Transportation Advocacy: Shippers Stand Up for Their Rights
Dissatisfied with transportation policy coming out of Washington? Waiting for our national logistics strategy? With so much at stake, standing on the sidelines is not an option. Now’s the time to get involved to drive real change.
In 2005, Bill Johnson, president of Wisconsin-based Johnson Timber Company, received some good news: Wisconsin passed legislation that boosted the state’s gross vehicle weight limit for trucks transporting raw forest products to 98,000 pounds, as long as the vehicles have six or more axles. The bill, which made it through a Republican-controlled state Senate and was signed into law by Democratic Governor Jim Doyle, meant substantial cost reductions for Johnson’s company, which transports two million tons of wood annually.
But the law wasn’t merely good fortune for Johnson—he was integral in advocating for its passing. Johnson and his colleagues in Wisconsin’s forest products industry convinced state representatives and senators of the need to increase gross vehicle weights. The change brought about increased efficiency and lower costs, as well as improved road safety, for forest products companies.
“By increasing the weight limit to 98,000 pounds and adding the sixth axle, we are now able to load another 10,000 to 12,000 pounds on our trucks, while keeping the same pound-per-square- inch on the road,” Johnson explains.
Because of this capacity to haul larger loads, forest products companies have cut roughly 26,000 trips, and saved one million gallons of fuel annually, according to Great Lakes Timber Professional Association estimates. “Taking that many trips off the road improves safety, and reaps environmental benefits because we are using less fuel,” Johnson says.
The law faced opposition from a national group called Coalition Against Bigger Trucks (CABT), but by meeting one-on-one with local government officials, Johnson’s group had the opportunity to combat CABT’s negative points. “The governor was quick to sign the bill, and it has benefitted the local forest products industry,” Johnson says.
Speaking Out Reaps Results
Johnson’s experience illustrates the important role advocacy plays in today’s logistics and transportation environment. With ever-increasing gridlock in Washington, and a seemingly endless array of proposed legislation that stands to affect transportation in some way, industry leaders are finding a greater need to speak out and educate government officials on key supply chain issues.
“It is important to have a grasp on the legislation our elected officials are putting forth, and how those laws can hurt or harm our businesses,” Johnson says. “Shippers should contact local elected officials and push for rules that will improve efficiency throughout the entire supply chain.”
“Legislators are currently considering and implementing laws and regulations that many transportation experts fear will significantly erode productivity—particularly in trucking—and could increase the delivered cost of goods by up to 15 percent annually,” adds Brian Everett, executive director of the National Shippers Strategic Transportation Council (NASSTRAC).
“It’s important that transportation and supply chain executives remain educated on the ‘what-ifs’ of decisions coming out of Washington in order to adequately plan and execute their supply chain strategies,” he says. “As they continue to educate themselves, they also need to educate legislators on the impact their decisions will have on supply chains nationwide.”
For would-be industry champions who are uncertain where to begin their foray into advocacy, Everett recommends identifying the issues most important to their own operations, and quantifying the impact of those issues on their business.
“They then need to understand the legislative and regulatory process, and participate in it by establishing meaningful dialogue with elected officials on the issues,” Everett says.
It’s not only CEOs or business owners who should speak up. “Shipper advocacy should happen at all levels,” Everett says. “Those responsible for transportation and supply chain management need to stay ahead of the game to proactively plan their strategies—and they need to remain nimble so they can react quickly when marketplace or advocacy issues shift.”
For shippers, the need to advocate is often tied directly to the bottom line. With transportation and supply chains typically comprising a large portion of shipper budgets, legislation that impacts transportation costs can be particularly painful.
“If shippers don’t help combat legislative issues, they are going to spend a lot more money for freight, which will raise costs for everyone,” explains Gail Rutkowski, president of Chicago-based third-party logistics provider Wabash Worldwide Logistics. “It is important that shippers get involved. They can’t sit on the sidelines and wait for someone else to do it for them.”
Cargo Moves Can End Up In Court
Legislation at both national and state levels can also impact shippers and transportation providers in a legal sense. Regulations and standards that may have been drafted with good intentions can end up introducing risk and cost into the supply chain because of a disconnect between lawmakers and the realities of business operations in this sector, says Andrew Spector, a partner at the law firm of Arnall Golden Gregory, based in Atlanta.
“Legislators don’t take logistics functions into account when they draft laws,” explains Spector, who is in charge of the firm’s global logistics and transportation practice group.
The complexities of the logistics and transportation field can create confusion for lawmakers, who are usually not supply chain experts. Terms such as “warehouse distribution,” “freight forwarder,” and “carrier” have different meanings in different contexts, which can complicate legislation.
“Definitional nuances can cause legal problems,” Spector explains. “A freight forwarder, for example, can be a company that merely coordinates a cargo movement, or it could undertake a carrier function, operating as a non-vessel-owning common carrier.” Depending on the way a law is written, logistics providers and shippers may find themselves with legal obligations that should fall outside their realm of operation.
The California Air Resources Board (CARB), for instance, recently approved a series of amendments that require all transport refrigeration units to be tested and registered with CARB. Freight brokers—and even the shippers who hire the brokers—will be responsible for ensuring that any truck they hire to move refrigerated freight in California is compliant with this law.
While the environmental concerns behind the law are commendable, the realities of cargo transportation—where it is common for companies to subcontract trucks to move their freight—make compliance with the law onerous at best.
In other states, freight forwarders and shippers are “statutory employers”—responsible for ensuring their transportation providers cover their own drivers with workers’ compensation insurance.
“If a trucking company that hires a driver or an independent contractor owner/operator doesn’t have workers’ compensation insurance, state regulations can say that the freight forwarder is the statutory employer, and is responsible to provide workers’ compensation coverage to the drivers,” Spector explains. “That means the freight forwarder or broker has to make sure that it only uses carriers that have—and maintain—their own workers’ compensation insurance. Some courts have even interpreted the laws to say that the shipper or consignee can be considered the statutory employer, and is therefore responsible for driver injuries.”
These types of regulations call into question the rationality of the laws, Spector adds. “If there is a view toward more stringent standards in this country, and that is what the legislature decides, that is fair. But we want to make sure that some rationality exists behind the intent of these laws,” he says. “Therefore, it is important that the industry advocate for itself with a practical, common-sense approach to combat misunderstandings about the logistics business.”
Strength in Numbers
For many advocates, the ticket to addressing these types of concerns and having their voices heard—and acted on—is through industry associations such as NASSTRAC, the National Industrial Transportation League (NITL), or the Transportation Intermediaries Association (TIA), which all have active advocacy programs. Banding together with other like-minded logistics professionals can be an effective tool for change, notes Rutkowski, who serves on NASSTRAC’s education and advocacy committees.
“The elected officials in Washington, regardless of party, will listen and respond if they hear from enough people,” she explains.
In February 2012, for example, NASSTRAC and 11 other industry organizations including NITL, TIA, and the American Trucking Associations (ATA) led a “Stand Up For Trucking” fly-in to Washington, bringing together more than 175 logistics and transportation advocates from around the country. The delegation discussed transportation issues with 46 members of Congress, including Senator Mark Kirk (R-IL), former Illinois Congressman Jesse Jackson Jr., Senator Barbara Boxer (D-CA), Senator Dick Durbin (D-IL), and Senator Frank Lautenberg (D-NJ).
In a stroke of fortuitousness, the NASSTRAC-led industry coalition arrived in Washington on the day the proposed $105-billion surface transportation funding bill known as MAP-21 (the Moving Ahead for Progress in the 21st Century Act) came out of committee. “We visited at an opportune time when the legislators were especially interested to hear what shippers had to say,” Rutkowski recalls.
Several of the elected officials and their aides—even those who have historically been at odds with the transportation industry—displayed an impressive knowledge of transportation issues, she adds. Senator Lautenberg’s senior aide, for example, a civil engineer well-versed on the ins and outs of transportation, sat down with Rutkowski at length to explain the senator’s views.
“Ultimately, we agreed to disagree, but I give Senator Lautenberg kudos for having people on his staff who understand the industry,” she says.
The group’s ultimate mission—to encourage members of Congress to support the American Energy and Infrastructure Jobs Act, proposed by Rep. John Mica (R-Fla., and chairman of the House Transportation and Infrastructure Committee) instead of MAP-21—was unsuccessful.
But, “NASSTRAC continues to support the need for a multi-year highway bill that reforms the program and focuses funding on critical freight corridors,” says Everett.
One provision TIA developed and the group advocated for during the fly-in—increased bonds for freight brokers—was successful. The proposal to increase the freight broker bond requirement from $10,000 to $75,000 to better protect motor carriers from being cheated by fraudulent freight brokers was included in the final version of the highway bill. “To see an issue we advocated for be successful was rewarding,” Rutkowski says.
Advocacy in Action
But advocates are not resting on their laurels. Associations such as NASSTRAC are gearing up for another busy year. Several key legislative matters, including the most recent Hours-of-Service rules and concerns over tolling policies, are still being decided.
“One critical issue that may have a negative impact on transportation and supply chain strategies is the Federal Motor Carrier Safety Administration’s (FMCSA) decision to revise the current hours-of-service rules for commercial truck drivers, which were adopted in December 2011,” Everett says.
The new rules—which require full compliance by July 1, 2013—retain the current 11-hour daily driving limit, but require drivers to take at least one half-hour break during eight hours. They also change the restart provisions, and mandate that a driver must have two consecutive rest periods from 1 a.m. to 5 a.m. before resuming driving.
“This change could reduce capacity by as much as seven to nine percent, according to some truckload carriers,” Everett says.
Testing the Limits
NASSTRAC is also tracking initiatives by safety groups to have the FMCSA reconsider reducing the driving limit from 11 hours to 10 hours. In October 2012, the organization filed a joint brief with ATA and other shipper and motor carrier interests to support the FMCSA decision to retain the 11th hour of daily driving time, based on findings that the benefits of that decision outweigh costs.
“NASSTRAC also supports ATA’s goal of more flexibility as to restarts between work weeks,” Everett explains. “In addition, the brief argues that public citizen and other interests pushing to reduce driver hours do not have legal standing to make their arguments.”
Issues such as these—on which legislators and logistics and transportation professionals do not always see eye-to-eye—are not likely to disappear anytime soon. The good news is, professionals eager to get involved in logistics and transportation advocacy will always have a place to make a difference.
For its part, NASSTRAC is planning another shipper-driven Washington fly-in for fall 2013, and is devoting two sessions at its 2013 Shippers Conference and Transportation Expo to educating shippers and transportation professionals on key advocacy developments, and how to get involved in educating the marketplace and legislators on the impact these advocacy issues can have on operations.
“It is very important for shippers and logistics professionals to regularly meet with key legislators,” says Everett. “It’s up to us to continue advancing the dialogue on advocacy issues critical to the transportation industry.”