OOIDA tells Washington to take action now
GRAIN VALLEY, Mo. – The Owner-Operator Independent Drivers Association (OOIDA) is asking U.S. policymakers to take action in response to new research predicting a dramatic drop in new truck and engine purchases which will ultimately lead to a break down in the trucking industry.
NERA Economic Consulting released a study detailing implications for the 2010 emission requirements for diesel engines indicating truckers and fleet managers will ultimately decide to not buy new engines and trucks because of financial reasons and user uncertainties. This will eventually mean huge job losses and a lack of choices for trucking equipment consumers of all sizes.
“With record-high diesel fuel prices earlier this year, trucking companies have already faced nearly insurmountable challenges trying to stay in business,” said Todd Spencer, Executive Vice President of OOIDA. “It’s the worst possible time for the trucking industry to take on a high stakes gamble with no known level of reliability of the technologies or return on investment.”
The Association would like the Administration and Congress to push for a restructured timeline, phasing in the new emission standards to allow ample breathing room and build confidence within the trucking industry. This would provide time to prove the worthiness of new engines, give the economy an opportunity to recover and explore new fuel alternatives.
“With more time, the solutions will become much clearer and environmentally much cleaner,” added Spencer. “Otherwise, there will be a delay in the intended environmental benefit because there is a disincentive to purchasing the new technology. Truckers and fleets are simply going to hold onto their equipment for a longer period of time, if they are able to hold onto it at all,” Spencer concluded.
The Association has been dedicated to a cleaner environment and is an affiliate in the SmartWay Transport Partnership with the Environmental Protection Agency.
However, the Association has reviewed recent news reports showing that sales and production of diesel engines and trucks have begun to slow dramatically. Manufacturers are laying off workers and closing production lines in anticipation of lower sales. Fleets, both small and large, are signaling that they will hold on to existing, older equipment, instead of making purchases of newer technology.
“While Congress and the Administration continue to address our economic crisis by focusing their attention on the Big 3 automakers after bailing out Wall Street ventures gone bad, the engine that drives the trucking industry is headed for a cliff looming just ahead,” added Spencer.
The NERA report is an update to a previous study done in January of 2005 in anticipation of a similar emission requirement in 2007. In 2010, truck engines will be required to comply with more stringent emission standards for nitrogen oxide (NOx). Various technologies are being developed and tested by engine and truck manufacturers to meet these standards.
Among other things, the study concluded:
Trucks that meet the new standard will have substantially higher purchase prices.
Trucks that meet the standard will entail technological uncertainties from the perspective of the customer, including uncertain increases in operating and maintenance costs.
The net result of these customer reactions (pre-buy and low-buy) to the 2010 standards would be reduced environmental benefits and less cost-effective standards.
Maintenance and operational costs will be substantially higher than current model engines. According to the NERA report, costs of trucks coming off the assembly line, in complying with 2010 emission standards, will run between $7,000 and $10,000 more per vehicle. This is nearly $21,000 more per truck higher than in 2004. Furthermore, there will be an additional weight of between 300 and 500 lbs. for some models utilizing new technology.
An analysis of the trucking industry released by Avondale Partners recently revealed a grim picture supporting the Association’s concerns.
The report, “Trucking: Still Driving Into the Ditch – Record Number of Trucks Exit Highways in 2008,” estimated that more than 39,000 trucks, making up 2.0 percent of the nation’s over the road heavy duty truck capacity, was idled during the third quarter of 2008. The total number of failures for 2008 is more than 127,000 trucks or 6.5 percent of the nation’s capacity. In terms of trucking company failures, during the third quarter of the year, 785 trucking companies closed shop. This is in addition to the 935 failures in the first quarter, followed by 970 failures in the second quarter, for a total of more than 2,690 trucking company failures so far in 2008.
This data only accounts for trucking companies with fleets of five or more trucks. Thousands of owner-operators and smaller fleet carriers who also failed in that same time period are not directly tracked by government or private sector analysts. The report concluded, “Never have more trucks been pulled off the road in a shorter period of time than in the first three quarters of this year.”
(For the full report go to the following url: "http://www.ooida.com/Documents/NERA_2010_NOx_Standard_Report.pdf".)
The Owner-Operator Independent Drivers Association is the national trade association representing the interests of small-business trucking professionals and professional truck drivers. OOIDA was established in 1973 and is headquartered in the greater Kansas City, Mo. area. The Association currently has more than 160,000 members from all 50 states and Canada.