It can be said that a crisis never met a regulation it didn’t like. The fact is, a crisis does not create regulations, the U.S. government agencies do through legislation enacted by Congress. During a crisis, legislation can come out of the woodwork and attach itself to various bills that showcase Congress is actively responding to the crisis, good or bad. Two such potential pieces of legislation have the framework to impact the industry that we serve.
The first potential legislation is Boost Amendment 194 attached to the highway bill set to pass through the House and onto the Senate. The amendment increases the current minimum insurance requirement for commercial vehicle drivers from $750,000 to $2 million. Advocates for the amendment speak to the liability requirement not being changed since 1980 and not being adjusted for inflation. Opponents of the amendment speak to the additional expense smaller carriers will be burdened with, forcing some smaller carriers out of business.
The second piece of legislation working its way through the House is H.R. 7457. This legislation will require brokers and carriers that contract a carrier to transport a load to properly qualify the carrier by validating proper registration with the FMCSA. Secondly, the carrier must have the minimum required insurance and, lastly, determine if the carrier has ever been placed out of service at the carrier level for any reason.
Chris Burroughs, TIA’s Vice President of Government Affairs
praised the H.R. 7457 stating, “There is a huge safety gap
that currently exists in the motor carrier marketplace, with
85% of motor carriers have an unrated safety rating. This
the legislation will drastically improve safety by requiring
entities that are selecting motor carriers to check certain
data points prior to tendering a load. There currently is no
standard or requirement for entities to check prior to
selecting a motor carrier.”
Though the full details of the bill are not yet available, the legislation does not appear to impact a shipper’s selection of a carrier which may lead to a higher level of so-called “dispatch services” deployed by smaller carriers and owner-operators. The other current challenge is carriers being rated. Currently, 85% of carriers are unrated carriers. Couple the lack of funding to rate carriers with the ease of entry to become a new carrier with authority within weeks, and you have a regulatory challenge in supporting future safety measures in the carrier industry.
The end of the 2nd quarter did not disappoint as the Rockfarm cost per mile rose from a low of $1.93 in May to $2.06 in June. June’s trend line illustrated the same capacity constraints seen in all the previous years since 2016. The question before us is whether will 2020 follow the 2017 trend of increased rates through the fall or take a softer approach as seen in 2018 and 2019?
Keeping all of us up at night is the X factor: COVID-19. The supply chain challenge is the recent infection trend and its impact on supply chains as we work to deliver some normalcy to our purchasing patterns or predict inventory needs based on sales projections. Both of which can be thrown out as the pandemic attempts to gain a hold over our daily lives once again.
On the fuel side, as reported by Stanley Reed of the NY Times, Saudi oil production has fallen to its lowest level in three decades. With the average cost of crude now above $30 a barrel, the hope is production can increase in August as economies begin to gain their footing. The looming question is the increased COVID-19 infection rate and its impact on fuel consumption. Though the cost of diesel fell to a yearly low of $2.39 per gallon in May, fuel costs is increasing with July seeing $2.43 per gallon.
Brad’s journey into logistics began as a Marine Officer and transitioned from the LTL docks to the non-asset side within the logistics service provider arena. As a co-founder of Rockfarm, Brad drives our business development efforts and delivery of our promise. An Arizona native, Brad enjoys spending time outdoors in his home state with his wife and family.
“Our approach to the market allowed us an opportunity to push forward in 2008 and enable our mission, “lower the cost to serve” to stand as a cornerstone to our company today.”