Though many truckload carriers are reporting strong earnings through the first nine months of this year, cost pressures are mounting on a wide variety of fronts, including high fuel prices and an increasing scarcity of drivers, just to name two.
Christopher W. Burruss, president of the Truckload Carriers Association (TCA), outlines his concerns in a Q&A.
Q: What issues worry truckload carriers the most at this point as they plan for 2005, from your perspective?
A: I think most of the issues we've seen over the last four or five years - high fuel and insurance costs, driver shortages, etc. - are still going to be here, it's just that some are becoming more of a concern than others right now. The fuel situation and the driver shortage are two things we are hearing the most about.
Q: Many carriers, large and small, are using fuel surcharges to at least soften the blow high diesel fuel prices are having on the bottom line. But are those surcharges effective? Are they enough?
A: I think carriers are still sweating it and it's not necessarily an issue of 'big vs. small.' I still think the price of fuel is a big concern - we've all seen the statistics as to how a spike in fuel prices relates to [trucking] bankruptcies. I think what's maybe buffering it a little bit in today's marketplace is that capacity is so tight. Trucking companies are having some success in compensating through rate increases. But for a lot of trucking companies out there, even if they are able to collect a surcharge, they are having a really difficult time getting it all back or even a substantial piece of it back. Though smaller carriers have a bigger challenge getting a surcharge, all [truckload carriers] have at least some challenge.
Q: The shortage of drivers has become a huge issue this year - what steps do you think the industry needs to take to address it?
A: I think when you start talking about drivers there's a couple of things you have to look at. First, I think the driver issue has two different meanings now. One deals with the existing pool of drivers and how do you, as a company, attract drivers to work for you. But the second issue is the non-existent pool of drivers; the new drivers we need to come into this industry. I think carriers focus individually a lot of attention on recruiting from just the existing pool. At some point in time, though, we need to take a step back and start focusing more on attracting new drivers because we have an aging driver base. So one thing we're talking more and more about is why we can't attract new workers into this industry. These are not minimum wage jobs - they are good jobs.
Q: Why is getting 'new blood' into the ranks of truck drivers so difficult?
A: You can talk about lifestyle and those kinds of things but I think the problem goes back to our image. The way we are portrayed affects it. If you can turn public opinion around about this industry - and I'm not suggesting people have to fall in love with trucks or trucks drivers here - we have to get them [the public] into the mindset where they understand why we're there and the role trucks play on the interstate. If we can do that, then I think we'll start making a dent.
I also think we're missing a tremendous opportunity in that 18-21 year old area. We're missing the folks coming out of high school because there is a three-year lag - you can drive intrastate [routes] but not interstate until you are 21. So you have a three-year gap and we're losing these folks to other industries in that time frame. So I think we have to find ways to tackle this issue.
A lot of people think what we're trying to do is put an 18-year-old right out of high school behind the wheel of a truck and it's just not that way. The whole idea behind TCA's initial young driver program was to explore the option of putting them through some type of apprenticeship program, so by the time they completed it and could drive by themselves, they would be 21 already. It's not about handing the keys to a tractor-trailer to a kid right out of high school.
I don't know if G.I. Bill type of arrangement [earning money for college while working as truck driver, similar to what's offered to military recruits today] would work in trucking, but it's part of taking our focus off the existing pool of drivers and looking at how to get that new person interested in this industry. Those are kind of things that we're going to have to start focusing on if we want to solve the driver shortage problem.
Q: At McLeod's annual user forum in Alabama this year, you said it was time for the industry to "start a dialog" about the black box. How do you think this strategy can help truckload carriers deal with this controversial issue?
A: The intent of what I said at McLeod was that, too often in this industry, we wait to put our two cents in on an issue -- and usually that means we're going to get force-fed something on terms we can't live by. So my comment is more that, whether you agree or disagree with the concept of the black box, we've got to start the dialog. If our answer to the black box is 'no, we don't want it and can't accept it,' then we need to start forming a rationale as to why. If it's 'yes, we accept it' then we need to look at under what circumstances, under what conditions will we accept it.
TCA's policy is that we oppose the block box, mainly because there are a lot of unanswered questions: how much will it cost, the privacy issue, and quite frankly, can the technology do what it is designed to do? Or are we going to put an investment in something that won't have the impact that the government and enforcement community thinks it will?
The days of going in and just opposing something without a reason why we're opposing it are long gone. Government regulators and the public don't want to hear what you are against anymore - they want to hear what you are for.
Q: Where does security rank as a trucking issue today and in 2005?
A: There's more unanswered questions on security in trucking than answered ones. I think the trucking industry is going to do what it has to do to make sure it's safe, its drivers are safe, and that its responsibility to protect the general public is there. But when we start looking at background investigations and fingerprinting for hazmat drivers or I.D. cards for drivers at the ports, there still remains unanswered questions as to how we do all of that. How do we fingerprint an entire industry? Are we going to create more confusion if we don't have standardized identification for the ports?
So I just think there's still too many unanswered questions - and the industry is still trying to get its arms around them. There's some concern about what it'll do to the hazmat segment in terms of what it'll do to drivers - will it compound the driver shortage even more? But at the end of the day, trucking companies are going to do what they have to do - whatever is required for the country to be safe, the industry will do it.
Q: So in terms of an outlook for 2005, what do you think will be the truckload industry's top issues?
A: Number one is drivers - they will remain a big issue for us, both recruiting and retention side and how do we get new drivers into the industry.
Second, we'll be paying a lot of attention to fuel - whether that means looking at national fuel surcharge legislation, whatever, we'll be looking at it. That will be a big priority.
Third, my suspicion is that highway funding - tolls, fuel taxes, and registration fees - will remain a hot button issue as they sit within the bigger issue of the highway reauthorization bill. Because there are several things sitting within that bill - truck parking and the lack thereof, the toll issue, and funding mechanisms for highway infrastructure over the next six years - that we'll be looking at from a policy standpoint in 2005. And of course hours of service and what will eventually happen to the new rules put in place this year - that's a given.
Finally, diversion of highway funds a big concern - are highways getting the full benefit of taxes collected for that purpose? That drives a lot of concerns - if those taxes are not spent for their primary purpose, why are we raising more taxes? If there weren't a diversion, would we have adequate highway funding?
The reality is that there are many stretches of road out there that need help. But the question at the end of the day is before the industry looks at additional taxes, more accountability needs to be placed into the process. We need a full accounting of how much money is being diverted from the highway trust fund and why we can't put it into the highways before we start taxing the industry again through tolls or whatever. Until that is justified then it becomes a hard sell for this industry.