I refer, of course, to those years before federal economic deregulation.

I am an enemy of deregulation. Aside from allowing many of you to form a trucking company, deregulation has not benefited either the public or our industry. I formed a trucking company in 1953. I subsequently served as a board member of various state and national trade groups for many years. I also served on tariff bureaus. I opposed deregulation in 1980, as did most of my counterparts at the time. We fought it because we believed deregulation would slowly bring reduced rates, safety problems, a fragmented industry and, ultimately, lower corporate profits. It’s taken 20 years but our fears are being realized.

Deregulation was not driven by the trucking industry. Its strongest supporters were the nation’s biggest shippers — Sears, Westinghouse Corp., General Electric — and the railroads. By dismantling the regulatory tariffs and controls over trucking, shippers believed rates would go down and their profits would go up. They were right.

Former President Jimmy Carter told me in 1979 that he supported deregulation because it would save the general public $19 billion annually. I actively supported President Carter, having been a life-long Democrat, but I responded that he was getting some bad advice on this issue. You see, all of the trucking companies in America weren’t generating profits collectively that totaled anywhere near the $19 billion that the public was going to save.

The shippers got their wish and Congress deregulated our industry. The tariff bureaus were dismantled. Operating authorities became worthless. Shippers canceled contracts and forced carriers to turn on each other. Freight rates went down, and so, too, did trucking companies. New companies were formed by owners who were willing to haul the freight at any price in order to get the business. Our industry has been on a slow downhill run ever since.

Sure, deregulation has allowed more people to start a trucking company. There are more than 100,000 trucking companies today compared with 15,000 prior to deregulation. But in the 20 years since deregulation, ask yourself — has our industry truly prospered? Is our industry safer? Is our workforce well-paid? Is our industry financially solvent or highly leveraged? Are profits higher? Is capital investment in our industry strong?

It’s time we petitioned Congress to support economic re-regulation of the nation’s trucking industry. Trucks will always deliver the nation’s freight. The real question is, at what price are we willing to keep delivering it?