CRITICAL ISSUES IN THE TRUCKING INDUSTRY – 2012

Presented to the American Trucking Associations

Prepared by The American Transportation Research Institute

October 2012

950 North Glebe Road Arlington, VA 22203

(703)838-1966 atri@trucking.org

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ATRI BOARD OF DIRECTORS

Mr. Steve Williams Chairman of the ATRI Board Chairman & CEO Maverick USA, Inc. Little Rock, AR Mr. Michael S. Card President Combined Transport, Inc. Central Point, OR Mr. Edward Crowell President & CEO Georgia Motor Trucking Association Atlanta, GA Mr. Rich Freeland President – Engine Business Cummins Inc. Columbus, IN Mr. Hugh H. Fugleberg President & COO Great West Casualty Company South Sioux City, NE Mr. Jack Holmes President UPS Freight Richmond, VA Mr. Ludvik F. Koci Director Penske Transportation Components Bloomfield Hills, MI Mr. Chris Lofgren President & CEO Schneider National, Inc. Green Bay, WI

Mr. William J. Logue President & CEO FedEx Freight Memphis, TN Ms. Judy McReynolds President & CEO Arkansas Best Corporation Fort Smith, AR Mr. Jeffrey J. McCaig President & CEO Trimac Transportation, Inc. Houston, TX Mr. Gregory L. Owen Head Coach & CEO Ability/ Tri-Modal Transportation Services Carson, CA Mr. Douglas W. Stotlar President & CEO Con-way Inc. Ann Arbor, MI Ms. Rebecca M. Brewster President & COO American Transportation Research Institute Atlanta, GA Honorable Bill Graves President & CEO American Trucking Associations Arlington, VA

ATRI RESEARCH ADVISORY COMMITTEE

Mr. Philip L. Byrd, Sr., RAC Chairman President & CEO Bulldog Hiway Express Ms. Kendra Adams Executive Director New York State Motor Truck Association Dr. Teresa M. Adams Director of CFIRE University of Wisconsin Ms. Susan Alt VP, Industry Relations and Public Affairs Volvo Group Ms. Cheryl Bynum Manager, SmartWay Transport Partnership U.S. Environmental Protection Agency Mr. LaMont Byrd Director, Safety & Health Department International Brotherhood of Teamsters Mr. Terry Croslow Chief Financial Officer Venture Express, Inc. Mr. Ted Dahlburg Manager, Office of Freight Planning Delaware Valley Regional Planning Commission Mr. Tom DiSalvi Director of Loss Prevention Schneider National, Inc. Mr. Chad England Chief Operating Officer C.R. England, Inc. Mr. John Flanagan Manager, Quality, Safety & Fleet Services Stevens Van Lines Mr. Tom Flies Senior Director, Product Management Qualcomm Mr. Bryan Foe Vice President, Transportation C.H. Robinson Worldwide Mr. David Foster Vice President of Fleet Services Southeastern Freight Lines

Ms. Patti Gillette Safety Director Colorado Motor Carriers Association Mr. John Hancock Director Prime, Inc. Mr. Steve A. Keppler Executive Director Commercial Vehicle Safety Alliance Mr. Alan Korn Chief Engineer Apps & Customer Support Meritor Wabco Ms. Jennifer Morrison Vehicle Factors Engineer National Transportation Safety Board Mr. Dean Newell Vice President, Safety Maverick USA, Inc. Mr. Steve L. Niswander VP, Safety Policy & Regulatory Relations Groendyke Transport, Inc. Mr. Deane H. Sager Director-Transportation Industry Practices The Northland Group Mr. Brett A. Sant VP, Safety & Risk Management Knight Transportation, Inc. Mr. Jim Schultz ITS Program Manager Michigan Department of Transportation Ms. Nanci Tellam Group Director, Environmental Services & Sustainability Ryder System, Inc. Ms. Tom Weakley Director of Operations Owner-Operator Independent Drivers Association Foundation Mr. Scott Wombold Vice President, National Accounts & Wholesale Fuel Pilot Travel Centers Mr. Greer Woodruff Senior Vice President of Corporate Safety & Security J.B. Hunt Transport Services, Inc.

American Transportation Research Institute 1 Critical Issues in the Trucking Industry – 2012 Executive Summary

Critical Issues in the Trucking Industry – 2012 The past year has been one of mixed signals for the trucking industry. While economic growth has been positive, the pace of growth has been frustratingly slow for many. A daily stream of economic data, which are oftentimes in conflict with each other, add to the economic uncertainties. The industry has also been faced with challenges and conflicts in the regulations that govern daily operations. The  Federal  Motor  Carrier  Safety  Administration’s  Compliance, Safety, Accountability (CSA) initiative is in its second year of national implementation yet the program continues to undergo change and its overall impact on industry safety remains in question. Similarly, a final rule on federal Hours-of-Service (HOS) regulations was issued at the close of 2011 and the degree to which the changes will impact the industry has yet to be fully understood. Looking forward, an industry-wide mandate on Electronic Onboard Recorder/Electronic Logging Device (EOBR/ELD) usage is expected in 2013 after a requirement was put in place by Congress in the highway authorization bill, MAP-21. With all of these important issues simultaneously impacting our industry, it is difficult to gauge the relative importance of one issue compared to another. Further complicating matters, the sheer size and diversity of the trucking industry creates differences in the magnitude of issue importance across industry sectors, operating size and regions of the country. It is this industry complexity that motivates the American Trucking Associations (ATA) to continue to closely identify and monitor the challenges facing the industry. ATA can more effectively provide national leadership to protect trucking interests by better understanding the issues that are both positively and negatively affecting industry stakeholders. The annual survey of trucking’s  critical issues, conducted by the American Transportation Research Institute (ATRI), is an important tool for increasing awareness of industry needs. Now in its eighth year, the ATRI Top Industry Issues (TII) Survey continues to serve as an important source of information for industry and public sector decision-makers alike. This year ATRI modified the TII survey methodology to provide respondents with an expanded list of challenges while streamlining the survey process. ATRI first collaborated with a group of key industry stakeholders to identify a sizeable catalog of issues and potential strategies from which the final list of critical industry issues and associated strategies was selected. Once the survey was designed and tested, it was distributed to a large sample of more than 4,000 industry stakeholders to gauge the importance of each issue. In previous TII surveys, respondents were asked to rank order a list of 10 issues. In 2012, survey participants were asked to select their top three choices from an industry-generated list of over 20 issues. These revisions helped generate a 22 percent increase in responses compared to the 2011 survey. A record 943 respondents completed the survey, representing industry stakeholders from both the U.S. and Canada and included motor carriers, commercial drivers and other industry stakeholders. This report presents the findings of the 2012 annual survey and analysis, and compares the results  of  previous  years’  surveys, creating a predictive indicator of emerging priorities in the trucking industry.

American Transportation Research Institute 2 Critical Issues in the Trucking Industry – 2012 Executive Summary

Top Issues After topping the list of critical issues from 2009-2011, the economy is no longer the most pressing industry issue according to survey respondents. This year, CSA eclipsed the economy, which fell two places to third. The federal commercial driver Hours-of-Service (HOS) regulations rank second this year, unchanged from last year. The  top  ten  list  is  developed  through  a  formula  that  assigns  values  to  respondents’  rankings  of  issues facing the industry. An issue that is ranked most important receives three points, while an issue ranked second receives two points and an issue ranked third receives one point. Issues that were not ranked by respondents did not receive any points. The total number of points is then summed to generate a prioritized level of industry concern. The issue with the highest level of concern (i.e. most total points) is identified as the top industry issue. As an added feature this year, an Industry Concern Index (ICI) is presented to illustrate the level of intensity in concern from one issue to the next. The issue of greatest concern receives an ICI of 100, and then all other issues are indexed to that issue’s level of concern. For example, if an issue receives an ICI of 50, it has half the level of concern as an issue with an ICI of 100. In addition to choosing the three most important challenges affecting the industry, respondents are also asked to rank order a list of three top strategies designed to address each issue. Values  are  assigned  to  respondents’  rankings  for each of the three strategies and an average score is calculated based on all of the rankings to determine the most preferred strategy. In rank order, the top ten issues identified by industry respondents are detailed below. Figure 1 shows a breakdown of the rankings for each of the top issues, from first place to tenth place (left to right). Please note that in 2012 there was a tie for tenth place.

Figure 1 – Distribution of Industry Issue Prioritization Scores

American Transportation Research Institute 3 Critical Issues in the Trucking Industry – 2012 Executive Summary

1. Compliance, Safety, Accountability (CSA) Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

15.0% 12.4% 10.3% 37.7% 100 Two years after first debuting on the top ten list, CSA has reached the number one position for the first time. This issue is ranked first, second or third by a larger share of respondents than any other issue (37.7%). Despite the fact that CSA was first implemented nationally by the Federal Motor Carrier Safety Administration (FMCSA) in late 2010, uncertainty and dissatisfaction with the impacts of CSA remains a significant challenge for many in the trucking industry. This is not unexpected given the scope and impact of the CSA program. These concerns notwithstanding, research indicates that many stakeholders still believe CSA will be an effective tool for raising overall safety; however, attitudes vary depending on the stakeholder group surveyed. Generally, the enforcement and shipper communities react the most positively to CSA, whereas carriers and drivers have become increasingly displeased with CSA since the program’s  inception.1 This increasing displeasure may be one reason for the number one ranking in 2012.

Proposed Strategies (in rank order):

a) Continue to advocate for a crash accountability determination process and removal of non-preventable  crashes  from  the  development  of  carriers’  scores. Forty-two percent of respondents support this as their top strategy for addressing concerns with CSA. According to research conducted in 2012, this issue has widespread consensus between motor carriers and enforcement personnel, however disagreement remains over choosing a definitive method for assigning fault.2 b) Educate drivers, carriers, shippers and enforcement personnel on the reliability, accuracy  and  significance  of  carriers’  CSA  scores. A close second, 40.9 percent of respondents believe education is the best way to deal with CSA issues. As is the case with any new program or regulation, there is a need for outreach and education during the early stages of implementation. Given the far-reaching implications of CSA, education must extend beyond carriers and drivers to include enforcement personnel and shippers. Recent research by ATRI found that, after nearly two years, driver misunderstandings continue to outnumber correct responses on a 14-item CSA knowledge test.3 Clearly, broad opportunities for increased CSA training exist. c) Research  the  relationship  between  carriers’  CSA  scores  (in  each  BASIC4) and future truck crash risk. There is concern among many in the industry that CSA scores may not be an accurate predictor of driver or carrier safety, as demonstrated by the 17.0 percent of respondents that chose this as their preferred CSA strategy. It is not surprising that there is disagreement over whether CSA scores relate to actual crash risk, since multiple

1 American Transportation Research Institute. Compliance, Safety, Accountability: Evaluating A New Safety Measurement System And Its Implications. (Unpublished manuscript) 2 Ibid. 3 Ibid. 4 There are seven Behavior Analysis and Safety Improvement Categories (BASIC) in CSA which are used to measure carrier safety performance. The BASICs are Unsafe Driving, Fatigued Driving, Driver Fitness, Controlled Substances/Alcohol, Vehicle Maintenance, Cargo and Crash Indicator.

American Transportation Research Institute 4 Critical Issues in the Trucking Industry – 2012 Executive Summary

conflicting reports have been published on the topic.5,6,7 ATRI recently released a comparative analysis of the published research and, using a more sophisticated statistical analysis than previous studies, identified which BASICs perform as intended and which are disconnected from safety benefits.8

5 Green, P. E. & Blower, D. (2011). Evaluation of the CSA 2010 Operational Model Test. (Report No. FMCSA-RRA-11-019). Washington, DC: Federal Motor Carrier Safety Administration. 6 Gallo, A. P. & Busche, M. CSA: Another look with similar conclusions. Wells Fargo Securities Equity Research. July 12, 2012. 7 Gimpel, J. Statistical issues in the safety measurement and inspection of motor carriers. Alliance for Safe, Efficient and Competitive Truck Transportation. July 10, 2012. http://asectt.blogspot.com/2012/07/news-brief-university-of-maryland-study.html. Accessed September 27, 2012. 8 American Transportation Research Institute. Compliance, Safety, Accountability: Analyzing the Relationship of Scores to Crash Risk. October 2012.

American Transportation Research Institute 5 Critical Issues in the Trucking Industry – 2012 Executive Summary

2. Hours-of-Service Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

11.6% 13.8% 10.8% 36.2% 91 Federal rules governing commercial driver Hours-of-Service (HOS) maintained the number two spot for the second year in a row. In December 2011, FMCSA published a final rule which changed several key provisions in the HOS and has a compliance date of July 2013. This final rule limits the 34-hour restart and requires a minimum 30-minute break after 8 hours of driving. The HOS rules were first changed in 2004 and since then, the industry has seen proposed changes implemented, vacated by the courts and changed again. Given the significant operational modifications that the industry has undergone to comply with the multiple changes to the HOS rules and the anticipation of additional costly impacts from this latest round of changes, it is not surprising this issue continues to rank high. Over one-third of respondents (36.2%) rank this as the first, second or third most important issue. The ICI of 91 indicates that FMCSA’s  proposed  changes  to  the  rules  generated only slightly less concern than CSA.

Proposed Strategies (in rank order):

a) Continue  to  highlight  the  industry’s  safety  record  under  the  current  HOS. Many respondents believe that the trucking industry’s safety record under the current HOS regulations is justification for keeping the existing HOS rules. According to FMCSA, truck-involved fatalities over the past several years (under the current HOS) have been at record-low levels.9 Nearly 40 percent (39.9%) of respondents feel this strategy would be the most effective for addressing HOS concerns. b) Quantify the impacts of changes to the 34-hour restart provision. This strategy is preferred by 37.2 percent, making it a close second. The most substantial changes in the new rule focus on the 34-hour restart provision. These new changes require that the restart includes two overnight rest periods, between the hours of 1 a.m. and 5 a.m., and it can only be used once per week. The impact of these changes remains unclear for the industry, which many feel necessitates research into their impact on industry operations. Earlier  this  year,  ATRI’s  Research  Advisory  Committee  (RAC)10 identified this research as a top priority for the industry.

c) Continue strong advocacy for retention of the 11-hour driving provision. While the final HOS rule from FMCSA did retain the 11-hour driving provision, it also included new restrictions that prohibit drivers from continuing to drive if 8 hours have passed since their last break of 30 minutes or more. Additionally, FMCSA Administrator Ferro has stated that the agency intends to revisit the 11-hour driving provision.11 Many in the industry believe that scaling back driving hours will have significant and costly operational impacts that will negatively impact the entire supply chain. Nearly one quarter (22.9%) of respondents rank this strategy first.

9 Large Truck and Bus Crash Trends 2010. Federal Motor Carrier Safety Administration. August, 2012. http://www.fmcsa.dot.gov/facts-research/research-technology/report/LTCC_Report_LargeTruckandBusCrashFacts2010.pdf. Accessed September 28, 2012. 10 The American Transportation Research Institute (ATRI) Research Advisory Committee (RAC) is comprised of industry stakeholders representing motor carriers, trucking industry suppliers, labor and driver groups, law enforcement, federal government and academia. The RAC is charged with annually recommending a research agenda for the Institute. 11 Ferro Defends Restart Change, Vows to Pursue 10-Hour Limit. Transport Topics. January 23, 2012.

American Transportation Research Institute 6 Critical Issues in the Trucking Industry – 2012 Executive Summary

3. Economy Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

16.1% 7.0% 9.0% 32.1% 89 The economy is the only issue in the history of the TII Survey to rank as the top issue for three consecutive years (2009-2011). However, due to an apparent combination of economic improvement and escalating concern over the impacts of CSA and HOS, the economy has dropped two spots to third place in the 2012 TII Survey. Regardless of the drop in ranking, concern over the economy still remains high. The ICI of 89 shows that concern over the state of the nation’s  economy  is  only  slightly  lower than HOS concerns (ICI of 91). Furthermore, the economy received more first place votes than any other issue (16.1% of first place votes). The unsteady nature of the economic recovery clearly continues to weigh heavily on the minds of many in the industry. ATA’s  chief  economist projects growth to continue, however the pace of growth is expected to remain relatively slow at 1.5 percent for the remainder of 2012.12

Proposed Strategies (in rank order):

a) Advocate for pro-business policies that will stimulate the economy and benefit the trucking industry through increased freight demand. Nearly half of respondents (48.6%) choose this strategy as their most preferred way to mitigate economic concerns. Those who choose this strategy likely feel that the key to improving the economy is to promote policies that increase consumer confidence and consumer spending, and generate additional hiring and investment. Increased consumer spending would lead to more robust freight demand and a more stable financial situation for the trucking industry.

b) Urge policymakers to address long-term economic issues, such as the national debt. It can be assumed that many of the 34.4 percent of respondents that prefer this strategy believe the worst of our recent economic woes may be over and that it is time to protect the economy from future problems. This strategy speaks to a longer term approach to improving economic security and stability by adopting more permanent financial reforms. Addressing more systemic economic problems, such as the national debt, could better position the economy for long-term health. This is reflected in the current debate over the so-called  “fiscal  cliff”  which  focuses  on  the  appropriate  level  of federal spending.

c) Promote the role of the trucking industry as an employment generator that puts Americans back to work. While the unemployment rate has generally dropped over the past year, the rate remains stubbornly high. Ironically, while many Americans struggle to find work, the trucking industry is facing a driver shortage that continues to worsen. Those that prefer this strategy believe that the industry should capitalize on this opportunity to attract new drivers to the industry and help put Americans back to work.

12 ATA’s  Costello:  Economy  motoring  on. Fleet Owner. September 26, 2012. http://fleetowner.com/fleet-management/ata-s-costello-economy-motoring. Accessed September 27, 2012.

American Transportation Research Institute 7 Critical Issues in the Trucking Industry – 2012 Executive Summary

4. Driver Shortage Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

12.8% 9.2% 5.9% 27.9% 78 At first glance, it may seem counter-intuitive that the driver shortage is the industry issue of next greatest concern after worry over the economy. This highlights the unevenness of the economic recovery and the diversity of the trucking industry. While some in the industry are worried about freight demand, others cannot find enough drivers to accommodate growing demand. Interestingly, the source of the driver shortage may not be completely tied to a growing economy or baby boomer retirements. Implementation of CSA and new HOS driving restrictions may be reducing the number of qualified drivers and impacting their level of productivity. Regardless of the reasons, the driver shortage is a major concern for many in the industry. Over a quarter (27.9%) of respondents feel strongly enough about the driver shortage to rank it first, second or third. Some industry analysts estimate there will be a shortage of 100,000 – 200,000 drivers over the next two years.13

Proposed Strategies (in rank order):

a) Examine the competitiveness of truck driver pay and benefits as compared to other industries. The majority of respondents (50.8%) feel that the best strategy for dealing with the driver shortage is to evaluate the competitiveness of truck driver pay and benefits. Given that the pool of qualified drivers may be shrinking, many respondents feel the industry should aggressively compete with other industries to recruit and retain the best possible driver candidates.

b) Work to streamline the transition from a military CDL to a civilian CDL in order to attract more veterans to the trucking industry. Unemployment for veterans of the wars in Iraq and Afghanistan is at 10.9 percent compared to the national rate of 8.1 percent.14 Veterans, many of whom have experience driving large vehicles in the military, represent a logical and ready solution for filling open commercial truck driving positions. For example, Virginia has recently started a program with the military to help veterans and members of the National Guard obtain a CDL.15 Nearly a quarter (24.6%) of respondents believe this is the best strategy for addressing the driver shortage.

c) Research the cognitive functioning and driving behaviors of 18-25 years-olds in order to formulate the criteria for a graduated CDL. Nearly a quarter of truck drivers (23.7%) are age 55 years or older.16 Given that these drivers will likely be exiting the workforce in the next ten years, it is paramount that the industry identify workers to replace those who leave. One such pool of potential drivers is young adults; however, concerns over the lack of experience, insurability and other age-related factors continue to keep this solution at bay. Researching ways to safely incorporate younger drivers into the industry is the preferred strategy for 24.6 percent of respondents.

13 Driver shortage to remain unchanged until 2013. Truck Gauge. September 19, 2012. http://www.truckgauge.com/2012/09/13/driver-shortage-to-remain-unchanged-until-2013/. Accessed September 27, 2012. 14 Virginia program helps veterans get CDLs. Fleet Owner. September 20, 2012. fleetowner.com/fleet-management/virginia-program-helps-veterans-get-cdls. Accessed September 27, 2012. 15 Ibid. 16 Bureau of Labor Statistics. Employed persons by detailed occupation and age, 2011 annual averages. http://www.bls.gov/cps/occupation_age.xls. Accessed September 27, 2012.

American Transportation Research Institute 8 Critical Issues in the Trucking Industry – 2012 Executive Summary

5. Fuel Issues/Fuel Prices Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

10.2% 11.2% 7.6% 29.0% 76 Fuel issues, particularly prices, remain an area of heightened concern for many in the industry given the direct impact that fuel has on a  motor  carrier’s bottom line. ATRI’s 2012 update to the Operational Costs of Trucking report found that fuel and oil was the second highest motor carrier cost center after driver wages and benefits.17 Not surprisingly, the rank of this issue appears to be closely correlated with the price of fuel. Since  the  release  of  last  year’s  survey  in  early October 2011, the average price of a gallon of diesel has climbed 33.7 cents to $4.086 in late September 2012.18 While a noticeable increase, this 9.0 percent climb in fuel prices was not significant enough to move industry concern upward, resulting in a fifth place rank unchanged from last year.

Proposed Strategies (in rank order):

a) Advocate for measures to reduce speculation on energy sources in financial markets which result in large price fluctuations/volatility. This strategy is preferred by a plurality of respondents (44.4%). Many respondents feel that market speculation is artificially impacting the prices of energy beyond simple supply and demand forces. Given that there was a $0.50 per gallon difference between the highest and lowest average diesel prices between October 2011 and September 201219, it is no surprise that many are interested in reducing price volatility.

b) Support the expanded development of less price-volatile sources of fuel through domestic production and alternative energy sources. A key strategy for dealing with price volatility is to ensure a stable supply of fuel. Due to the fact that fuel and oil costs constitute 34.6 percent of motor carrier operational costs, energy price volatility can significantly impact the financial health of the trucking industry.20 This strategy came in a close second with 41.8 percent of first place votes. c) Invest in new technologies and methods for improving fuel efficiency that reduce industry demand for diesel. A number of respondents (13.8%) feel that efforts to reduce fuel demand represent the best strategy for addressing fuel concerns. These respondents may believe that the global scale of the fuel issue supports this strategy as one that the industry can begin to implement without waiting for the geopolitical process to unfold.

17 An Analysis of the Operational Costs of Trucking: 2012 Update. American Transportation Research Institute. September 2012. 18 Gasoline and Diesel Fuel Update. U.S. Energy Information Administration. http://www.eia.gov/petroleum/gasdiesel/. Accessed September 27, 2012. 19 Ibid. 20 Ibid.

American Transportation Research Institute 9 Critical Issues in the Trucking Industry – 2012 Executive Summary

6. Electronic Onboard Recorder/Electronic Logging Device Mandate Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

10.1% 8.7% 7.5% 26.3% 69 As part of the revisions to the 2012 TII Survey, industry respondents were given an expanded list of issues to rank. Among the expanded list of issues were several that were drawn from previous  years’  surveys.    The Electronic Onboard Recorder/Electronic Logging Device (EOBR/ELD) mandate is one such issue, having evolved from the onboard truck technology issue that first appeared in the 2007 TII Survey. The EOBR/ELD mandate holds the sixth position in the 2012 TII which is the highest rank of any issue related to onboard truck technology in the eight year history of the TII survey. In 2011, FMCSA was forced to vacate a proposed EOBR/ELD rule due to a court decision regarding concerns over driver harassment. Though FMCSA had been working toward a new EOBR/ELD final rule that addressed harassment concerns,  the  agency’s  work  was  preempted  by  the  inclusion  of  an  EOBR/ELD mandate for HOS tracking in the MAP-21 transportation bill passed by Congress in 2012. In MAP-21, Congress gave the agency until October 1, 2013 to issue a final rule.

Proposed Strategies (in rank order):

a) Ensure that a mandate does not require data storage and non-HOS activities beyond record-of-duty status keeping. Recognizing that an EOBR/ELD mandate for monitoring HOS compliance has been prescribed by Congress, many in the industry are concerned that FMCSA may implement a final rule that is more far-reaching and cumbersome in its requirements. This strategy speaks to that concern and is the top choice of 37.4 percent of respondents. b) Advocate for inclusion of provisions to retain existing Hours-of-Service (HOS) exemptions and provide supporting document relief in an EOBR/ELD mandate. With the exact language of an EOBR/ELD mandate still unknown, some in the industry are worried about the implementation details of any mandate. HOS exemptions, such as those for agricultural haulers during peak season, and supporting document relief, are two specific examples of details that are important to many in the industry. c) Promote government incentives for voluntary adoption of EOBRs/ELDs. Any EOBR/ELD mandate would not go into effect until two years after a final rule is issued. During that two-year timeframe, early adopters of EOBR/ELD technology could provide valuable testing and feedback on the compliance process for the US DOT. Some in the industry would like to encourage early adoption through government incentive programs. While this strategy is the least favored overall of the three, it still is the top choice of over one third of respondents (34.0%).

American Transportation Research Institute 10 Critical Issues in the Trucking Industry – 2012 Executive Summary

7. Driver Retention Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

3.3% 7.2% 4.4% 14.9% 36 This year, driver retention returns to the top ten ranking as a standalone issue for the first time since 2006. Driver retention is closely related to the issue of driver shortage as many in the industry often cite driver churning as a significant contributor to the driver shortage. The return of this issue to the TII Survey is not surprising given the recent competition among firms for qualified drivers, based in large part on the increased scrutiny of drivers and carriers in the Pre-employment Screening Program (PSP) and CSA. Research by ATA has shown that driver turnover has significantly increased recently for many carriers. During the 2nd quarter of 2012, annualized driver turnover was 106 percent among large truckload fleets, the highest value since the end of 2007.21 The issue of driver retention goes beyond driver pay, and touches on issues surrounding driver quality of life, demographics, and workplace environment. It is interesting to note that the ICI drops by nearly half (-47.8%) between issue six and issue seven, indicating a much lower level of concern for the remaining issues compared to the top six.

Proposed Strategies (in rank order):

a) Develop programs to improve work/life balance, healthy lifestyles and family relationships. Respondents who choose this strategy likely believe that the industry should work to improve the quality of life for commercial drivers as a way to stem the loss of drivers to other carriers and other industries. Drivers, particularly those operating in the long-haul sector, could benefit from programs that strengthen family connections and promote more healthy lifestyles. Nearly half (48.8%) rank this strategy as their most preferred.

b) Study innovative driver retention programs nationwide to create a list of driver retention best practices. As is the case in any industry, some companies are better at retaining employees than others. The trucking industry could benefit from a review of driver retention programs from around the country that results in a list of retention best practices. This information could then be disseminated throughout the industry in an attempt to reduce driver turnover. This is the top strategy for 37.0 percent of respondents.

c) Research solutions to the unique challenges faced by aging drivers in order to sustain existing workforce. This is the least preferred of the three strategies, with only 14.2 percent selecting it as their most preferred strategy. Even so, with a driver pool that continues to age and limited backfilling with younger drivers, it is becoming imperative that the trucking industry identify ways to more effectively utilize its aging workforce.

21 Driver Turnover Rate Surges Past 100% at Large Truckload Fleets. Transport Topics. September 12, 2012. http://www.ttnews.com/articles/basetemplate.aspx?storyid=30152&t=Driver-Turnover-Rate-Surges-Past-100%25-at-Large-Truckload-Fleets. Accessed September 27, 2012.

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8. Truck Parking Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

3.2% 4.8% 5.9% 13.8% 31 Truck parking is debuting on the TII Survey for the first time ever in 2012. This issue is ranked first, second or third by 13.8 percent of survey respondents. HOS regulations require that drivers take rest breaks and off-duty time at multiple points during the duty cycle. With the new requirement for 30-minute breaks before continuing to drive beyond 8 hours, there will be additional need for safe, available parking for drivers. In many locations, a scarcity of truck parking can sometimes create a dangerous dilemma for drivers: continue to drive beyond what the HOS rules allow in order to find safe parking, or park the vehicle in an undesignated location. Recently, the State of Maryland began a heightened enforcement campaign by issuing citations to drivers who ran out of driving hours and were parked on the side of the road.22

Proposed Strategies (in rank order):

a) Encourage investment in new truck parking facilities (public and private) and reopening of closed public rest facilities. This strategy is the overwhelming favorite of survey respondents, with 64.0 percent indicating it as their preferred strategy. The budget shortfalls experienced by many states has resulted in the closure of many public truck stops and rest areas. Reopening shuttered facilities and investing in new ones would help alleviate the shortages occurring in some areas. b) Educate state and local governments on the safety consequences of inadequate truck parking. Oftentimes,  drivers  are  stuck  between  the  proverbial  “rock  and  a  hard  place”,  when  it  comes  to  finding  safe  parking.    Recently, Congress passed “Jason’s  Law” as part of the larger MAP-21 highway authorization bill.23 The impetus for the law, which seeks to improve truck parking safety, was the murder of a truck driver who was forced to park in an unsafe area. Some in the industry feel that by educating state and local officials on the criticality of truck parking facilities, it could lead to new investments in parking facilities. This strategy is preferred by 32.5 percent of respondents. c) Support expanded development and testing of real-time information delivery systems notifying commercial drivers of available truck parking. One potential solution to the parking shortage is to provide drivers with better information on the availability of truck parking to help avoid dangerous situations. Recent advances in technology may make real-time parking information readily available to drivers. There are currently several DOT-funded demonstration projects underway testing the functionality of driver notification systems.

22 Maryland to ticket trucks parked on I-83; spaces scarce, MMTA head says. The Trucker. September 7, 2012. http://www.thetrucker.com/News/Stories/2012/9/7/MarylandtotickettrucksparkedonI-83spacesscarceMMTAheadsays.aspx. Accessed September 27, 2012. 23 Jason’s  Law:  Safety  for  Truckers.    http://jhlrivenburg.com. Accessed October 1, 2012.

American Transportation Research Institute 12 Critical Issues in the Trucking Industry – 2012 Executive Summary

9. Driver Health and Wellness Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

2.3% 4.6% 4.0% 11.0% 25 Driver health and wellness is the third driver-specific issue to make the 2012 TII Survey, the first year that three individual driver issues have made the top 10 list. Furthermore, this is the first time that driver health and wellness has been included in the top ten list. Over one in ten respondents (11.0%) feel strongly enough about driver health and wellness to rank it first, second or third. With driver turnover increasing and carriers having difficulty finding qualified new drivers, a focus on improving driver health and overall wellness could help preserve the industry’s  most  valuable  asset.    Past research has shown that the nature of the truck driving profession exposes drivers to lifestyle behaviors that can have negative health consequences (e.g. lack of exercise, poor diet).24 Furthermore, an improvement in driver health may also have positive implications for industry safety. Past research has found a positive correlation between driver health and driver safety.25

Proposed Strategies (in rank order):

a) Raise awareness of the need for exercise facilities and more healthy food choices at truck stops/travel plazas. Many drivers report a lack of healthy options for eating and exercising while on the road. Coupled with a shortage of truck parking facilities, these factors have a negative impact on driver health. Forty percent of respondents feel that more should be done to make public and private facility owners aware that healthy options are needed. b) Promote voluntary programs that incentivize commercial drivers to adopt healthy lifestyle practices. Some in the industry would like to incentivize drivers to lead more healthy lives through voluntary programs that promote health and wellness. The choice to eat healthy foods and get adequate exercise is ultimately the individual responsibility of the driver and those who selected this strategy propose that the industry should do more to incentivize drivers to make the right choices. This is the preferred strategy for 28.9 percent of respondents. c) Research and highlight driver health and wellness programs/best practices and their potential return-on-investment. There have been demonstrated cases of carriers successfully implementing driver health and wellness programs and achieving a positive return-on-investment.26 A review of these programs could lead to an industry best practices report that may assist carriers with starting or modifying their own wellness programs. Just over 31 percent of respondents believe this is the best strategy for dealing with driver health and wellness.

24 Research on the Health and Wellness of Commercial Truck and Bus Drivers: Summary of an International Conference. Transportation Research Board. November 8-10, 2010. 25 Ibid. 26 Ibid.

American Transportation Research Institute 13 Critical Issues in the Trucking Industry – 2012 Executive Summary

10. (Tie) Congestion/Truck Bottlenecks Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

2.6% 2.5% 4.3% 9.5% 22 After ranking sixth in 2011, congestion/bottlenecks ties for tenth place in the 2012 TII Survey. Congestion, both recurring and non-recurring, can increase a carrier’s operational costs through wasted fuel and losses in labor productivity. Given that driver wages and fuel/oil costs represent 61.5 percent of motor carrier operational costs27, congestion can have serious negative consequences on carrier financial health. With economic growth forecast to continue over the next year, roadway usage should also increase, likely worsening congestion in many areas.

Proposed Strategies (in rank order):

a) Identify the specific locations for the worst truck bottlenecks and encourage government to target investments in those locations. Nearly three-quarters of respondents (73.8%) list this as their preferred strategy for dealing with congestion, making it the most favored strategy of any of the issues in the 2012 TII Survey. Given relatively scarce funds for transportation improvements, many in the industry believe it is critical to target investments at locations that produce the biggest return-on-investment. Research to identify those locations could help improve transportation investment prioritization and formulas. In Illinois, the governor recently announced28 a study to improve congestion at an interchange identified by ATRI as the worst truck bottleneck in the nation.29 b) Update and improve routing and scheduling information to help commercial drivers avoid bottlenecks, congested areas and peak travel periods. While shippers generally dictate the schedule and location where goods are picked up and delivered, the industry has some control in getting from Point A to Point B more cost-effectively. Real-time traffic information coupled with historical bottleneck data has the potential to make route selection, planning and scheduling more efficient. Twenty percent of respondents choose this as their most preferred strategy. c) Expand research on the cost to the trucking industry from bottlenecks and the related impacts on the health  of  the  nation’s  economy. As mentioned previously, congestion can have a direct impact on the trucking industry bottom line. Some in the industry feel that by better explaining the negative impacts congestion has on the economy it could help persuade policymakers to make the investments in infrastructure to relieve congestion. This is the first choice for 6.3 percent of respondents.

27 An Analysis of the Operational Costs of Trucking: 2012 Update. American Transportation Research Institute. September 2012. 28 Governor Quinn Announces Studies on Circle Interchange Reconstruction. http://www.illinois.gov/PressReleases/ShowPressRelease.cfm?SubjectID=1&RecNum=10192. Accessed October 1, 2012. 29 FPM Congestion Monitoring at 250 Freight Significant Highway Locations. American Transportation Research Institute. September 2011. Available online at www.atri-online.org.

American Transportation Research Institute 14 Critical Issues in the Trucking Industry – 2012 Executive Summary

10. (Tie) Highway Infrastructure Ranked 1st Ranked 2nd Ranked 3rd Total Share Industry Concern Index

2.0% 3.4% 4.6% 9.9% 22 The trucking industry relies on nearly 4 million miles of public roadways30 in the United States to deliver the goods that drive the economy. Given the importance of roads to the industry, it is of no surprise that highway infrastructure is included in the top ten list of the 2012 TII Survey. In fact, issues involving transportation infrastructure or funding have been on the top ten list since the inception of the TII Survey. In recent years, many in the industry have been frustrated with a series of short-term extensions of the last transportation authorization bill which expired in 2009, as opposed to a full reauthorization bill. In July 2012, a new two-year authorization bill (MAP-21) was finally passed by Congress and signed into law.

Proposed Strategies (in rank order):

a) Continue to push for policies that protect highway user revenues from being diverted away from road infrastructure investment. The Highway Trust Fund (HTF) is the primary mechanism by which the federal government funds highway construction projects. The HTF is replenished by revenue collected through the vehicle registration fees and federal fuel taxes. However, not all funds in the HTF are used exclusively for highway projects. Between October 2011 and July 2012, over $681 million was transferred from the HTF to the Mass Transit Account.31 Many in the industry, including 60.2 percent of TII Survey respondents who rank this as their preferred strategy, seek to ensure that HTF revenues are used for road investment. b) Advocate for increased federal and state fuel taxes as the most stable and efficient source of surface transportation system funding. With fuel economy increasing and fuel taxes remaining unchanged, the ability of existing fuel tax revenues to adequately fund transportation improvements has been declining.32 It is therefore necessary to find additional funding to make up for funding shortfalls. Research has demonstrated that the gas tax is an efficient form of taxation33, and many in the industry feel that an increase in the gas tax is the best way to ensure the transportation system is adequately funded. One quarter (25.3%) of respondents rank this strategy as their top choice. c) Quantify the supply chain impacts of deteriorating highway infrastructure as rationale for increased investment. Failure  to  properly  maintain  the  nation’s  highway  infrastructure will undoubtedly result in negative impacts to transportation network efficiency. Understanding the financial impacts of that efficiency loss may be one way to encourage policymakers to properly fund infrastructure. This strategy is the top choice of 14.5 percent of respondents.

30 Transportation of the United States. National Atlas. http://www.nationalatlas.gov/transportation.html. Accessed October 2, 2012. 31 Status of the Highway Trust Fund – FY 2012. FHWA. http://www.fhwa.dot.gov/highwaytrustfund/. Accessed September 28, 2012. 32 Defining the Legacy for Users: Understanding Strategies and Implications for Highway Funding. American Transportation Research Institute. May 2007. 33 Ibid.

American Transportation Research Institute 15 Critical Issues in the Trucking Industry – 2012 Executive Summary

Issues 12 to 15 As a result of the methodology changes to the 2012 TII Survey, it is now possible to determine which issues fall just beyond the top ten ranking. Since there is a two-way tie for tenth place, the 12th-15th place issues are presented in Table 1. This provides the industry with insight into issues that generated a measurable amount of concern, but not enough to make the critical issues list. Furthermore, this list could also be an indicator of emerging issues of concern to the industry.

Table 1 – Issues 12 through 15

Rank Issue Industry Concern Index 12 Driver Distraction 20 13 Tolling/Vehicle Mileage Taxes 17 14 Tort Reform 16 15 Independent Contractor Status 15

This is the first year that Driver Distraction has been an issue identified by survey participants as important. With an ICI of 20, it barely misses the 2012 list. This may be the result of the U.S. DOT’s  focus  on  driver  distraction  and  the  recent  regulations on cell phone use by commercial drivers. Tolling/Vehicle Mileage Taxes and Tort Reform have appeared on the top ten list several times over the history of the TII Survey. The debate continues on both of these issues as neither has been resolved. Specifically, tolling has seen recent attention as new tolling proposals have emerged, such as those along I-95 in Virginia and North Carolina. It is possible that further tolling initiatives over the next year could cause tolling to climb in ranking. Independent contractor status registered an ICI of 15, which is strong enough to put this issue in 15th place. This is also the first year that the issue of independent contractors has emerged as a standalone issue. Depending on the outcome of the various state court battles surrounding this issue, the level of industry concern could elevate enough to place this issue in the top ten in future years.

American Transportation Research Institute 16 Critical Issues in the Trucking Industry – 2012 Executive Summary

I S S U E R A N K 1 2 3 4 5 6 7 8 9 10

2012 CSA Hours-of-Service Economy Driver

Shortage Fuel Supply/ Fuel Prices

Electronic Logging Mandate

Driver Retention

Truck Parking

Driver Health/

Wellness

Congestion/ Truck

Bottlenecks

2011 Economy Hours-of-Service

Driver Shortage CSA Fuel Issues Congestion Transportation

Funding Tort Reform Onboard

Truck Technology

Truck Size and Weight

2010 Economy CSA 2010 Government Regulation

Hours-of-Service

Driver Shortage Fuel Issues

Transportation Funding/

Infrastructure

Onboard Truck

Technology

Environmental Issues

Truck Size and Weight

2009 Economy Government Regulation Fuel Issues

Congestion/ Highway

Infrastructure

Hours-of-Service

Commercial Driver Issues

Environmental Issues

Tolls/ Highway Funding

Truck Size and Weight

Onboard Truck

Technology

2008 Fuel Costs Economy Driver

Shortage/ Retention

Government Regulation

Hours-of-Service Congestion

Tolls/ Highway Funding

Environmental Issues Tort Reform

Onboard Truck

Technology

2007 Hours-of-Service

Driver Shortage Fuel Issues Congestion Government

Regulation

Tolls/ Highway Funding

Tort Reform/ Legal Issues

Truck Driver Training

Environmental Issues

Onboard Truck

Technology

2006 Driver Shortage Fuel Issues Driver

Retention Hours-of-Service Congestion Government

Regulation Highway

Infrastructure Tort Reform Tolls/

Highway Funding

Environmental Issues

2005 Fuel Costs Driver Shortage

Insurance Costs

Hours-of-Service

Tolls/ Highway Funding

Tort Reform/ Legal Issues

Government Regulation Congestion Environmental

Issues Truck

Security

Notes: Bold issues are new to the top ten list.