Market Mystery

A fair playing field was all he wanted, said the owner-operator who ran three trucks from California. He was addressing a panel of Federal Motor Carrier Safety Administration and California Highway Patrol officials during a California Trucking Association-sponsored town hall meeting held at a recent trucking show in Las Vegas.

The trucker assailed the federal hours-of-service proposal and other regulatory burdens and asked when the FMCSA would start making rules dealing with excessive waiting, loading and unloading, the high price of fuel and other issues hammering his company and the industry in general. “What can you do about bringing back regulations where we can afford to make higher profits and where we can afford to give our drivers more money?” the trucker asked.

Julie A. Cirillo, FMCSA’s chief safety officer, was sympathetic with the trucker’s situation, but reminded him her agency was responsible only for regulating safety. “We are responsible for all federal motor carrier safety regulations,” Cirillo noted. Those regulations deal with equipment, maintenance, operations, driver qualifications, drug testing, medical qualifications and company safety management practices. Most of the trucker’s complaints were free-market issues, she said, and outside her agency’s range of authority.

“In terms of the economics of the industry, we don’t deal directly with the economics of the industry other than to determine the impact on the economics if we promulgate a regulation,” she said. That impact can be significant as the costs associated with complying with federal and local safety and environmental regulations continue to mount. Meeting federal emissions standards in the future, for instance, will mean pricier engines and more expensive low-sulfur fuel.

But Cirillo stressed her agency doesn’t have authority to regulate in the economic area, and doubted Congress would decide to re-regulate the trucking industry anytime soon.

Before deregulation in the early 1980s, the industry worked with its regulators to set rates, assign traffic lanes and control entry. A former state trucking executive told us they worked with state regulators to set rates so “the dumbest guy out there” could make a profit. But those days are long gone.

“In terms of suggesting, ‘Gosh, deregulation didn’t work, we ought to re-regulate,’ I think most economists would argue that there is really no basis for that view,” Cirillo said. Instead, she said, “economists say that deregulation has kept the price of moving freight low. Whether that is conducive to safety, I have no idea.”

Cirillo admitted she found the deregulated trucking marketplace mind-boggling. “It boggles my mind that the market doesn’t take care of some of the issues you bring up,” she told the trucker. She wondered why, with a driver shortage, drivers could be compelled to falsify their log books, or companies to accept unrealistic shipper demands that put their drivers in impossible situations. “Why is it that people can ask drivers and companies to do things that are totally absurd and they will do them? Because, people have told me, if they don’t take that job, their neighbor will take it; because in our industry, in our community, there is always someone unscrupulous, someone who will break the law, someone who will put people at risk, someone who will put the community at risk.”

These “bad actors,” as Cirillo calls them, are the focus of her agency’s enforcement efforts, she said. According to her argument, legitimate operators should welcome efforts to put these bad actors out of business since they also do economic harm to the industry. In recent months, we’ve heard a number of truckers agree.

While discussing the industry’s many safety gains over recent years, CTA executive vice president Joel Anderson offered one caveat. “We’ve earned our stripes” from the safety standpoint, he said, “but what we haven’t achieved yet is putting the really bad guys out of business.” One problem, according to Anderson, is that truckers in general have an ‘I-don’t-trust-government’ attitude, and for good reason. They tend to oppose regulations of any kind. Another problem is that truckers have been less than willing to help enforcement officials put the bad guys out of business, whether by sponsoring legislation or other means.

“But there is an awakening that the bad guys are hurting the good operators” both economically and in terms of public image, Anderson said.

During an hours-of-service hearing in Ontario, Calif., last year, trucker Steve Dale also urged regulators to get tougher. Dale said some of his competitors were running drivers 100 hours or more per week. Operators like that undermine safety and hurt his company, he said. His solution: FMCSA should “come in with some disciplinary action that hurts – that will clean up the industry.”

A large body of data suggests a positive link between enforcement and highway safety. The key question remains whether a clean industry will also be more economically sound and less “mind-boggling.” That’s a market mystery we’ve yet to figure out.

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