Truck capacity, driver shortages, and transportation costs were top concerns for the nearly 300 executives who attended the Transportation & Logistics Council (T&LC) annual conference last week, but not their only concerns. Federal regulations, technology, legal issues, and the growing influence of Amazon were all brought up during the three-day event in Memphis. In reporter’s notebook style, here are some anecdotes and insights from the T&LC conference:
Legalized marijuana blows smoke toward trucking
The number of truck crashes involving marijuana is on the rise, Jack Van Steenburg, chief safety officer and assistant administrator at the Federal Motor Carrier Safety Administration (FMCSA) told the T&LC conference. Although he didn’t have supporting data at the time, he said the increase has paralleled the legalization of medical or recreational use of marijuana in many states, although the drug derived from cannabis is still an illegal substance under federal law, including those governing commercial drivers licensing for interstate truck drivers.
As of 2018, 33 states and the District of Columbia had passed laws legalizing the use of marijuana in some form. Ten of those states legalized recreational as well as medicinal use of cannabis. This is becoming an issue for motor carriers based in those states. A driver can legally toke a joint when off-duty in California, but that doesn’t mean federal laws and safety regulations will allow that driver to get back behind the wheel. “Marijuana is still on our list of non-approved drugs,” Van Steenburg said. “You can’t smoke it and operate a commercial vehicle.”
US regulators and policymakers are still deciding how to respond to the spread of state laws permitting marijuana use, he said, with marijuana transport the subject of increasing debate. “How do we regulate the transportation of marijuana or even hemp?” Van Steenburg asked. “We met with several other federal agencies a few weeks ago to discuss this.”
That discussion is needed. A truck driver hauling a load of industrial hemp from Oregon bound for a pharmaceutical processing plant was arrested in Idaho in January for transporting marijuana. That’s led to a lawsuit against the state by Big Sky Scientific, the Colorado company that ordered the load. Industrial hemp — cannabis with less than 0.3 percent THC, the psychoactive agent in marijuana — was legalized for production and transport by the farm bill signed by President Donald Trump in December.
Driver regulations to tighten hiring market
The national drug and alcohol test clearinghouse scheduled to open in 2020 will improve highway safety but will crimp the pool of available truck drivers, Van Steenburg also said at the T&LC conference. “On Jan. 6, 2020, it’s going to be ready to go,” he said. “We’ve got the clearinghouse built and we’re working on the website. Drivers will be able to log in and get an account.” Trucking companies will then be able, with a driver’s permission, to check those records, which will make it more difficult for truckers to hide past positive test results.
Over time, that will knock some habitual drug users who have been able to cover their trail of positive drug tests by moving from company to company out of the trucking market. Overall, “There will be an impact, but I think it will be a minimal impact,” Van Steenburg said.
New commercial drivers license training standards might have a bigger impact on trucker employment. The FMCSA amended its final rule on entry-level driver training requirements last month, and the regulation takes effect Feb. 7, 2020. “Training schools will have to report to us,” Van Steenburg said.
Driver pay has ‘got to be good enough’ to attract candidates
Tom Walker of A. Duie Pyle said that when he started his transportation career driving a truck on the streets of Manhattan in the late 1970s, “There was never a driver shortage. Truck drivers back then made the same money as longshoremen, electricians, carpenters.” Walker, who currently serves as director of chemical markets and compliance for the West Chester, Pennsylvania-based regional less-than-truckload (LTL) carrier, said his starting wage as a trucker in 1979 New York was $37,000 a year, the equivalent of $137,300 in 2019. The average truckload dry van wage today is $58,000 a year, according to the National Transportation Institute.
“Until we start paying people better, this [driver shortage] conversation keeps going around in circles,” Walker said during a discussion on truck capacity and pricing.
When it comes to raising wages, “The question is who goes first,” said Matt Harding, vice president at Chainalytics. “If you’re a carrier and you want to pay them more, suddenly you’re at a competitive disadvantage.”
Harding did note, however, that Walmart has announced plans to hire 1,500 drivers and pay them $90,000 a year. Flatbed specialist Daseke has also launched a base-salary-plus-mileage-pay program that boosts its drivers’ annual pay to about $65,000. Don Daseke, founder and chairman of the holding company, has said he wants driver pay at his fleets to top $100,000 per year within five years. “The pay has got to be good enough for people to be away five or six days at a time,” Walker said, referring mainly to over-the-road truckload drivers.
Shippers undermine their own efforts to collect cargo claims
The most dangerous portion of any international freight movement is not on the high seas, but on the highway, according to David T. Maloof, a transportation attorney with Maloof & Browne LLC. Truck accidents are much more common than vessel collisions, and, as such, generate far more cargo claims. “Losses are more likely to occur on an inland leg of a multimodal transportation transaction than on the ocean,” he said during a discussion of court decisions and legislation affecting shippers, carriers, and brokers and forwarders. Lawyers at the conference described an increasingly complex claims arena.
“The 11 US circuit courts couldn’t interpret the Carmack Amendment more differently,” Maloof said, referring to the 1906 law that spells out the rights, duties, and liabilities of shippers and carriers when it comes to cargo loss (first applied to railroads, it was extended to trucking in 1935). Some circuits are more carrier-friendly than others, and the US Supreme Court has yet to issue a ruling that would clarify or preempt disparate lower court interpretations of Carmack. But Steve W. Block of Foster Pepper PLLC said it’s not differing interpretations of the law that hurts shippers most.
“One of the biggest exposures for cargo liability isn’t imposed by law at all; it’s contractual assumption of liability,” said Block. In other words, shippers too often agree to contract language that limits their ability to seek claims. His advice: don’t do it.
Automation leads shipper to new routes to savings
Columbia Sportswear got quite a surprise when it flipped the switch on a new transportation management system (TMS). The apparel company expected to automate, optimize, and enhance activities throughout the supply chain, but it got more than improvements to its current processes. “The TMS actually identified that it was better to bring goods [from Asia] through Norfolk [Virginia] and deliver direct, rather than go through the transload process on the West Coast,” said Jerrod Slaughter, senior manager of global logistics for the importer.
Speaking on a panel about technology and innovation, Slaughter said the company’s first reaction was disbelief. The results upended presumptions grounded in years of experience with shipping and transloading. Columbia’s second reaction was to check the data. “If a solution does look weird, that’s okay,” Slaughter said. “Let’s make some phone calls and validate.”
Those checks revealed that, yes, the TMS was correct and doing its job. “The more you put into it and enable automation, the deeper you dig, the more return you’re going to receive,” said Slaughter.