Editorial Comment: the Trucking Industry Is Growing Up
May 1, 2007
In a surprising move, the US trucking industry has recently said it would welcome higher fuel taxes. The caveat being, the money would have to be set aside for infrastructure funding. And we're not ta...
In a surprising move, the US trucking industry has recently said it would welcome higher fuel taxes. The caveat being, the money would have to be set aside for infrastructure funding. And we’re not talking bicycle paths here, which sadly has been where some of the current fuel tax revenue generated in the US has been directed. American Trucking Associations president Bill Graves recently told the National Surface Transportation Policy and Revenue Study Commission, that the industry prefers fuel taxes as a source of funding for the nation’s highways. It opposes slapping tolls on existing highways.
“We are prepared to pay,” he said. “We do favour fuel tax as a method of payment. And we believe in a program that is tied to system use. The sense now is that given the right plan, there could be some great things accomplished.”
It’s an interesting view, and one that certainly won’t be shared by many motor carriers who feel they’re already over-taxed. It’s difficult to argue that the trucking industry doesn’t already shoulder more than its share of the cost of building and maintaining roads, through fuel taxes and licensing fees.
If fuel taxes are hiked in the US, Canadian carriers operating there will also have to pay if they fuel up south of the border. But those companies also stand to benefit if roads are kept in better condition and congestion is alleviated.
The federal fuel tax on diesel in the US is 24.4 cents per gallon and it hasn’t been increased since 1993.
Graves’ position echoes comments made by FedEx Freight CEO Doug Duncan at last year’s Ontario Trucking Association convention. He too said the US government should hike fuel taxes and allot that money specifically to highway funding. Perhaps these comments signal a changing philosophy in the trucking industry, or according to ATA economist Bob Costello, a ‘maturing.’
Costello was at Bizcon 11 (Bridgestone Firestone’s annual dealer conference) earlier this month. He said inadequate infrastructure costs the US trucking industry US$7.8 billion per year and the industry has come to terms with the fact it will have to help pay the costs of bringing that infrastructure up to par. He said the industry’s voluntary tax increase is one of several signs the industry has come of age in recent years.
This voluntary tax increase is just one of several signs of the trucking industry’s maturation, Costello said at Bizcon 11. He said history has shown it traditionally takes about 20 years for an industry to ‘mature’ and he thinks the trucking industry began reaching that point right on schedule – about 20 years after deregulation. Since 2000, there has been a consistent increase in revenue per mile among carriers and a sharp decline in trucking company failures for every 1% drop in truck tonnage. Costello pointed out revenue per mile dropped every year between 1980 and 2000 as the industry came to terms with deregulation.
“We have a new industry out there and the data supports that,” he said. “We have matured, and we’ve matured quite a bit.”
Volunteering to pay higher fuel taxes may offend some truckers, who already feel they pay too much for diesel. But looking at the big picture and considering the costs congestion and crumbling infrastructure place on the industry, maybe volunteering to pay more now is the mature thing to do.