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The recurring crisis

Considering the many important issues currently pending or temporarily in limbo, I find it difficult to determine which is most important to focus this editorial space on. The North American Free Trade Agreement (NAFTA) and the Bush administration’s recently expressed intent to open the border allowing Mexican trucks access to U.S. destinations is certainly an important issue with far reaching consequences.

The Department of Transportation’s hours-of-service initiative, while temporarily in limbo due to last year’s congressional action putting the process on hold, is also a very important issue. Even though no final rule can be issued before October and DOT sources indicate that a more realistic target date will be the middle of next year, this issue will very likely be heating up again in the near future. Obviously, the right changes could be an improvement over existing regulations, while another wrong approach similar to last year’s debacle could be devastating not only to the industry, but to the entire economy.

The many important legal actions initiated by OOIDA against motor carrier leasing practices are also an important issue. Several of these cases are scheduled for trial this summer with significant court rulings in others expected soon. As discussed in last month’s editorial, favorable decisions in these cases would result in a significant impact throughout the industry.

The one issue that really never seems to go away for long and the one that by far creates the most devastating impact on the trucking industry is the energy crisis. Each time it hits it’s like a hurricane passing through, wreaking havoc and turning things upside down. After it passes through most of us recover and rebuild. The casualties soon are forgotten and we go right back to business as usual. Congress squawks about it and holds all the usual hearings with no meaningful action to address the root cause of the problem.

The fact is, if this were a hurricane and we knew it was going to hit in exactly the same place every few years, we wouldn’t simply go back to business as usual. We would take the necessary steps to prepare for the next one and, if possible, maybe even find a way to avoid it.

The good news is that after all these decades of inaction, it appears we finally have an administration in office that looks like it is prepared to aggressively seek out and implement solutions. In a recent press conference, Vice President Dick Cheney, who is heading the administration’s Energy Policy Task Force, made it clear that the administration will base its policy on promoting a vigorous expansion of the traditional energy industry and will avoid the kinds of austerity measures that marked the country’s previous responses to the energy crisis. He stated “to speak exclusively of conservation is to duck the tough issues. Conservation may be a sign of personal virtue but it is not a significant basis for a sound, comprehensive energy policy.” While not yet officially released, Cheney emphasized that the policy will focus on an ambitious expansion of the country’s oil, coal and natural gas industries in addition to broader reliance on nuclear power.

The bad news is that there is no quick fix and whatever initiatives are put in place will take considerable time before significant U.S. self-reliance is developed. Meanwhile, this latest energy crisis, as most of you are painfully aware, didn’t really go away. Fuel prices moderated some over the past several months allowing a bit of a breather but not really an opportunity for any broad-based recovery. The crisis is still simmering just under the surface where any type of disruption could very quickly result yet again in skyrocketing fuel prices. Gasoline prices have been increasing steadily for the past several months and diesel fuel, again moving upward, could experience dramatic increases by the fall.

There is not much you can do about the price increases, but you should put those folks you haul for on notice that you will not operate without the necessary increase in compensation to cover any increase in fuel costs.

Last year we fell just short of gaining passage of mandatory fuel surcharge legislation when the U.S. Senate failed to act on the bill (HR4441) in the final days before adjournment. We are currently communicating with House and Senate representatives to seek the necessary support to have the legislation reintroduced. One positive development is that while last year OOIDA stood alone on this effort with opposition from not only the shipping industry but also from some parts of the trucking industry, this year we have gained an important ally. On April 11, the board of directors of the Truckload Carriers Association voted to support our efforts.

Assuming we are able to gain preliminary congressional support, it is important to note that this will still be another hard uphill battle to gain passage. In other words, while I truly wish we could guarantee success, we can’t. It’s also possible that just the fact the United States is planning aggressive moves toward energy independence may loosen up the OPEC oil cartel. But they may also decide they need to cash in while they still have control.

As always, there’s a bottom line and the bottom line here is –don’t bet your future that solutions will be in place when and if this crisis reemerges. If you’re not already prepared then start preparing now. If your contracts don’t provide adequate compensation to cover increased fuel costs then this is the time to start negotiating. Better to find out now if the people you’re working with are concerned about your profitability while there’s still time to shop around for a better deal.

July Digital Edition