DC Velocity - January 2012

newsworthy

gested highways.

“Supply chain optimization is the bread and butter of America’s most successful retailers. Their ability to move goods efficiently has changed the retail landscape and benefited consumers by reducing prices and increasing product assortments. The new hours-of-service rule will upend the advances in efficiency made over the past decade,” said Kelly Kolb, vice president for government relations for the Retail Industry Leaders Association (RILA), in a statement.

“A PRETTY GOOD RULE”

But not everyone is perturbed. Don Osterberg, senior vice president of safety and security at Green Bay, Wis.-based truckload and logistics giant Schneider National Inc., said “it’s a pretty good rule. There are people who won’t like the restart changes, but on balance, it’s a rule we can live with.” Osterberg had been more concerned with language in the original December 2010 proposal that would have required drivers to complete all on-duty work-related activities within 13 hours instead of the current 14. Osterberg told the Council of Supply Chain Management Professionals’ 2011 Annual Global Conference in October that the proposed reduction would have the effect of decreasing the number of continuous hours a driver could be behind the wheel— even if the government didn’t change the driving limit— because most drivers could not complete a continuous 11- hour driving shift under a more compressed overall work schedule. The final rule maintains the 14-hour workday, thus allaying Osterberg’s concerns.

Ben Cubitt, senior vice president, consulting and engineering for Dallas-based logistics service provider Transplace, called the rule the “best possible outcome” because it keeps the 11-hour continuous drive times within the 14-hour workday. The other changes “will have only a minor impact, [and it] does not appear to be a major hit on capacity,” Cubitt said.

The National Retail Federation (NRF), while critical of the mandatory rest periods and their potential impact on safety, applauded the FMCSA for keeping the 11-hour continuous drive times. “We’re pleased that regulators have seen the wisdom of keeping the current 11-hour limit, but longer overnight breaks create the potential for more big trucks to be mixing with passenger cars during congested daylight hours,” said David French, NRF’s senior vice president for government relations, in a statement.

J. Bruce Carlton, president of the shipper group National Industrial Transportation League, said the new rule could have been worse. “We survived with the 11-hour daily driving limit intact,” he noted. But Carlton warned that this could be a “Pyrrhic victory” for shippers and carriers as the mandatory rest periods would result in a reduction in the number of available hours to earn a paycheck.

go figure …

30%

The percentage of a typical parcel shipper’s bill devoted to “accessorial” charges, fees that are tacked on apart from the basic transportation service. The accessorials include fuel surcharges.

SOURCE: SHIPWARE LLC

and the production/delivery matrices of industry generally,” said Carlton. He echoed the concerns of others regarding the safety consequences of putting more drivers on the road during the day.

COURT CHALLENGE MULLED

The rule is set to take effect on July 1, 2013, nine months later than many had expected. The extended period will give shippers, carriers, and intermediaries 18 months to adjust their supply chains. It will also give industry groups time to decide if they want to mount a court challenge aimed at blocking or delaying the rule’s implementation.

The ATA plans to hold conference calls with members in the coming days to gauge the rank-and-file response and to determine if acceptance of the new rule is a better option than footing an expensive legal bill in an effort to stop its implementation, according to Dave Osiecki, the group’s senior vice president of policy.

For good or ill, the new rule indicates that the federal
government will be in the trucking industry’s collective face
for years to come. John G. Larkin, Baltimore-based manag-
ing director and lead transport analyst at investment firm
Stifel, Nicolaus & Co., said “many carriers will struggle to
recruit [and] train drivers and keep costs in line as the
industry becomes more highly regulated.”
Larkin said the trend toward increased government inter-
vention will “end up playing into the hands” of well-man-
aged carriers with strong safety ratings and effective driver
recruitment and retention strategies. It will be critical for
truckers in that select group to raise rates quickly in
response to cost pressures that will be “inevitable” in a new
world of government involvement, Larkin added.

Noël Perry, senior consultant at Nashville, Ind.-based FTR Associates, said the changes would reduce industry productivity by about 3 percent, and will almost certainly result in rate increases as truckers try to recoup their investments in deploying more rigs and drivers on the road to offset that loss of productivity. ;