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Are Obama’s Policies Killing the Trucking Industry?

October 18, 2011 By Sozo Staff

Whether or not trucking business owners agree with President Obama’s policies, there is one thing they can agree upon: his regulations will impact the trucking industry. Since taking office, the Obama administration’s notable transportation changes have included establishing fuel efficiency standards for large trucks and making a controversial cross-border trucking pact with Mexico, to name a few. What will be the outcome of these policies? Only time will tell. In the meantime, however, trucking company owners can still make choices about how they run their businesses.

Increased Fuel Efficiency

In August 2011, the first fuel efficiency standards for trucking transportation went into effect. According to the unprecedented national program, new semi-trucks manufactured between 2014 and 2018 are required to reduce fuel consumption by 20 percent, an estimated savings of about 4 gallons per 100 miles. New models of delivery trucks and heavy-duty pickup trucks are expected to lower fuel consumption by 10 percent.

Large organizations like the American Trucking Association have lauded the law’s potential for decreasing dependence on foreign oil and reducing greenhouse gas emissions. However, many groups composed of smaller, independently-owned trucking businesses – such as the Owner-Operator Independent Drivers Association – are singing a different tune. While fuel costs may be reduced, they say, businesses will have to eat the higher prices of new high-tech trucks, potentially preventing many transportation companies from making necessary reinvestments. Some hold that the regulation overlooks a more affordable and easily-implemented alternative: driver training that teaches better fuel efficiency techniques.

Crossing the Border

Many small freight brokerage businesses are also concerned about another policy that debuted this summer, a cross-border trucking agreement created between the U.S. and Mexico. The regulation has succeeding in convincing Mexico to eliminate tariffs on many U.S. goods, from beef to Christmas trees. Some believe the increased traffic will serve to boost business for the trucking industry. However, groups like the O-OIDA maintain that transportation companies could lose out to Mexican carriers, whose lower regulation costs allow them to undercut the prices of U.S. truck companies.

Among small transportation business owners, the prevailing opinion seems to be that the U.S. government is adding barriers at an economically-sensitive time and perhaps stifling the jobs and growth it is attempting to create.

Emerging Opportunities

From stringent safety regulations to changing technological requirements, the trucking business continues to be one of the most regulated industries worldwide. Factor in rising fuel costs, a driver shortage, and a shaky economy, and it’s easy to see how many trucking business owners are becoming discouraged. However, with 70 percent of products still transported by truck, the industry retains profit potential for those willing to make wise investments. As transportation carriers drop out of the industry, new opportunities will open up for both fellow trucking business owners and entrepreneurs who are new to the market. With guidance from the right industry professionals, investors can position themselves to take advantage of changing times.

Whether you decide to put your trucking business for sale before you feel the effect of new regulations, or you decide to take advantage of the current policies by exploring how to expand a trucking company, an experienced transportation industry broker can provide the trucking company valuation and guidance you need to determine your most advantageous action.

Filed Under: Transportation

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