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October 7, 2013 2:15 AM, EDT

Shutdown Impact Minimal

Freight Officials Wary of Long Budget Impasse
By Michele Fuetsch, Staff Reporter

This story appears in the Oct. 7 print edition of Transport Topics.

Freight transportation officials said their companies suffered only minimal effects from the federal government shutdown last week but added they were preparing for disruptions if the budget dispute drags on.

While most federal agencies were shuttered, the Federal Motor Carrier Safety Administration and Federal Highway Administration were among the few continuing normal operations because they are supported by the Highway Trust Fund and not the general budget.

Likewise, U.S. Customs and Border Protection continued processing freight at ports and border crossings because inspectors are exempt for security reasons from the furloughs the shutdown imposed on 800,000 federal workers.

“We can see out the windows, and dockworkers are working, the ships are being loaded and unloaded,” Phillip Sanfield, a spokesman for the Port of Los Angeles, told Transport Topics.

However, the U.S. Department of Transportation said that furloughs would include 18,418 of its 55,468 employees.

Highway construction and maintenance projects have not been affected.

The shutdown comes just as the trucking industry was starting to feel optimistic about the pace of the economic recovery, American Trucking Associations President Bill Graves said.

“We’re clearly concerned, because we think the government shutdown and the potential for ongoing debate over the debt ceiling could really have a very negative impact on consumer confidence and the overall health of the economy,” Graves said during an Oct. 3 television interview. “A lot of tonnage in this country, a lot of product, is moved in support of government functions.

ATA Chief Economist Bob Costello said, “As the economy goes, trucking’s going to go; that’s what it boils down to.”

If the shutdown ends soon and federal workers get their back pay, the effect on the economy will be minimal, Costello said.

Chris Christopher, an economist at IHS Global Insight, noted that back-to-school spending was disappointing, and a long shutdown could lower consumer confidence. That, in turn, could dampen retail sales, leading shippers to hold off moving freight to store shelves from warehouses.

“There’s about 700,000 to 800,000 workers that are not going to work, so less gasoline” is being sold and they aren’t going out to lunch, he added.

The prospect of a long shutdown was especially worrisome to truckers doing business with the government.

“We do have an increasing concern over moves related to military families,” said Paul Oakley, senior vice president of government and military affairs at the American Moving and Storage Association.

“As I understand it, we are carrying out the moves that are already in the pipeline, but [the military is] not booking additional moves and . . . we are not sure we are going to be paid for the moves that are already in the pipeline,” Oakley said.

Up to 25% of the moving industry’s business is related to the military, he estimated.

Most of those moving freight last week, however, said that the shutdown was not yet producing visible effects.

Large carriers routinely at the ports and border crossings, such as FedEx Corp. and UPS Inc., said as of Oct. 2 they had not suffered any slowdowns.

Martin Rojas, vice president for security and operations at American Trucking Associations, said he was tracking truck activity at the Mexican and Canadian borders and found activity normal.

“We are not at this point able to identify any impacts,” said Holly Arthur, a spokeswoman for the Association of American Railroads. “The issue for freight railroads will likely come down the line if the shutdown is long term and has an impact on consumer confidence and our customers.”

In Canada, however, truckers worried about the possibility of a long-term U.S. budget impasse.

“The threat right now is uncertainty — at the border and in terms of the economic impact,” said David Bradley, president of the Canadian Trucking Alliance. “However, it is still far too early to get a handle on things, and we hope that saner heads will prevail and a deal gets done in the next few days.”

“The border is a huge priority for us, and we will be monitoring developments as they happen,” he said.

As a result of the shutdown, the National Transportation Safety Board said it would not send investigators to the site of a bus crash in Tennessee in which eight people were killed and 14 injured.

The Oct. 2 incident also involved a tractor-trailer and a sport utility vehicle, and the truck driver was among the dead.

In addition, some personnel in the federal Pipeline and Hazardous Materials Safety Administration, which oversees hazardous materials shipping, were furloughed.