# Presentation: 681645

## 
Darrin Roth
American Trucking Associations, Inc.

**Darrin Roth**
**American Trucking Associations, Inc.**

**Trucking Industry Perspectives on Freight Transportation Planning****July 10, 2001**

**Notes:**
Thank you for inviting me to speak here today.  
I don’t think it’s any secret, at least in this room, that freight has largely been absent from the transportation planning process, and I’m going to run through why I think that’s happened and what can be done about it.
But first, it’s important to understand how freight, trucking in particular, fits into the national economy, because the ability of cities and states to address the particular challenges that face the trucking industry will have tremendous impacts on our nation’s future economic health.

## Trucking’s Role in the Economy

**Notes:**
Today, trucking delivers the lion’s share of freight - around 8 billion tons per year.  
That’s over 63% of the market
By 2008 trucks are projected to deliver about 9.3 billion tons, and our market share is expected to climb as well.

## Trucking’s Role in the Economy (cont.)

**Notes:**
When measured by value, trucking’s dominance of the freight market, and the importance of its role in the economy, becomes even more clear.
Today, trucking accounts for 5% of the nation’s GDP.
Within a decade, the trucking industry’s revenue is expected to reach $625 billion.  
That’s 87% of the total freight market.
By comparison, our closest competitor, rail, will account for less than 5% of the market in 2008.  

## Trucking’s Role in the Economy (cont.)

**82% of U.S. communities served exclusively by trucks**
**Industry growth will require an additional 2.3 million trucks and 117 billion additional VMT between 1998-2008**
**Population of smaller vehicles will increase 93% and VMT will increase 154%**
- Operate mostly in urban areas

**Notes:**
82% of U.S. communities rely exclusively on trucks for their freight transportation service.  They are served by no other mode.
Because of the tremendous growth in the demand for trucking, by 2008, we will see another 2.3 million trucks on the road and truck travel will increase by 117 billion vehicle miles.
Smaller vehicles will see the most rapid growth.  Their population will rise 93%, and miles traveled by these vehicles will explode by 154%.
It is especially important to recognize the future growth of these trucks because most of their travel occurs in urban areas.    

## Logistics: A Critical Factor in National Productivity

**Reliable, Efficient Highway System**

**Trucking industry deregulation**

**Adoption of Advanced Logistics**

**Productivity Growth**

**Notes:**
Trucking’s real value is measured in the tremendous contributions it has made toward national productivity.
Construction of the Interstate system, which reached maturity in the 1970s and 80s,enabled the creation of a transportation system that, for the first time, permitted reliable delivery of freight, and delivery windows that could be measured in minutes instead of hours or days.
In addition, deregulation of the trucking industry created tremendous competition, bringing down rates and fueling investment in new technologies and the development of highly creative, very efficient, delivery strategies.
These two factors enabled shippers to cut their inventories and respond rapidly to consumer demands.
This in turn fueled tremendous productivity growth, and has contributed to the United States’ newfound ability to sustain strong economic growth without the onset of inflation.   

## Logistics: A Critical Factor in National Productivity (cont.)

**Adoption of advanced logistics allows firms to **
- Produce more goods using fewer resources
- Reinvest in more productivity-improving technologies
- Productivity cycle
**Impacts of improved logistics (1980-2000)**
- Inventory carrying costs declined 50%
- Transportation costs declined 22%
- Total logistics costs declined 37%
**Reduction in logistics costs during 1980s **
**	****resulted in an average annual savings of about **
**	****$1,000 per family**

**Notes:**
The adoption of advanced logistics techniques, such as electronic data interchange and just in time deliveries, has allowed firms to produce goods using fewer resources, and to then reinvest their savings in more productivity-improving technologies, creating a sort of productivity improvement cycle.

The impacts of improved logistics over the past two decades are difficult to overstate.
Inventory carrying costs declined nearly 50%
Transportation costs came down 22%
And the total cost of logistics to the national economy came down by 37%. 

To the average American family, the savings that resulted from logistics cost reductions was equivalent to an annual increase in income of about $1,000.

## Logistics: A Critical Factor in National Productivity (cont.)

**Notes:**
This chart illustrates the decrease in logistics costs relative to GDP since deregulation.

As you can see, logistics costs as a percentage of GDP has dropped from around 16% to about 10%.

What is troubling, however, is that since the early 1990s, the line is pretty much flat.  We seem to be stuck at around 10%.

## Logistics: A Critical Factor in National Productivity (cont.)

**Productivity gains that resulted from deregulation and new transportation efficiencies have been realized**
**Except for past few quarters, inventory-sales ratio dropping steadily**
**Transportation costs static**
**Logistics cost over $1 trillion in 2000**
- Transportation $590 billion
- Trucking $481 billion (5% of GDP)

**Notes:**
This suggests that the productivity gains following deregulation, and the savings that resulted from them, have all been realized.

So what’s causing this to happen?
Well, until the recent economic slowdown, inventory costs have been coming down fairly steadily.  
However, transportation costs, which represent the bulk of logistics costs, have been static.
This suggests that freight transportation providers, particularly trucking companies, are facing challenges that have prevented them from bringing their costs down.

## Current and Future Challenges

**Profit margins continue to be very low**
**Glut of Used Trucks in the Market**
**Driver salary increases slowing and driver shortage becoming less of a problem**
**Fuel Prices stabilizing**
**Dramatic increase in insurance rates**

**Notes:**
Let’s quickly run through a few of those challenges.
First, profit margins continue to be very low, which prevents carriers from making investments in more efficient equipment and efficiency enabling technologies.
Contributing to this problem is a glut of used trucks in the market, which has slowed fleet turnover. 
For the short term, while the economy is in a slump, the driver shortage has subsided, but will likely be a factor again once the economy picks up.
Fuel prices are stabilizing, albeit at a relatively high level.
And the industry has recently experienced a dramatic increase in insurance rates.

## Planning-related Challenges

**Worsening congestion**
- TTI - Overall congestion costs $3.3 billion annually, $50-$70 an hour/vehicle
- Real cost of congestion is unpredictability
- Tight delivery windows (10-30 minutes)
- Drivers forced to build time into deliveries to account for potential delays
- Delayed deliveries can shut down production lines

**Notes:**
The trucking industry is also facing many serious challenges that I believe can be traced to either a failure to plan properly or a failure to implement recommended projects and programs.
We are, of course, dealing with significantly worse congestion.
While it’s hard to quantify the impact of congestion on the trucking industry, by one estimate, the annual Texas Transportation Institute report, congestion costs the industry at least $3.3 billion per year, based on an average vehicle operating cost of $50 to $70 per hour.
However, the real cost of congestion to the economy, and the one that is extremely difficult to get our arms around, is not measured in wasted fuel or underutilization of drivers and equipment.  The real cost of congestion is the impact it has on the predictability of deliveries.
In order for shippers to minimize their inventory costs and take advantage of advanced logistics, they have set very tight delivery windows, sometimes as low as 10 minutes.
As more highways become congested, and as the rush hour expands to 3 hours or more, the highway system becomes less predictable, and truckers are forced to build some fudge time into their delivery schedules, which reduces driver and equipment utilization.
And if they are late, many plants’ inventories are so thin that the late delivery has the potential to actually shut down assembly lines, which forces plants to carry more inventory than they would like or would need to have if the highway system was more reliable.

## Planning-related Challenges (cont.)

**Poor loading/unloading access**
- Cities have converted loading zones to parking, failed to require adequate loading facilities for new buildings
- Delivery vehicles forced to double, triple park at cost of several hundred million dollars/year; congestion compounds problems
**Given the choice, truckers will avoid rush hour, but the choice is usually not theirs to make **
**Lack of truck parking outside metro areas to stage deliveries and avoid peak congestion**

**Notes:**
Another problem that truckers have is with the lack of loading facilities.
Some cities have converted loading zones into parking spots. They haven’t kept up with the demand for loading zones and don’t require new buildings to have loading docks, even as the demand for truck deliveries increases.
There’s no surprise, therefore, that delivery vehicles are forced to double or even triple park, at a cost of hundreds of millions of dollars a year in fines.  UPS, for example, pays in excess of $1 million in parking tickets to the District of Columbia alone.
And of course when parked trucks are blocking traffic lanes they’re causing more congestion. 
There’s a tendency to blame trucks for the congestion they contribute to, and an assumption that they have a lot more flexibility than they do.
Given a choice, truckers would prefer to avoid rush hours.
Which is why schemes like congestion pricing don’t work.  There’s already a financial incentive to avoid peak travel periods, and truckers take advantage of the opportunity to avoid rush hour travel when they have a choice.
Usually, they don’t get to decide when to make deliveries - that’s the shipper’s decision.
Truck drivers would like to be able to stage their deliveries by staying at a rest area or truckstop overnight and getting into the metropolitan area before the morning rush.  Unfortunately, the lack of truck parking outside of metro areas, besides  being a safety hazard, prevents them from doing this, forcing them into rush hour traffic.

## Recommendations

**Incident Management - All Major Corridors**
**Sensible ITS Applications **
**Improved Access Control and Signalization**
**Better Signage, Better Parking/loading zone Mgmt. **

**Notes:**
So what can be done?
First, most congestion is caused by unanticipated incidents, so we need to do things like clear broken down vehicles off the road quickly and respond rapidly to hazmat incidents.  This means being prepared, having the right equipment in place, and the right people, who have proper training, and are ready to react quickly.
This seems obvious, but even large metropolitan transportation agencies will take hours longer to clear an incident than they would have if they were better prepared.
Intelligent Transportation Systems can play a role, but we have to be careful not to be seduced by the promise of technology.  A variable message board that warns of congestion is useless if the highway system doesn’t have excess capacity.  Adoption of technology should complement, not replace, highway capacity expansion.
 Trucks are not cars, and if access control and signalization are designed to only meet the needs of cars, then you’re going to see trucks clipping and damaging sidewalks, and traffic lights on heavily traveled truck routes that allow only one or two vehicles through at a time.
Truckers tend to drive in areas that they are unfamiliar with.  They need better signage and directions letting them know where they can legally park for loading and unloading or for rest.

## Recommendations (cont.)

**Design highways with trucks in mind**
**Replacement of Substandard Structures**
**Better access to Intermodal facilities**
**Workshops and Education on Best Practice and Low Cost Strategies**

**Notes:**
Trucks take longer to accelerate and decelerate, and they have other operating characteristics that are different than cars.  If an agency designs highways to only accommodate cars, as many do, they shouldn’t be surprised when trucks  flip over on cloverleaf interchanges or a lot of merge-related accidents are occurring because a ramp is too short to allow the truck adequate space to reach highway speed.
About 16% of bridges are structurally deficient, including around 3,000 on the Interstate System.  Many are these bridges are closed to some or all trucks, and that essentially forces trucks onto a smaller highway system.  Replacing or fixing these bridges should be given a very high priority.
I think we’re all familiar with the condition of intermodal connectors, or will be by the time this conference is over.  This is not a problem that is related to funding.  It simply represents a failure to set proper priorities.
There are some relatively simple, inexpensive solutions to the problems involved in moving freight, and I’ve mentioned a few.  The problem is that many planning agencies don’t have the time, incentive or staff expertise to recognize and act upon them.
 That information can be made available, through the state DOT or some other source, at a relatively low cost and a small commitment of time.

## Getting the Trucking Industry Involved

**Freight stakeholders generally not involved in planning process**
- Too many agencies, too many meetings
- Michigan has a dozen MPOs; each has approx. 10-15 meetings each year
- Planning process too slow and incremental
- Companies, state associations don’t have time, resources to participate
- Cultural issues
- Lack of trust by carriers of government officials
- Planners view freight as adversaries

**Notes:**
Finally, if we in the trucking industry have all of these great ideas, why don’t we show up at meetings to talk about them?
For one thing, there are just too many agencies holding too many meetings.
Since we’re in Michigan, I’ll pick on Michigan. 
There are a dozen MPOs in Michigan.  Each holds about 10 to 15 meetings per year.  That’s around 150 meetings per year just in one state.  And that doesn’t include the state DOT meetings.  Some states also have turnpike authorities, which hold their own planning meetings.
The planning process is too slow and incremental.  Trucking executives operate on quarterly timetables; the idea of talking about a project for 5 years before it even gets started is unfathomable to them, and they lose patience with a process that is seemingly endless.
And they simply don’t have the time or resources to devote to freight planning.  They have businesses to run.
State trucking associations would have to hire someone full time to keep track of all the planning activities in their state, and they simply can’t afford to do that.
There are also cultural barriers to freight planning.  
Remember that freight planning as a formal process has only really existed since 1991, and even now, with a few exceptions, freight has been pushed off to the side in favor of passenger projects, which are more glamorous and enjoy greater popular and political support. 
There’s also a general lack of trust by carriers of government officials, and, in turn, agency people see freight stakeholders more as adversaries than as partners or customers.

## Getting the Trucking Industry Involved (cont.)

**Recommendations**
- Simplify, shorten planning process
- Don’t expect freight stakeholders to come to the agency; the agency must make initial and subsequent contact
- Make freight stakeholders part of the decision-making process
- Anticipate freight needs

**Notes:**
So what can be done to get freight stakeholders more involved?
First, simplify and shorten the planning process.
Second, don’t expect freight interests to come to the agency.  
The agency must be the one to provide the outreach and to make sure that their freight contacts remain engaged.
You can’t just do that by creating some kind of advisory panel.  They carry no weight, and their recommendations generally get ignored.  
Freight interests have to be in a decision-making capacity if agencies are serious about addressing freight problems and about keeping freight stakeholders engaged.  
For example, MPOs should include freight practitioners on their Boards.
Finally, planning agencies should work with freight practitioners to anticipate future needs.  For example, before building an 8-foot shoulder, consider that trucks are 8 and a half feet wide, and will likely be blocking a lane of traffic if they have to pull over.  
The trucking industry wants to work with planners.  We want to deal with the barriers to productivity that we face, just as you would like to resolve the tremendous challenges that you deal with every day.
However, such involvement requires a tremendous commitment on the agency’s part to give something more than lip service to freight  The only way freight projects will ever compete with passenger projects is if transportation officials become champions to the cause, to raise the profile of these projects so that they can be on at least equal footing with passenger projects.