The fight for freight

Shippers know it, bureaucrats ignore it and most industries—manufacturing in particular—have experienced it on some level: Our country is fast approaching a crisis when it comes to shipping goods and raw materials. This unprecedented shortage of transportation capacity from both trucking and rail service is costing us in more ways than one.

Our national transportation system cannot accommodate the coming surge in increased freight demand without also making changes to transportation policies that permit increased trucking and rail efficiency. Demand for truck and rail shipment is growing, and capacity constraints are extraordinarily tight, with demand for truck shipment far outpacing truck availability. Nearly 70 percent of all U.S. freight tonnage is moved by trucks.

Additional growth of 25 percent is estimated over the next decade, while available truck capacity has decreased 16 percent from 2008. Moreover, as rates for rail service continue to rise, the supply of boxcars—critical to the forest products industry—is dwindling as consolidation in the rail industry threatens open competition.
 

Cross-country challenges

This growing highway congestion coupled with increasing government regulation and a lack of long-term infrastructure investment continues to create even greater problems for shippers across all manufacturing industries.

Moving raw materials to mills as well as moving finished products to consumers has become increasingly difficult and costly, and companies small and large already have been hurt by increased diesel costs, higher insurance premiums and the cost of stricter emissions standards.

Additionally, the Federal Motor Carrier Safety Administration recently outlined its top five 2016 regulatory priorities, which could increase costs for shippers by decreasing truck productivity and increasing drivers’ barriers to entry.

Despite these challenges, U.S. manufacturers continue to find new and innovative ways to optimize their businesses throughout their supply chains. Unfortunately, archaic gross vehicle weight (GVW) limits for federal interstates inhibit shippers’ ability to use all the space in trucks. The 80,000-pound GVW has not been increased in more than 30 years.

More than 90 percent of states allow heavier trucks to access some or all secondary roadways, while federal regulations prohibit these heavier trucks from accessing the interstates, which is the safest place for them to travel.

An increase in the maximum allowable weight of six-axle semitrailers is an effective and safe way to increase truck productivity and America’s freight capacity. Such a move would reduce congestion, decrease emissions, improve highway safety in light of fewer vehicle miles traveled, reduce road wear and tear and improve global competitiveness.

By allowing companies to consolidate goods and reduce the number of weekly shipments, the U.S. Department of Transportation (DOT) estimates that the impact of implementing heavier, six-axle trucks would reduce logistics costs by 1.4 percent annually, yielding “significant logistics savings” of approximately $5.6 billion. In the forest products industry alone, if the weight limit were increased to 91,000 pounds, the number of truck trips could be reduced by 1.4 million, while the number of truck miles traveled could decline by 250 million.
 

Relying on rail

Shipping by rail continues to be an essential part of the forest products industry’s supply chain as well; the industry is the largest user of boxcars, accounting for approximately half of all shipments in 2014.

However, poor service, continual rate increases and lack of investment for boxcars have caused widespread frustration. Shippers have seen their supply of boxcars dwindling as the cars reach their federally mandated lifespan of 50 years.

Several forest products groups are working with the Association of American Railroads and the DOT to extend the lifespan of boxcars to 65 years, with proper refurbishment. Yet, the supply of boxcars continues to dwindle; reinvestment has lagged well behind the pace necessary to ensure an adequate supply is available. Nearly 41 percent of the boxcar fleet has been decommissioned in the past decade, and 75,000 more boxcars are scheduled to be retired in the next 15 years.

Rail customers also are not receiving reliable rail service at reasonable rates. Since 1980, the railroad industry has seen unprecedented consolidation, with four Class 1 providers servicing approximately 90 percent of all rail traffic. Nearly one-third of forest products facilities have access to only one rail carrier.

The railroad industry has an obligation to serve its customers and the nation’s freight rail needs, but many see an opportunity to charge excessive rates while providing poor service.
 

Getting on board

The American Forest & Paper Association (AF&PA) supports reforming the Surface Transportation Board (STB), the federal regulatory body in charge of overseeing the nation’s freight rail system, which is failing in its mission to ensure competition and to protect rail customers from the power of a railroad monopoly.

Sens. John Thune and Bill Nelson have introduced the bipartisan “Surface Transportation Board Reauthorization Act of 2015” (S. 808), which includes changes to the composition of the STB, streamlines how the board handles rate disputes and service complaints and expands the authority of the STB to investigate matters other than rate cases. This bill passed the Senate June 18, 2015. We urge Congress to pass this common sense reform legislation this year.

Studies show and experts agree that technology improvements and stronger roads and bridges would make it safe for trucks to carry more freight, yet the struggle continues.

Rail and truck transportation should work in complementary ways and at competitive rates, and we’re hopeful that someday this will become reality. The impending transportation crisis affects too many industries across the United States for these efforts to fail. It’s time to bring our transportation system into the 21st century to deliver for America.

Elizabeth Bartheld is vice president of government affairs for the American Forest & Paper Association (AF&PA), a Washington-based trade association representing the forest products industry. More information is at www.afandpa.org.