January 29, 2015

Position Paper: CERT Speaks On Productivity

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A modest extension of the length for twin trailers, with no changes in weight, would have a tremendous positive effect on productivity in the less than truckload (LTL) freight industry.

The statement is uncontroversial. Nonetheless it is worth exploring in more depth to understand why the proposal for twin 33s matters today. Basically, most consumers pay the ultimate cost for artificial inefficiencies due to anachronistic regulations and subsequently benefit from commonsense policy changes. Therefore when goods are shipped more efficiently, consumers win.

In an economic sense, productivity is a relatively easy concept. It is expressed as the ratio of outputs to inputs. Trucking productivity is measured by the number of trucks (i.e., input) it takes to move a given amount of freight (i.e., output). As it turns out, a little more room in a truck can yield a lot more efficiency. And that is good for carriers and consumers alike.
We believe that the amount of freight shipped — every item found in your grocery, auto parts store, and shopping mall as well as 85 percent of all manufactured goods in America — will continue to grow.

More people, more economic growth and more wealth, translates to more goods moving from place to place. Hidden in plain sight, with more than 9.4 million daily customers in all 50 states, the LTL industry is like a circulatory system for the American economy. Moving goods more efficiently — making fewer trips on the highways and using fewer resources like fuel — creates a downward pressure on prices for the items consumers use every day. As the economy grows, LTL needs to be more productive.

In the course of the past generation, innovation has enabled tremendous gains in trucking productivity. Technological progress produces advantages for early adopters that quickly spread through the industry. Trucks engines continue to become more efficient. Aerodynamic caps for truck cabs and skirts for trailers have become the norm.

What economists call organization of service delivery also generates productivity gains, typically by reducing the costs, or inputs, necessary for the LTL industry. For example, creating better routes, utilizing GPS and advanced real-time mapping to optimize use of the fleet as well as to avoid congestion delays, and pairing an increased use of on-board sensors with tracking software to anticipate maintenance and repairs all help the industry run leaner, smarter and in a more cost-effective manner.

In addition to the important, but incremental, technological advances and service delivery gains, there is a third area that is ripe for significant advances in productivity: regulation, literally the rules of the road, for the industry. And in this area, the federal motor carrier regulatory system has not allowed a productivity improvement to the
LTL industry since 1982.

Prior to that time, there were no national standards governing the length of truck trailers. A hodgepodge of regulations from state to state stymied efficient freight deliveries. The 1982 federal surface transportation bill established minimum length laws for both single trailer and double trailer trucks, with the latter authorized to operate throughout the country at a length of 28 feet each.

As a practical matter, a five foot extension on trailers would change the way LTL carriers load their trailers. Because LTL carriers put shipments for multiple customers on each trailer, the goods are loaded on pallets. A 28-foot pup trailer typically accommodates pallets in a two-by-two fashion. The pallets are loaded side by side starting at the front of the trailer and moving back toward the rear. Up to eight rows can be loaded which leaves extra space in the trailer but not enough for a full pallet. Five more feet would utilize that extra space to allow a ninth row of pallets, thus increasing the cubic capacity by 18 percent.

An 18 percent productivity gain would have far-reaching consequences. Conservative estimates show that 6.6 million truck trips would be avoided. Fewer trips to carry the same amount of goods mean less congestion, fewer accidents, longer lasting infrastructure and capital investments, and reduction in carbon emissions. In addition, both real-world evidence from Florida and South Dakota as well as advanced computer modeling demonstrate improved handling over the current twin 28-foot configuration.

Typically in policymaking there are trade-offs to be considered. With the case of the proposal to retain current weight limits and allow the use of 33-foot twin trailers, the primary obstacles are inertia and misinformation. The current policy has been in place for decades despite radical improvements in the equipment used and the training of professional drivers. CERT welcomes the opportunity to address the issue of information. But the leadership to modernize LTL length restrictions must come from Congress.

It is time for a change. The facts demonstrate dramatic productivity gains as well as significant safety and environmental advantages. Let’s adopt twin 33s across the nation.
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