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January 6, 2014 3:45 AM, EST

Trucking to Face New Rules, Continue Road-Funding Push

By Daniel P. Bearth, Senior Features Writer

This story appears in the Jan. 6 print edition of Transport Topics.

A new highway finance law, greenhouse-gas emissions standards for commercial vehicles and a mandate for electronic logs to record drivers’ hours of service are some of the issues trucking will face in 2014.

Also coming are the midterm congressional elections and a continuing barrage of new regulations aimed at improving highway safety and driver health.

“It’s all about the money,” Mary Phillips, senior vice president and director of legislative affairs for American Trucking Associations, said regarding prospects for passage of a highway funding bill to replace the current law, MAP-21, that expires Sept. 30.

A critical issue will be whether to raise federal fuel taxes to replenish the depleted Highway Trust Fund.

“Unless lawmakers find new sources of revenue,” Phillips said, “we do not expect anything to reach the finish line.”

David Saunders, founder of Compliance Safety Systems in Midlothian, Texas, said carriers should prepare for what he calls “the enforcement tsunami” in 2014.

“We have all seen and experienced some incredible changes and a dramatic increase of enforcement by the [Federal Motor Carrier Safety Administration],” Saunders said. “We all must know and prepare for making 2014 a year to remember in the trucking industry.”

Dave Osiecki, senior vice president for policy and regulatory affairs for ATA, said he expects a number of regulatory initiatives in 2014, including a final rule requiring carriers to use electronic logs.

FMCSA is expected to come out with a proposal to create a new carrier-safety rating process and to set standards for testing drivers for sleep apnea.

The agency also is stepping up enforcement of new registration requirements for for-hire and private carriers, plus a new higher minimum surety bond requirement for freight brokers and forwarders that were part of MAP-21.

In addition, Oseicki said, the National Highway Traffic Safety Administration is expected to recommend that new trucks be equipped with speed limiters and stability control systems.

Saunders also cited the expansion of the Compliance, Safety, Ac-countability program — a system put in place by FMCSA in 2010 to evaluate data from crashes, roadside inspection and compliance reviews to target carriers and drivers for enforcement action.

“CSA just got much, much bigger,” Saunders said, referring to the increased use of CSA scores by insurers, finance companies and shippers to evaluate carriers’ safety performance.

Other areas that will be the focus of additional enforcement activity include new carrier registration requirements under MAP-21 and a new system for certifying medical examiners, Saunders said.

Mike Regan, chief of relationship development at TranzAct Technologies Inc. in Elmhurst, Ill., said he’s concerned that trucking will see additional regulations “without addressing how these regulations affect carriers and shippers.”

Legislation to watch, Regan said, includes a resolution in the House and a bill in the Senate that would alter truck size-and-weight limits, a proposal to replace the harbor maintenance tax with a fee of the value of containerized cargo and a Clean Ports Act bill that would allow states to enact restrictions on trucks serving port facilities.

Lawmakers also are expected to take up several bills this year, including one that would raise the minimum insurance levels for motor carriers from $750,000 to $4.4 million.

On Jan. 1, new standards regulating greenhouse-gas emissions and fuel economy of heavy-duty trucks took effect.

While the rules on NOx and soot remain in place, the Environmental Protection Agency and NHTSA are adding grams of carbon dioxide emissions per ton-mile and gallons of fuel used per 1,000 ton-miles moved for truck makers.

The 2014 engine standard is a 3% tightening over the EPA estimate for the average heavy-duty truck engine made in 2010.

In terms of the outlook for freight hauling, most industry observers said they expect a continuation of relatively modest growth, with some pockets of strong activity, such as the energy sector, and other areas of weak demand, such as retail.

Bob Costello, chief economist for American Trucking Associations, said the main drivers of economic growth — gains in jobs and income, along with rising home values — are tracking in a positive direction.

Costello said he expects gross domestic product to expand by 2.5% in 2014, compared with 1.7% in 2013.

Tom Nightingale, president of the transportation logistics unit at Pittsburgh-based Genco, said he sees continued growth in logistics services as shippers outsource more transportation services and freight carriers rely more on freight brokers and forwarders to find suitable freight for their operations.

The loss of productivity because of changes in HOS rules and the adoption of electronic logs will be partially offset by greater efficiencies.

For example, freight brokerage firms and other third-party logistics companies “are getting better at working with truckers, aggregating demand and helping capacity-constrained carriers fine-tune networks [and] reduce empty backhauls,” Nightingale said.

While regulatory “headwinds” are likely to dampen productivity in 2014, Joel Clum, vice president of CarrierDirect, a Chicago-based industry research firm, said he expects carriers to get some price or productivity back “as shippers get smarter in buying ahead to hedge risk and carriers become smarter with the use of technology to optimize asset utilization.”

The pace of mergers and acquisitions will continue as well.

“Non-asset-based companies will find it cheaper to buy capabilities or books of business to remain competitive instead of trying to build [a business] via cold starts in new markets or learning a new mode by trial and error,” Clum said.