Posted by: rbmcarriers | November 16, 2007

Time to Consider Permitting Cabotage

This article is taken directly from Truck News and covers some of the points made during this weeks Ontario Trucking Association’s annual convention. It is certainly nice to see that we have a guy like Ray Kuntz supporting what all carriers would like and would benefit from. Crossing the US-Canada border is becoming increasingly cumbersome – check out Kuntz’s comment at the end.

By: James Menzies

TORONTO, Ont. — Canadian carriers should be able to deliver from point-to-point within the US and vice-versa, Ray Kuntz, chairman of the American Trucking Associations (ATA) said this morning in kicking off the Ontario Trucking Association’s annual convention.

Kuntz emphasized he was not speaking on behalf of the ATA when he made the remark. However, he said permitting cabotage is the next logical step in improving efficiencies for carriers on both sides of the border.

“It won’t be popular but it’s time to start looking outside the box,” he told OTA delegates.

Kuntz, CEO of Montana-based Watkins and Shepard Trucking, said NAFTA has “changed how we live” with Canada/US surface trade skyrocketing from US$211 billion in 1993 to US$536 billion in 2006.

Overall, however, Kuntz delivered a grim message to OTA delegates. He echoed an earlier report by ATA chief economist Bob Costello that the immediate outlook for the US economy was bleak and he said some carriers were already beginning to reel in their fleet size.

“Unfortunately, we’re going to see significant bankruptcies, particularly among small carriers going into next year,” Kuntz said. He also noted that rail is also experiencing a decline in tonnage and it can be expected to put downward pressure on freight rates.

Kuntz said he’s encouraged by comments by some major carriers that they would reduce their fleet size before accepting cheap freight. Major player Werner Enterprises said it would cut back its fleet by 500 trucks and Swift recently said it would reduce its truck count by up to 1,000, Kuntz said.

“Rather than compete in this capacity they will trim back the number of trucks. We could see excess capacity disappear pretty quickly,” Kuntz pointed out. He said ATA is expecting the housing collapse and credit crunch in the US to continue impacting the industry with no recovery in sight before 2009.

Another major issue of concern for the ATA is the nation’s infrastructure. Kuntz said the ATA is vehemently opposed to tolling existing highways and prefers the fuel tax model for raising infrastructure funding. The US hasn’t seen a federal fuel tax hike since 1993, noted Kuntz, and he said the industry has gone from strongly opposing fuel tax hikes to favouring them as a means to fund roads and bridges.

Kuntz also said trucking is being hampered by congestion, which has blossomed into a multi-billion dollar problem for the industry. Kuntz pointed out the cost of congestion has grown 8% every year since 1982 and the 200 worst bottlenecks in the country cost the industry a staggering US$7.8 billion per year. That’s negatively impacting fleet profitability and also the earning potential of professional drivers, he pointed out.

“Who wants to drive in this kind of mess?” he asked. “We pay drivers by the mile and they can’t get the same miles they were getting four to five years ago.”

Kuntz said “We need a real solid focus on rebuilding our infrastructure over the next 10 years” and added the US should focus more on fixing its infrastructure woes than being the “world’s policeman.”

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