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reflecting its lower operating costs. These discounts were subsequently

matched by many of its competitors.

The type of innovative activity that the Act was meant to foster

is also reflected in the introduction of new less-than-truckload service

by Leaseway Transportation Corp. (by its new subsidiary Leaseway Express)

on June 1, 1982. This service will offer a simplified tariff structure

in which rates will be based only on commodity density, shipment weight,

and destination. Leaseway announced that it would be able to serve

shippers of all sizes at rates substantially lower than prevailing class

rates, and that its innovative productivity and cost control measures

including the use of owner-operators

will allow cost savings to

be passed along to shippers.

Finally, United Parcel Service continues to provide excellent sma11 shipment service to communities including the very smallest communities

throughout the nation, while increasing its profits in the face of a

recession.

te SAFETY/INSURANCE/HOURS OF SERVICE

During the debate over motor carrier regulatory reform, concern was expressed that public safety problems might arise from enactment of trucking reform legislation. We have not seen any evidence to

demonstrate that this concern was valid.

I would point out that the insurance requirements contained in Section 30 of the Motor Carrier Act of 1980 were intended by the Congress to

encourage safe operations of motor carriers. The insurance standards

promulgated under the Department's financial responsibility rulemaking

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have been in effect for roughly a year. In addition, we have submitted

the report to Congress required by Section 30. Our report contains

recommended modifications to the Act designed to improve the effectiveness

of the provision and thereby further enhance public safety.

Committee staff has requested that we give a status report on our rulemakings on hours of service and driver's log regulations. Regarding the basic hours of service regulations, Federal Highway Administration Docket MC-70 was closed on September 3, 1981 with no change in the existing hours of service limitations. With respect to driver's log regulations, the Federal Highway Administration issued a Notice of Proposed Rulemaking (47 Federal Register 7702) on February 22, 1982, seeking comments on

a proposal to reduce the paperwork burden for motor carriers and drivers

operating in interstate commerce by eliminating the required forms of the driver's logs, proposing a less burdensome method of recording a driver's record of duty status, and providing an expanded exemption to the recordkeeping requirement. The comment period closed on April 23, 1982. FHWA is now in the process of reviewing the comments received and expects to publish a final rule by the end of August.

STATE DEREGULATION

On the same day the Motor Carrier Act went into effect, Florida's economic regulation of for-hire motor carriers was abolished. This total "sunset" of Intrastate trucking regulation provided more sweeping reforms than did the Act and offers an excellent opportunity to study

the effects of complete deregulation. Two studies are especially worthy of mention: one undertaken at the University of Kentucky and the other

done for the American Trucking Associations by faculty members at several

Florida universities.

In each case, the primary conclusions were the

sam: it's too soon to evaluate the full impact of deregulation and relatively little change has yet occurred. Nefther study found evidence of any serious problem resulting from Florida's deregulation of intrastate

trucking

It is worth not tag that during the past two years, several states in addition to Florida have joined the trend toward deregulation. For example, there has been intrastate deregulation of trucks in Maine,

buses in Alaska, both buses and trucks in Arizona and Wisconsin, and

household goods carriers in Idaho. In addition, West Virginia has removed

antitrust immunity for Intrastate motor carrier ratemaking for a period of two years, in order, to evaluate the need for collective ratemaking.

If "chaos" had been the result of the Motor Carrier Act -- as some critics

of reform once argued -- We do not believe we would be seeing these

pro-competitive reforms at the state level today.

SUMMARY AND CONCLUSIONS

Even though not all of the reforms contained in the Motor Carrier

Act have been fully implemented, and in spite of the fact that it

is difficult to separate the effects of the recession from the effects

of the Act, I am pleased to report that reform is working well. "Chaos"

has not occurred, and we have continued to observe trends toward increased

entry, greater independent ratemaking, and new price/service options

for shippers.

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Motor carrier business failures have increased, but so have business failures in virtually every sector of the economy. The evidence we have seen sugg its that it has primarily been the recession not the Motor Carrier Act that is responsible for the increase in carrier failures.

As we testified last year, motor carriers continue to provide quality transportation service to every region of the nation. Further, we have

seen no evidence of any significant deterioration of service to small

communities and some evidence of improvement. In fact, small communities continue to be served adequately even in Florida, where state regulatory

reform was far more sweeping than that provided for interstate trucking

by the Motor Carrier Act.

Although some inefficient motor carriers have been hurt by the recession,

other carriers have prospered using the new freedoms provided by the

Act. There will always be winners and losers in any competitive market

environment in the long run, all shippers and the nation will benefit :from the more efficient, more competitive trucking industry that is beginning to emerge as a result of the reforms provided by the Motor

Carrier Act of 1980.

*MO

*w or

Mr. ANDERSON. Please proceed.

TESTIMONY OF CHARLES SWINBURN, DEPUTY ASSISTANT SEC

RETARY FOR POLICY AND INTERNATIONAL AFFAIRS, DEPART. MENT OF TRANSPORTATION, ACCOMPANIED BY EDWARD H. RASTATTER, CHIEF, REGULATORY POLICY DIVISION, OFFICE OF THE SECRETARY

Mr. SWINBURN. Thank you, Mr. Chairman. This is Mr. Ed Ras tatter, the chief of our Regulatory Policy Division. I will read a summary of my prepared statement.

Mr. Chairman and members of the committee, let me thank you for inviting me here today to discuss economic regulation of the motor carrier of property industry.

Less than 2 years ago today, the Motor Carrier Act of 1980 was signed into law. Even though not all of the reforms contained in the act-most notably elimination of antitrust immunity for singlerate lines-have been fully implemented yet, and in spite of the fact that it is difficult to separate the effects of the recession from the effects of the act, I am pleased to convey our view that reform is working well.

As the members of this committee are well aware, the past year has been a difficult and challenging one for companies in virtually every sector of our economy, and the performance of the trucking industry during the past year has been strongly influenced by overall economic conditions. The last quarter of calendar 1981 was espe cially weak, and it appears that conditions have not improved so far in 1982. Nevertheless, while industrywide traffic and rates of return have decreased, it is encouraging to observe that some firms and some sectors of the trucking industry-such as UPS and many of the large household goods carriers-have met these challenges with vigor and success.

Recent economic conditions have also had an adverse impact on trucking industry employment. However, there is reason to believe that the increased unemployment rate is primarily the result of the recession, since according to Department of Labor figures this rate is no worse than during the 1973-75 recession.

I might note here, Mr. Chairman, that I listened to your discus sion with the Teamsters representatives, and the statistics that we have in our prepared statement on unemployment are the same ones that the Department of Labor and probably GAO were using since our source was the Department of Labor, and we will be happy to participate with those agencies in an exercise to attempt to reconcile the points of view on this.

Mr. ANDERSON. They both said that they wanted to work with labor, because they had preliminary reports on what labor is going to state. I would think that the Department of Transportation should be working with the GAO in putting this all together. We would like to have you all working from the same source of information so we get somewhat comparable answers or at least sources.

Mr. SWINBURN. We will do that, Mr. Chairman.

The increase in motor carrier bankruptcies in the recent past has received widespread public attention, particularly where large carriers have been involved. Although some have argued that de

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