Over the course of history, the White House Rose Garden has been the venue for many Presidential decisions which heralded a new direction for our country. Earlier this summer, I had the opportunity to participate in one such event that, hopefully, we can look back on years from now and recall as the beginning of important change for our citizens, our nation and our industry.

The event was the signing by President Barack Obama of an official presidential memorandum on Fuel Efficiency Standards, which directed his administration to establish fuel efficiency and greenhouse gas (GHG) emissions standards for commercial medium- and heavy-duty vehicles beginning with the nation’s 2014 models.

In a country so reliant on fossil fuels, increasing fuel efficiency while reducing greenhouse gas emissions is a goal worthy of everyone. The President’s action recognized the efforts of a group of industry leaders who see this goal as not only worthy for the environment, but necessary for our business.  And that’s the Heavy-Duty Fuel Efficiency Leadership Group, a diverse coalition of trucking fleets and related technology providers formed earlier this year.

The mission of the group is to assist federal agencies in formulating effective policies to reduce GHG emissions and increase fuel efficiency in heavy-duty commercial vehicles, while avoiding unintended consequences that could disrupt the industry and our economy.

This group, of which Con-way is a founding member, believes that a strong GHG/fuel efficiency program can result in significant environmental, economic and national security benefits. Encouragingly, the President’s call to action emphasized the importance of collaboration between government and industry as the path forward to developing, refining and implementing effective policy.

To that end, the leadership group created and presented to the Administration and federal agencies a Statement of Principles to support and help guide the rulemaking process. These basic principles call for future regulations to:

• Leverage and build upon on existing programs proven to be effective

• Emphasize the prompt deployment of viable technologies

• Recognize the diversity of medium- and heavy-duty fleets

• Are complemented by financial incentives and transportation policies that accelerate results

At Con-way, we’ve already taken many critical steps in that direction. We’ve implemented initiatives that include reducing the speed of our tractors, moving to single wide-base tires for decreased rolling resistance and better fuel economy, no-idling policies and reengineering our freight network to run fewer miles and use less fuel.

As President Obama noted that day, freight vehicles are thought to be responsible for approximately 20 percent of the GHG related to transportation. He believes that we can increase tractor-trailer fuel economy by as much as 25 percent using technologies that now exist.

This is an achievable goal — if industry and government work together in a true partnership to make it a reality. The outcome will be the first-ever national GHG/fuel efficiency program for medium- and heavy-duty vehicles. It’s a goal that has benefits for all — and one that, for the sustainability of our industry and our environment, deserves our full support.

Doug Stotlar is president and chief executive officer of Con-way Inc. He, along with Tommy Hodges, chairman of American Trucking Associations, and other industry executives joined President Obama at a Rose Garden signing ceremony earlier this year that laid the groundwork for new fuel efficiency standards for the trucking industry.

Source: US News

Last Wednesday, I spoke on behalf of American Trucking Associations (ATA) at a press conference sponsored by the Derivatives Reform Alliance. This organization is advocating for tougher regulation of commodity derivatives trading, which includes crude oil and refined products like diesel fuel.

If that sounds like some arcane financial manipulation practice, you’re right. But it affects anyone who uses diesel fuel, since the effect of this practice is to encourage excessive speculation in the trading and pricing of energy-based commodities.

Transportation companies already are under pressure from tight margins, excess supply and slack demand for services. Throw in volatile diesel fuel prices and it’s no wonder many companies are struggling to stay afloat. To deliver virtually all of the country’s consumer goods, the trucking industry consumes 34 billion gallons of diesel fuel annually. Fuel is generally considered the second highest expense incurred by trucking companies. Every one-cent increase in the price of diesel fuel costs the trucking industry an additional $340 million a year.

One year ago, the price of oil was $42 a barrel. Today that price is up over 70 percent, despite the fact that global demand is down, crude oil inventories are well above average, and the dollar has declined by only 8 percent relative to the Euro. What’s driving the higher prices? Excessive speculation is the only other variable left unaccounted for.

While there is no good metric that will quantify how much of the volatility and increased price of crude oil can be attributed to the influence of excessive speculation, it’s clear that this is part of the problem. To address this market disconnect, we believe that the federal government should take steps to increase the transparency of the derivatives markets. Reasonable aggregate position limits should be set. The Commodity Futures Trading Commission (CFTC) has proposed position limits for energy trades on certain commodities exchanges; however, this step by itself is insufficient to curb the problem of excessive speculation. There are still loopholes which allow destructive practices and leave the buyers of diesel fuel – and ultimately consumers – on the hook for the cost.

It is time for Congress to strengthen the Commission’s authority and eliminate trading loopholes. We encourage mandated transparency and stated aggregate position limits for all markets (including over-the-counter and foreign exchanges) that trade energy commodity derivatives. If we do not enforce position limits, the practice of excessive speculation will continue beyond the control of government regulators.

Importantly, the CFTC or Congress also must clarify and define the difference between a commercial participant and a legitimate hedger. A commercial participant — such as a trucking company — must take physical possession of a petroleum product. The trucking industry typically hedges diesel fuel by purchasing heating oil and crude oil derivatives. Recognizing these hedging surrogates is important in determining the status of various commercial participants. Those who purchase petroleum derivative contracts as a hedge against inflation — but who never take possession of the products — are more akin to pure speculators and should not be considered commercial participants. This destructive practice cries out for more legislative or regulatory oversight.

Transparency that distinguishes between commercial and non-commercial participants has no potential downside. Trading markets are improved and the price of oil remains unaffected. Tougher regulation would likely reduce speculative bubbles, restore investor confidence and strengthen the link between commodity prices and market fundamentals. We call on Congress to do the right thing and protect the commodities markets from destructive, excessive speculation through derivatives practices that add no value.

Source: fhwa.dot.gov

The message from BNSF Railway Group Vice President Stephen Branscum was strikingly positive. In a recent letter to Transport Topics magazine, he cited as accurate “BNSF’s willingness to work with shippers and American Trucking Associations to develop progressive changes to TS&W (truck size and weight) rules for the betterment of our nation’s transportation system . . .”

Could it be true?  Was the rail industry really ready to join up with us truckers and strike ahead as a united front to improve our nation’s critical transportation infrastructure?  I was giddy with anticipation!

Alas, while the sentiment was encouraging, sadly, it lasted about two seconds. In his letter, Mr. Branscum then quickly reverted to form, attacking the trucking industry, which, oddly enough, is one of the railroad’s largest customers. He criticized the industry and existing government policies, claiming: “The current system of taxation is subsidizing trucks . . . and provides a competitive advantage to the trucking industry, to the detriment of our nation’s roads and overall transportation system.” He also stated that trucking did not pay its fair share of infrastructure costs. These comments are all the more interesting, coming from an industry that is currently seeking a federal investment tax credit.

It’s disappointing to see the railroad industry unable to overcome old habits. Slamming the trucking industry with the same tired rhetoric does nothing to bring meaningful progress to the infrastructure problems we collectively face as a nation and an integrated transportation industry.

His comments, at best, are disingenuous. When you consider the billions of dollars trucking pays annually through registration fees, fuel, sales and excise taxes, tolls and other assessments — monies intended for bridge and road maintenance and capacity increases — Mr. Branscum’s argument doesn’t wash. The larger issue is how some of these funds are being co-opted for uses other than modernizing and repairing our highways. Today, about 25% of every gasoline or fuel tax dollar collected from highway users is diverted to non-highway use — projects such as heavy and light-rail mass transit, bridle paths, bicycle trails and Frisbee parks.

The economic success of the United States cannot be decoupled from our transportation systems. It takes all modes of transportation to move America, and it takes a vibrant, well-designed and well-maintained critical infrastructure to provide the foundation for our nation to compete in the global marketplace. Each mode of transportation plays a role. Shippers ultimately determine the mode that provides the best value proposition.

It should be incumbent upon transportation service providers to work together to improve our nation’s infrastructure. Trucking provides exclusive service to about 80% of our nation’s cities and towns. If the rail industry were to double its intermodal capacity overnight, it would remove only an additional 1.5% of trucks from our highways. Those are inconvenient truths for the rail industry.

The Highway Trust Fund and its funding mechanisms perform as designed and ensure that highway users pay their fair share toward the costs of maintaining and improving our infrastructure. What needs to be addressed are those policy decisions that prevent 100% of these funds from being applied to where they are most sorely needed — our highways.