"JUST IN TIME . . . TO WAIT"

Major Obstacles to Increased Productivity Faced by the Truckload Carrier Industry

by Laurie T. Baulig, Esq.

Partner Scopelitis, Garvin, Light & Hanson, P.C.
1500 K Street, N.W., Suite 910
Washington, D.C. 20005-1209
(202) 783-9222
lbaulig@scopelitis.com

Webmaster's Note: the following paper was commissioned by TCA's "Improving Efficiency at the Docks" Management Panel and released to the public in March, 2000. The Panel is conducting a series of meetings with shippers and receivers to explore solutions because they feel that many shippers and receivers do not understand that substantive changes are taking place in the regulatory arena that will change the relationship between carriers, shippers, receivers, and drivers on the docks. This paper attempts to increase awareness of those changes and to put them in perspective. Paper copies in brochure format are available by contacting TCA.

I. Introduction

The economic outlook for trucking in the 21st century presents a classic "good news, bad news" scenario. The goods news is that the trucking industry will benefit from greater reliance on surface transportation as the economy becomes ever more dependent on just-in-time delivery. With a booming economy, customer demand for real-time tracking of shipments, and an improved safety record, it is no wonder that the trucking industry now accounts for over 80% of all freight transportation revenues¹ and will continue to be the preeminent transportation mode well into the 21st century.²

The bad news, however, is that the trucking industry, and in particular, the long-haul segment of the industry, will face significant human resources and regulatory challenges in 2000 and beyond. These challenges include:

• A serious shortage of qualified truck drivers that will likely continue well into the next century;
• OSHA's new forklift (and other powered industrial truck) training regulations, which will be virtually impossible for truckload carriers to comply with;
• Issuance of new federal ergonomics rules by the end of 2000 that will add tremendous new burdens and costs to all employers, but especially for those engaged in manual handling operations; and
• New Department of Transportation hours-of-service rules that will likely reduce the maximum number of hours of driving time and result in significantly lower productivity.

Discussed in more detail below, each of these challenges will most certainly change the way the industry interacts with its customers, especially with respect to the handling of freight by drivers and operations at the dock. Indeed, the common thread among all these issues is that the truckload carrier industry simply cannot continue to allow its drivers to bear the responsibility of loading and unloading freight. Otherwise, the "just-in-time" buzzword of our booming economy will be replaced by a more unsettling -- and costly -- phrase: "just in time . . . to wait."

II. Human Resources and Regulatory Challenges
Confronting the Truckload Carrier Industry

A. The Challenge to Find -- and Keep -- Qualified Drivers.

Finding solutions to the current driver shortage may be the most significant challenge facing the truckload carrier industry in the next century.

The well-respected Gallup Organization, in a comprehensive study for the American Trucking Associations Foundation in 1997, concluded that the industry would need to hire approximately 80,000 new drivers each year, for the period 1995-2005, in order to meet the growing demand for truck transportation.³ Gallup estimates that approximately 894,000 truck drivers will need to be hired over this eleven-year period -- a 10.3 % increase in the current driver population.⁴ On September 22, 1999, the Federal Reserve Board released its so-called "Beige Book," a report of the twelve federal regions' economic performance. For the third straight year, the Fed raised concerns about the driver shortage.⁵

Gallup also found that driver turnover in the truckload carrier industry is significant. According to the 1997 study, 80% of new hires in the truckload industry are due to turnover; that is, drivers leaving one trucking company to work for another. Given that it costs more than $5,000 to recruit and train a new driver, truckload carriers are working hard to improve retention rates, and the Gallup study provides some important insights into why drivers leave.

In fact, Gallup took a more positive approach by asking the key question: Why do drivers stay? To answer that question, Gallup interviewed 801 drivers who had been with their current company for five years or more.

These interviews revealed a high level of job satisfaction among long-tenured drivers, but also identified areas in need of improvement. In particular, time spent waiting for freight to be loaded or unloaded was found to be a significant concern to drivers, since they are not being compensated for that time and are also constrained by maximum on-duty limits under DOT hours-of-service regulations.

Indeed, a recent survey conducted for the Truckload Carriers Association found that dry van drivers who load and unload spend nearly seven hours, on average, for each freight shipment that they pick up and deliver and that nearly 34 hours per week is spent on activities other than driving.⁶ A survey of refrigerated carrier drivers had similar findings.⁷ Both surveys found that the waiting time associated with loading and unloading freight was a major determinant of job satisfaction -- a key factor in driver turnover. As the truckload carrier industry works to improve driver retention rates, shippers and receivers can do their part by minimizing waiting time at the dock.

B. Regulatory Challenge #1: OSHA's New Forklift Training Rules

Effective March 1 of this year, employers must comply with new government regulations to ensure that all operators of "powered industrial trucks," including forklifts, are qualified to operate the equipment. The new rule⁸, issued by the Occupational Safety and Health Administration ("OSHA"), imposes extensive new training requirements for "anyone who drives a powered industrial truck used to carry, push, pull, left, stack or tier material, including forklifts, pallet jacks, and motorized hand trucks." 29 CFR § 1910.178 (l) 1999.

The regulation also requires that the training must be tailored to the specific make or model of forklift or other powered industrial truck ("PIT") and cover the hazards of the particular workplace where the vehicle operates. Training for current employees must have been completed by December 1, 1999. Employees hired after that date, or required to operate PITs after that date, must be trained, evaluated and certified before operating the equipment.

The new forklift training rules will impose significant burdens on all employers, but particularly for truckload carriers that now require their drivers to operate PITs at a shipper's or receiver's place of business. In fact, it may be virtually impossible for truckload carriers to comply, given that the training must include, as noted in italics above, "hazards associated with specific makes or models" of the trucks being used, and "the hazards of the particular workplace where the vehicle operates." There is simply no way for a carrier to know what type of equipment will be used (if it is supplied by the shipper or receiver), or what particular hazards exist at the shipper's or receiver's worksite. Because truckload carriers will find it virtually impossible to satisfy OSHA's new training requirements, it is likely that most carriers will simply choose to prohibit their employee drivers⁹ from operating forklifts or other PITs in order to load or unload freight at another employer's worksite. Indeed, members of TCA have indicated that they will not require their drivers to operate forklifts and will therefore be under no obligation to train them.

Shippers and receivers must therefore understand their obligations under the new rules, train their own employees, ensure adequate training of any lumpers invited onto their property¹⁰, and refrain from requiring non-employee drivers to use equipment that they are not legally authorized to operate. Moreover, the shipper or receiver has a duty to protect its own employees from unsafe working conditions and therefore may be cited by OSHA because it has permitted the unauthorized operation of a PIT on its worksite by a non-employee.

C. Regulatory Challenge #2: OSHA's Expected Ergonomics Rules

For over a decade, the federal government has considered whether to regulate "repetitive motion" in the workplace and to require employers to adopt "ergonomic" controls to reduce the incidence of so-called "musculoskeletal disorders (MSDs)." More recently, the Occupational Safety and Health Administration has targeted jobs involving manufacturing and manual handling¹¹ as those that have the highest risk for MSDs such as carpal tunnel syndrome and low back pain -- even though there is no scientific proof that these activities actually cause injury.

OSHA is moving aggressively toward issuing a national ergonomics standard by the end of 2000 and has already begun the final rulemaking process.¹² Once issued, the standard will require companies with manufacturing or material handling operations to reduce or eliminate so-called "ergonomic risk factors" that may be present in the workplace, such as repetitive motion, force, awkward or static postures, vibrations, and even cold temperatures. The standard will also impose significant new training, job analysis, and medical management obligations on all covered employers.

The implications of new federal ergonomics rules for the trucking industry are enormous. According to an economic impact study conducted for the ATA Foundation in 1996, a nationwide ergonomics standard would cost the trucking industry $6.5 billion a year to comply. These costs were attributed to the purchase of new equipment, such as lift gates for trailers; the hiring of new employees, required because of mandatory rest breaks and other ergonomic interventions that would reduce productivity; and changes to the workplace itself that would minimize an employee's risk of strain in lifting or moving freight.

Because loading and unloading freight falls into the category of manual handling, truckload carriers that require their drivers to perform these services for customers will automatically be covered by the ergonomics standard. It is therefore likely that truckload carriers will carefully examine whether to continue to require their drivers to perform such work. And, while use of a forklift could certainly ameliorate any strain to the back in loading and unloading operations, it is virtually impossible for truckload carriers to comply with OSHA's new PIT rules, discussed above. At best, the combination of these two burdensome rules will serve as a strong disincentive for truckload carriers to continue to require their drivers to load and unload freight.

D: Regulatory Challenge #3: More Restrictive Hours-of-Service Rules

Officials at the U. S. Department of Transportation have said for the past several years that reforming the current hours-of-service ("HOS") regulations for truck drivers is a major priority for the Clinton Administration.¹³ Unfortunately, the rules believed to be under consideration by the agency would significantly cut back the number of hours drivers can now operate.

According to an August 13, 1999, article on the front page of USA Today, DOT may be considering imposing a maximum daily driving time of no more than 10 hours in any 24-hour period; the driver would be required to rest for the remaining 14 hours ("10 on/14 off"). Under the current rules, drivers can drive for 10 hours, and then must take 8 hours off ("10 on/8 off"). The current rules therefore allow drivers to exceed 10 hours of driving time in a 24-hour period -- up to 16 hours a day in some cases.¹⁴ In addition, the current rules allow a driver to work for a total of 14 hours before taking 8 hours off. (Of course, the additional 4 hours must be associated with non-driving activity.)

Recently, TCA has learned that it is more likely that DOT will propose rules that will allow drivers to be on-duty for up to a maximum of 14 hours and require a minimum of 10 hours rest in any 24-hour period. Within the 14 hours of on-duty time, however, the proposal would require drivers to take 2 additional hours off for mandatory rest breaks. Thus, the proposal essentially allows drivers to work for 12 hours and then requires that they take 12 hours off ("12 on/12 off").¹⁵ No distinction is made between driving and non-driving time under any proposal under consideration by DOT.

TCA wholeheartedly supports the concept of basing the new HOS rules on a 24-hour clock and eliminating the current rules' artificial distinction between driving and non-driving time. But TCA believes that the new rules, consistent with the best available science dealing with fatigue and alertness, should allow drivers to work for a maximum of 14 hours, encourage rest breaks within that period, and require rest for a minimum of 10 hours, in any 24-hour period ("14 on/10 off"). ATA also supports this position.

TCA is not optimistic that its position will prevail in the HOS rulemaking and is concerned that the proposal under consideration by DOT will be a significant setback. Moving from the current 10-on/8-off rule to either a 10-on/14-off or 12-on/12-off rule would result in a dramatic decrease in productivity for the truckload carrier industry. Compared with the maximum number of hours that can now be worked in a 24-hour period, TCA estimates that the industry will suffer a 37% drop in productivity under a 10-on/14-off rule, and a 25% drop in productivity under a 12-on/12-off rule.

Of even greater concern is how the new rules will treat waiting time for purposes of counting the number of hours a driver is on-duty. If waiting time counts against on-duty hours, there will be an even more dramatic drop in productivity for the industry.

According to a TCA study of driver waiting time, a dry van driver that typically spends 34 hours per week either waiting, or actually loading and unloading, would lose 40% of the maximum driving hours now available to him under the current rules. Refrigerated carrier drivers would experience a 70% drop in driving time if loading and unloading counted against hours on-duty.¹⁶

Such precipitous drops in productivity could not be sustained without severe disruption to the industry, our customers, and the entire economy. Minimizing the amount of time drivers spend either waiting, or actually loading and unloading, could therefore be of even greater importance to carriers, shippers and receivers, under the new HOS rules.

III. Conclusion

The driver shortage, intrusive new OSHA regulations, and more restrictive hours-of-service rules will all impact the ability of truckload carriers to deliver the goods "just-in-time." But all of these issues have something else in common: all can be ameliorated, to some extent, by either minimizing the amount of time drivers spend waiting at the dock or getting drivers out of the business of loading and unloading altogether.

The industry invites more shippers and receivers to work with it on this important project. Otherwise, there will simply be no way for truckload carriers to continue to provide the reliable, efficient, and cost-effective service that has become synonymous with trucking at the dawn of the 21st century.

¹U.S. Freight Transportation Forecast . . . to 2007, Fourth Annual Report (American Trucking Associations, July 1999) at p. 19.

²Id at 16.

³"Empty Seats and Musical Chairs: Critical Success Factors in Driver Retention," ATA Foundation, October 1997.

⁴Gallup's statistics are based on estimates from the United States Bureau of Labor Statistics, an agency within the U.S. Department of Labor.

⁵See www.federalreserve.gov/FOMC/BeigeBook/1999/1990922/FullReport.htm.

⁶TCA 1999 Dry Van Drivers Survey, prepared by Martin Labbe Associates, at p. 12.

⁷TCA 1998 National Refrigerated Driver Survey, prepared by Martin Labbe Associates.

⁸This rule represents a dramatic increase in the government's oversight of forklift training. Prior to issuance of this rule, the relevant OSHA regulation stated simply:

Only trained and authorized operators shall be permitted to operate a powered industrial truck. Methods shall be devised to train operators in the safe operation of powered industrial trucks. [29 CFR §1910.178(l) (1998)].

⁹Because OSHA's new rules cover only "employees," motor carriers are not responsible for training independent contractors with whom they do business. The issue of who may be responsible for training independent contractors is a matter that may best be left to negotiation between the shipper and the carrier.

¹⁰Shippers and receivers should also consider training any lumpers they have invited onto their property to assist in loading and unloading. OSHA has taken the position that an employer must ensure that a lumper is properly trained before being allowed to operate a PIT on the employer's worksite.

¹¹The Notice of Proposed Rulemaking was issued on November 23, 1999. 64 Federal Register 65768-66078.

¹²The Notice of Proposed Rulemaking was issued on November 23, 1999. 64 Federal Register 65768-66078.

¹³In fact, DOT has failed to meet the statutory deadline, imposed under the Interstate Commerce Commission Termination Act of 1995, to issue final HOS rules by March 1999.

¹⁴The current rules also provide that driving time cannot exceed 60 hours in 7 days, or 70 hours in 8 days.

¹⁵In response to the Advance Notice of Proposed Rulemaking issued on the hours-of-service rules on November 5, 1996, 61 Fed. Reg. 57,252, several safety advocacy groups, including Parents Against Tired Truckers, supported a 12-on/12-off rule.

¹⁶See TCA 1999 Dry Van Drivers Survey, prepared by Martin Labbe Associates; TCA 1998 Refrigerated Driver Survey prepared by Martin Labbe Associates.