A Federal Government “Bail-Out” of the Transportation Capacity Crisis?

By Mike Kilgore, President & CEO, Chainalytics Monday, January 24, 2011 On January 18th, President Obama announced an executive order to review all regulations to balance...

By Mike Kilgore, President & CEO, Chainalytics
Monday, January 24, 2011

On January 18th, President Obama announced an executive order to review all regulations to balance “freedom of commerce” with the necessary rules to protect the public. Could this outreach benefit the trucking industry, and ultimately, the entire supply chain?

Let’s be realistic, in international trade, the list of prospective regulations seems endless. There has been an explosion of regulations in recent years. But domestically, it’s easier to narrow the focus on the ever-looming burden for supply chain executives: transportation capacity. I think several regulations should sit atop their list to review:

1) CSA 2010 and Hours-of-Service. The recently launched CSA 2010 program and pending Hours-of-Service regulation exacerbate the current threat of a transportation capacity crunch. Truck drivers are the primary capacity bottleneck in the truckload industry, and after CSA pushes drivers out of the system, HOS regulations will reduce the capacity of the remaining drivers. A growing economy can’t handle the combination of rising costs and service issues that will ensue. If the Hours-of-Service regulation is approved, this initiative will look more like policy manipulation than a play-nice with the business community.

2) Gross Vehicle Weight Restrictions. The Safe and Efficient Transportation Act of 2010 (SETA), which increases gross vehicle weight restrictions to 97,000 pounds, can benefit the industry, but it never made it out of committee last year. Had it been enacted, it would have eventually eased pressure on capacity and improved efficiency by boosting load factors for products that weigh-out. Who knows? Obama might even have gotten a pat on the back from environmentalists for reducing millions of GHG-emitting miles. Let’s hope we see a 2011 version of this bill.

Will this attempt to balance economic growth and public safety in transportation industry be successful? While it has the potential to improve the overall business climate, similar orders by President Bush and President Clinton did not yield substantial results. Freight transportation is the vascular system of the product economy; let’s hope 2011 reduces the regulatory build-up which restricts flow.

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