Truck drivers across the country are hoping for great changes in the upcoming year. As President-elect Trump moves into position to run this great nation the questions linger. What will he do for the trucking industry? What can truck drivers and trucking company owners with companies like Landstar, SRT and United Road expect from the Trump administration? While there is the wait-and-see scenario we do have some information that leads us to believe that certain situations will take place. From rebuilding America’s highways to reversing trucking regulations, let’s take a look at what we know so far.
Trump and Chao on Trucking
The first thing Trump has done for the trucking industry has been to nominate Elaine Chao as the Secretary of Transportation. One reason Chao was chosen was to get infrastructure spending passed through Congress. Trump has also said he wants to start government-backed projects in the Transportation Department, which would include repairing and rebuilding roads. Chao has extensive experience in government policy as she was the Transportation Secretary under George HW Bush, as well as Labor Secretary for both terms of George W Bush. One concern is her marriage to Senator Mitch McConnell, who is the Majority Leader of the Senate. However, another Secretary of Transportation, Elizabeth Dole, was married to a Senator and Majority Leader, Bob Dole, in the ‘80s so this conflict of interest isn’t a big concern for Chao’s leadership abilities. As such there is quite a lot of hope hinged on the Chao appointment for the Secretary of Transportation.
Privatization of Highways and Infrastructure Repair
Looking specifically at the infrastructure Trump hopes to address with Chao at the helm, there is plenty to consider. According to Fortune Trump has proposed to spend $1 trillion for infrastructure development on roads, as well as pipelines, airports and the electrical grid. Compare this to the $305 billion proposed by Congress in late 2015 for the next 5 years. It’s quite a spending increase. For traditional GOP members this is a lot of money to be shelled out, and conservative Congressmen and Senators may not be so keen on passing this kind of spending. In fact, in Florida Governor Scott, a Republican, rejected free federal money to invest in a large-scale rail project. This investment just isn’t the type of infrastructure that is supported by the GOP and Republican leaders.
At the same time Trump has stated his infrastructure spending is going to focus on high-speed trains and mass transit, while not making any claims to the infrastructure used by the trucking industry. So what about new highway corridors to ease congestion in urban areas? What about truck driver parking lots and areas for truckers to pull over for break periods? How about money for redesigning highways so they are truck driver friendly? It leaves you wondering just exactly how much of that $1 trillion will be used by the trucking industry, especially if the trucking companies, owner operators and independent drivers are going to be the ones fitting the bill through toll roads and fuel taxes.
The way Trump plans to repair infrastructure in the US is more of a concern among those in the trucking industry. He wants to rebuild highways and improve infrastructure, but Trump expects the trucking industry to help pay for improvements. A lot of this will occur through toll fees and/or higher fuel taxes. Privatization is not something that the trucking industry is on board with. In fact, the American Trucking Associations (ATA) have made it clear that they oppose tolls to finance infrastructure and highway projects. What the ATA wants is to have a blanket increase in fuel taxes. What we can expect is for both tolls and fuel taxes to increase to cover these projects.
However, toll fees and fuel taxes aren’t the only thing Trump is proposing to cover the cost of infrastructure spending. He also proposes using $167 billion of government-backed equity and sizable tax credits in order to draw $1 trillion from the pockets of private investors. The goal is that these tax credits would generate additional tax revenue that would come from the projects, such as job growth and contractor corporation taxes. However, if large corporations are going to have those tax cuts promised to big businesses then these contractor taxes may not be enough to cover the costs. As for job growth among companies this will this create additional tax revenue through increased spending by workers and businesses working on the projects.
Not everyone in the trucking industry is impressed with Trump’s privatization of infrastructure. Owner-Operator Independent Drivers Association (OOIDA) executive vice president Todd Spencer states, “You wouldn’t have the highway system now if they were for-profit things. The public is not well served by private roads.” Spencer refers to the Indiana Toll Road, which is a 157-mile stretch that was sold to a private company for $3.8 billion in 2006. The roadway suffered from reduced traffic during the recession, which lead to decreased toll collections, and the management company went bankrupt. This is the type of concern we should have when talking about privatizing roads, the possibility for companies to go belly up leaving public highways in disrepair and without maintenance.
Trump and Trucking Regulation Reform
By December 2017 the Department Transportation will begin enforcing the electronic trucking devices as required by the FAST Act bill. These devices will serve two purposes. First they will track and monitor drivers according to their hours of service requirements. Secondly these devices will govern the top speed for Class 8 heavy duty trucks commonly used by over the road truck drivers. The use of electronic devices in commercial trucks has the trucking industry up in arms.
Can Trump make any changes to the FAST Act bill before the December 2017 deadline for e-log devices? Technically Trump would be able to make regulatory changes with executive action and without the backing of Congress. However, according to the Wall Street Journal killing regulations already in place by Obama and passed into a bill could take years. This is due to the complex steps that must be taken to reverse these complex policies. Additionally Trump’s administration must overcome political challenges from Democrats, state attorney generals and legal teams.
Most importantly, the administration already has other regulatory reversals on their to-do list including the Volcker Rule, Fiduciary Rule, Clean Power Plan, Water Rule, and Methane Rule. These are the priorities of the Republican leaders, not trucking regulation reform. In terms of the trucking industry reversing these regulations could be favorable. For example with the energy policy of Trump this could increase oil production, which will boost trucking jobs and keep fuel costs low. Also any changes that Trump makes to the tax code in favor of business owners will help trucking companies to keep more cash in their pockets come tax time. This would benefit owner operators, while also encouraging spending and growth among larger trucking companies.
Another regulation that is up for change is a revision of the hours of service rules. The revisions would limit the time truckers can drive without taking breaks. This is one of the regulatory issues that is backed by the trucking industry. However, with the new administration coming in there is a concern that Trump will have too much other to do than worry about HOS rule changes. Either way the ATA has already been meeting with the Trump administration’s transition team to discuss improvements for the upcoming regulations.
Trade Wars and a Recession
Moving beyond trucking regulations there are other areas where Trump will make drastic changes that will effect truckers and trucking companies. During Trump’s campaign he promised to renegotiate the North American Free Trade Agreement. He also promised to reverse protectionist policies, all of which will likely cause a trade war. If the country becomes engaged in a trade war we could end up in a recession.
Additionally if Trump strikes a trade war this will have a direct impact on the trucking industry that depends on imports and exports. When these critical aspects of the economy are in jeopardy the entire trucking industry is in trouble. Take the recent port crisis in California that had truckers on strike at ports, causing a back up that effected inventories among businesses for months. Now imagine if this happened on a large scale with companies overseas unable to export or import. Smaller trucking companies will be shut down within months and trucking jobs will be difficult to retain among bigger companies. It will put the trucking industry in a tailspin if there is a crisis among trade. After all, we are in a global economy and we have to remember this when dealing with trade.
Summing It All Up
The Trump administration has a lot of grand ideas on what needs to happen for the transportation industry as a whole. However, nothing specific for the trucking industry has been said by Trump, which leaves a lot of room for guessing. Overall we need to be keeping a close eye on trade and other regulatory changes in terms of how these effect the trucking industry as we transition into the new year.