Regulation Keeps On Truckin’

Dr. David Mielke is he Retired Dean of the College of Business at Eastern Michigan University

 

Dr. David MielkeA long battle between truck drivers and federal regulators is culminating in giving truckers something that many don’t want: more sleep.  The changes shorten the work week, restrict how many nights truckers can be on the road and require rest breaks during the day.  In general, truckers and trucking companies are against the new regulations.  The new rules went into effect on July 1st.  Do we have significant problems that the Federal Motor Carrier Safety Administration needs to step in to force new regulations?  Is this the “Right Thing to do?”  Let’s look at some issues:

1. The regulations will effectively cap a driver’s average work week at 70 hours, down from the previous maximum of 82.

2. The Obama administration says the regulations will reduce crashes from sleep deprived drivers getting behind the wheel.  The Transportation Department says 3,887 people were killed in 2012 in crashes involving large trucks.  It doesn’t have precise statistics on fatigue related crashes, but cited one study showing that roughly 13% of large truck crashes involve a sleep deprived driver.  They estimate that the new regulations will save 19 lives.

3. Truck crash fatality numbers have been trending down over the past decade, helped by new technologies.

4. Trucking companies say the sweeping changes will cost them money by requiring more trucks to carry the same number of loads with little benefit.

5. The rules are threatening to upend the schedules and slice the pay of long haul drivers–especially independent owner operators.  One trucker estimates the new rules will idle his truck one day a week and cut his revenue by over 10%.

6. The government says only about 15% of the nation’s 1.55 million long haul truckers will be affected, as many don’t have routes that require such long hours and unionized truckers have shorter work weeks.

7. The Teamsters union, which represents 600,000 truckers, has pushed for stricter limits on driver’s hours, arguing that having shorter work days and longer rest periods would improve worker safety and create more jobs.  In fact, they say the new rules don’t go far enough.

8. The Federal Motor Carrier Safety Administration plans to enforce the rules by routinely checking driver’s work logs, in which they are required to report their schedules and imposing fines up to $11,000 for companies and $2,750 for individual drivers for each offense.

9. Regulators estimate the rules will cost the industry about $500 million a year.

10. A Wells Fargo analyst says the new rules could cut business as much as 4%.  The American Trucking Association, an industry group, says the new regulations will cost $1.4 billion.

11. The industry also says that the new rules will increase stress on drivers since they will now be more likely to drive during daylight hours, when traffic congestion is more likely than at night.

 

Do we need more regulations to deal with a worsening safety problem?  The safety record for large trucks has been improving for the last decade—the estimate is 13% of all large truck accidents may be fatigue related and that they will save 19 lives.  You will note that this will not impact unionized truckers or trucking companies—they are already meet the new regulations.  Those that are impacted however are the independent owner operators and non-union trucking companies.  They will see higher costs and lower income.  The short run effect of the rules will likely result in higher costs to the consumer and could down the line exacerbate an existing shortage of truckers because of decreased incomes.  This is not the “Right Thing to do.”  We have one more example of the Obama administration regulating the small business owner, making it more difficult to operate, and potentially benefiting the Teamsters union.

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Author:David Mielke

Each Thursday Lucy Ann and Dr. Mielke discuss business ethos as it pertains to current events. Dr. Mielke says, “Making ethics the backbone of teaching makes sense not only because it’s the right thing to do but also because ethics is good for business.”

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