Released: June 24, 2013
Transportation Secretary Nominee Anthony Foxx Could Be Confirmed This Week
NASSTRAC learned from its sources in Washington late last week that Transportation Secretary nominee Anthony Foxx could be confirmed this week. Sources we are close to say that the Senate should vote this week, likely early in the week, to confirm Foxx as the nation's next transportation secretary. Foxx sailed through a confirmation hearing and drew praise from both sides of the aisle, making him one of the least controversial nominees of President Obama's second term.
The exact timing of the vote is unclear and will be decided by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell, though a Democratic aide said it would probably be early in the week. The agreement includes 30 minutes of debate before a vote. The Senate has been working on a major immigration overhaul bill, but the short time agreement makes it easy to break from that debate to confirm Foxx. NASSTRAC will continue to keep a close eye on this important appointment.
Truck Tonnage Index Up 2.3% In May
NASSTRAC learned from the American Trucking Associations that its advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index surged 2.3% in May, after falling 0.2% in April. In May, the SA index equaled 126.0 (2000=100) versus 123.2 in April. May 2013 is the highest level on record, surpassing the previous high in December 2011 (124.3). Compared with May 2012, the SA index surged 6.7%, which makes it the largest year-over-year gain since December 2011. Year-to-date, compared with the same period in 2012, the tonnage index is up 4.5%. The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 132.7 in May, which was 5.4% above the previous month (125.9).
"After bouncing around in a fairly tight band during the previous three months, tonnage skyrocketed in May,” ATA Chief Economist Bob Costello said in a recent ATA announcement. Some of the increase is attributable to factory output rising in May for the first time since February (+0.2%) and retail sales performing stronger than expected in May (+0.6%). "The 6.8% surge in new housing starts during May obviously pushed tonnage up as home construction generates a significant amount of truck tonnage,” said Costello. "While we heard good reports regarding freight levels during May, I have to admit I am a little surprised at the large gain in tonnage. He added that tonnage continues to outpace the number of loads hauled as heavy freight (e.g., housing construction materials and sand and water for hydraulic fracturing) is outperforming box trailer (i.e., dry van) freight. Many NASSTRAC Associate Members also are members of the ATA.
Managing Capacity To Take Advantage of Market Fluctuations
Capacity discussions were prevalent at the recent NASSTRAC Shippers Conference in Orlando. Attendees had the perspective that supply-driven pressures will keep truckload capacity tight, leading to both strong pricing gains and market share growth for larger, better capitalized carriers in the coming years. While little supply has entered the market, pricing gains have been constrained by continued weak demand. There will continue to be challenges on the LTL side as well. "That said, it's not so much ‘capacity challenges' that are keeping shippers up at night but rather the need to better manage capacity,” says Doug Bley of Pentair, Ltd., who facilitated a Collaborative Learning Lab on Capacity Challenges. "It may be a matter of managing capacity for risk and rate to best take advantage of market fluctuations.” He said there were three primary options for truckload and LTL shippers:
- Work With Smaller Carriers and Invest Time With Them. That's because they need constant management and time, and the reward is better rates and service. However, it's important for shippers to be aware that at some point they grow overhead and the cost structures become uncompetitive.
- Use of Intermodal. Drivers often are out-of-balance, and this helps to overcome this obstacle. While many don't use intermodal because they believe that transit time is too long, others suggest that it helps with peak needs and will balance drivers during seasons like the holidays and produce seasons. "By using a mix of over-the-road and intermodal, you can lower net net costs and keep material moving,” says Bley. "Some shippers during our discussion reported using intermodal for lanes as short as 900 miles, which is easy when you have long lead times.”
- Collaboration/Mixing Material With Other People. Bley said that shippers ought to consider using LTL consolidators as one option. He also recommends focusing on collaboration within your organization, and says to look at inbound transportation as well as outbound.
During the Collaborative Learning Lab, Bley highlighted additional observations made by shippers during the discussion. See these highlights at FreightTalk.org , NASSTRAC's blog.
NASSTRAC Applauds Supreme Court Ruling on Challenge to L.A. Port Drayage Rules
There's good news for carriers and shippers who were concerned about the challenge to L.A. Port drayage rules. In an opinion recently handed down, the U.S. Supreme Court agreed with American Trucking Associations and unanimously rejected burdensome operational mandates the Port of Los Angeles had attempted to impose on interstate commerce. NASSTRAC's Legal Counsel, John Cutler, was hopeful of this development at the recent NASSTRAC Shippers Conference & Transportation Expo in Orlando in April.
The ATA has been through many years of litigation on this, and we congratulate them on the ruling. ATA's position has always been that the port's attempt to regulate drayage operators – in ways that had nothing to do with its efforts to improve air quality at the Port – was inconsistent with Congress' command that the trucking industry be shaped by market forces, rather than an incompatible patchwork of state and local regulations. This decision sends out a signal to any other entities that may have been considering similar programs which would impermissibly regulate the port trucking industry.
According to the ATA, at issue was the Port's attempt to impose so-called "concession agreements” on drayage operators wishing to move goods in and out of the Port. The Federal Aviation Administration Authorization Act prohibits the enforcement of any state or local "law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier.” The question before the Supreme Court was whether certain provisions of the concession agreements that undisputedly "related to a price, route, or service” of motor carriers nevertheless escaped preemption because the Port asserted that it imposed these requirements to serve its "business interest” in expanding the Port, rather than in an effort to regulate the drayage market.
In an opinion authored by Justice Kagan, a unanimous Supreme Court rejected the Port's contention. The Court concluded that, whatever the Port's asserted motivation, the concession agreements amounted to "classic regulatory authority” and thus fell within the scope of the FAAAA's preemption provision. It observed that the concession agreements, while technically contracts between the Port and trucking companies, were not the "result merely of the parties' voluntary commitments.” Rather, the Port compelled trucking companies to enter into the contracts as a condition of access to the Port, by "wielding coercive power over private parties, backed by the threat of criminal punishment.” By imposing the concession agreements through coercion rather than "ordinary bargaining,” Los Angeles was "performing its prototypical regulatory role.”
To see the full ruling, download the pdf.
NASSTRAC Creates New Student Scholarship Program
In an effort to provide learning and networking opportunities to college-level students coming into the industry, NASSTRAC launched its annual Transportation & Supply Chain Scholarship Program this year. Through this program, NASSTRAC provided financial resources that enabled three individuals in transportation/supply chain academic programs to attend this year's conference. To read perspectives on the experiences from these scholarship recipients, visit NASSTRAC's blog at FreightTalk.org.
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