CSCMP panel focuses on industry regulations

The impact of regulations is ostensibly a constant them in the freight transportation and logistics sectors, whether a shipper’s core focus is inside or outside the four walls.

The subject of regulations was front and center at last week’s Council of Supply Chain Management Professionals (CSCMP) Annual Conference in Denver during a session entitled “Planes, Trains, and Automobiles—Regulatory Challenges in Transportation.”

UPS Vice President Tom Jensen, the session’s moderator noted how myriad regulations have a tangible impact on how freight transportation and logistics services providers treat customers and run their own operations.

The subject of trucking regulations was addressed by James Burnley, a partner at Washington, D.C.-based law firm Venable LLP and former Secretary of Transportation under the late President Ronald Reagan.

“There are very significant changes going on in the trucking industry, which are very important, because they are part of your business and part of your supply chain,” said Burnley.

And one of the most significant changes, according to Burnley, is the new motor carriers Hours-of-Service regulations, which took effect on July 1. Assessing the impact of HOS at this point is too soon in terms of its overall impact and how it could exacerbate the driver shortage as well, while noting that despite its opposition of the rules from many industry groups, it is apparent the new regulations will stick.

Burnley also touched upon CSA, which, he explained, in some cases is flawed.

“If a truck is in an accident without regard to fault, that goes into the database,” he said. “If a driver is distracted at a red light and hits somebody, that goes in. If a driver gets hit by somebody, that goes in. The industry believes there are some ways to work through this, but there are those on the other side that say it is usually the truck driver that survives an accident so all incidents need to be recorded.”

While many regulations are viewed as hindrances by industry stakeholders, Burnley described the status of the Highway Trust Fund as “one huge cloud” hanging over the federal role in the nation’s highway system.

The main reason for this, he said, is that the dollars coming into it do not support the level of spending.

“We last raised federal fuel taxes 20 years ago and…through last year and beginning in 2008, when it went underwater, the federal government had to transfer $4 billion from the general revenue fund into the Highway Trust Fund just to prop it up and keep current funds going,” he said.

What’s more, one thing agreed on in both sides of the aisle is not to raise the federal fuel tax, as Burnley explained the White House views that as a regressive tax and Republicans don’t want new taxes on anything.

Another issue is the pending expiration of the federal transportation bill, MAP-21, in September 2014, which coupled with the ongoing funding issues related to the Highway Trust Fund, leaves the current predicament without a predictable outcome in sight, explained Burnley.

“There are ideas focused on a federal infrastructure bank and vehicle miles traveled and other alternative [funding] mechanisms that would not replace the HTF but would instead supplement it,” said Burnley. “This is a real crisis, because the states are not in a position to step in and really replace the federal rules. We are all concerned. If you think our infrastructure today is not being properly maintained or improved, then just wait three or four years.”

Peter Gatti, executive vice president of the National Industrial Transportation League, noted that while MAP-21 was a “new” bill it really kept things the same.

Parts of MAP-21 like the two-year study of truck size and weight limits were more of a compromise among lawmakers than anything else, he said, joking that “there is a saying in Washington that if you study something enough it will go away.”

With a finite amount of capital resources available for transportation, Gatti said there needs to be a comprehensive overview in terms of ordering the priorities in which how these resources are spent on infrastructure and making America more competitive.

“The only way to do this is to develop some type of comprehensive plan that deals with freight transportation,” he said. “I am not sure what it will lead to, but that is the premise and we will have to see where that leads.”

MAP-21, said Gatti, essentially kicks the “can down the road,” leaving the door open for how to develop new sources of revenue, with pros and cons in terms of where to go in the next cycle, which begins when MAP-21 expires at the end of September 2014.

“I think we are again going to see a game of political football again in terms of where to bridge that gap in the HTF,” Gatti said.