Pass it on

Linda Longton, Editor
llongton@rrpub.com

In 10 years, demand for trucking will increase more than 30 percent. That’s the forecast Bob Costello, chief economist for the American Trucking Associations, gave attendees last month at the the CCJ Spring Symposium, organized by Overdrive’s sister publication, Commercial Carrier Journal.

Meeting that challenge will be tough, he said, especially when you consider that trucking productivity has dropped 9 percent in five years. Reasons include reduced lengths of haul and changed hours of service regulations, but the primary cause is congestion.

Increased demand coupled with reduced productivity is a formula for disaster. Add projections that the Highway Trust Fund, which accounts for 42 percent of highway improvements, could go bankrupt in 2008, and the possibility of meeting current, much less future, transportation needs looks bleak.

Clearly, something’s got to give, and it’s going to be your wallet.

Whether it’s increased fuel taxes (an approach ATA supports), steadily climbing tolls, or both, you’ll be paying more for the privilege of delivering freight. But the real question is not how much more it will cost you. It’s how you’ll pass those costs on to the carrier you’re leased to or to your customers.

Until recent years, passing on costs was not something owner-operators were good at. But the combination of tight capacity, a strong economy and rising fuel prices changed that for many. (Those who didn’t discover this hidden talent probably aren’t in business anymore.) Instead of eating huge spikes in fuel prices, successful owner-operators negotiated increases into their rates, added surcharges or leased to carriers that passed on 100 percent of the surcharges they received.

In theory, the same should be true for the rising costs of caring for our overburdened highways. Shippers are looking for ways to move freight more efficiently, says Robert Poole of the Reason Foundation. If toll roads accomplish that goal, shippers have said they’d be willing to pay more. And if a continued strong economy means freight hauled by truck increases as projected, carriers desperate to meet capacity demands will have to reimburse their leased operators for tolls or raise their pay to compensate for higher fuel taxes. Either way, shippers ultimately will pass these increases on to consumers.

Whether it’s for tolls, taxes or drive-through burgers, no one ever wants to pay more. But a viable highway infrastructure comes at a price. It’s one that all Americans, not just truckers, eventually will have to bear.

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