The American Trucking Associations on Tuesday, May 6, called on Congress to support the trucking industry’s efforts to reduce fuel consumption and address the escalating cost of fuel in efforts to ease the financial hardships of the nation’s motor carriers.
Testifying on behalf of ATA before the Subcommittee on Highways and Transit of the House Transportation and Infrastructure Committee, ATA State Vice President Mike Card said the dramatic increase in the price of diesel, combined with a downturn in the economy and softening demand for freight transportation, has many trucking companies struggling to survive.
Card, president of Combined Transport, asked Congress to create incentives to speed the introduction of auxiliary power units to reduce main engine idling, establish a 65-mile-per-hour national speed limit and support the Environmental Protection Agency’s SmartWay program.
“Our industry can’t simply absorb this rapid increase in fuel costs,” Card said. “We must pass some of these costs through to our customers, which ultimately translate into higher prices on the store shelves.”
Card, whose Oregon-based family-owned trucking company operates more than 400 trucks, expects to spend more than $21.7 million on diesel fuel this year, a 26 percent increase from 2007. The trucking industry overall is on pace to spend $141.5 billion on fuel in 2008, $29 billion more than a year earlier.
Because trucking is a highly competitive industry with very low profit margins, many trucking companies are reporting that higher fuel prices are greatly suppressing profits, according to ATA. In the 2008 first quarter, 935 trucking companies with at least five trucks failed, according to Donald Broughton, transportation analyst for institutional investment firm Avondale Partners. This represents the largest number of trucking-related failures since the 2001 third quarter.
Subcommittee Chairman Peter DeFazio (D-Ore.) testified at the hearing that while every American driver is impacted by the dramatic gas price increases, the rise in fuel costs has had a particularly significant impact on the trucking industry.
“Each time the price of fuel increases by 5 cents per gallon, a trucker’s annual costs increase by $1,000,” DeFazio said. “When the average trucker feels the pinch of gas prices, the increased cost of transporting goods to market significantly affects the price of many consumer goods.”
Similarly, Congressman James Oberstar (D-Minn.) submitted a prepared statement that said because the price of gasoline and diesel are at an all-time high, they are increasing the cost of everything delivered by truck. “Consumers, who are having to pay $3.61 per gallon at the pump, are hit again with escalating costs for food and other basic consumer goods, in part due to the rising costs of getting these goods to market,” Oberstar said.
ATA — which believes that balancing the need for an efficient petroleum market with the desire to limit petroleum speculation could help burst the bubble that has formed in the petroleum markets — is urging the federal government to do the following: