New Entrant Rules to Get Tougher

I haven’t posted anything in awhile. Why? Well, let’s just say, if you’re not backing up your computer files, you should be. One day you’re going to push the “ON” button on your trusty laptop, and it’s just going to sit there. I was 80% ready for that awful day, next time I will be 100% ready.

Anyway, I came across this article on the Net about FMCSA’s New Entrant program. As you may know, I am selling a DVD training package, for $275 plus shipping and handling. It is designed for small companies who don’t know much about the safety regulations, such as logbooks, driver files, or drug testing. One of the main groups I market to are the ‘new entrants’, which are carriers who have just gotten a DOT number. FMCSA audits all new entrants within 18 months. According to this article, FMCSA is going to make the new entrant audit much tougher to pass. If that’s true, then you really should buy my DVD package.

Arnold Safety Training Package
Anyway, here is the article, from Traffic World, dated April 21, 2008:

“Never mind the record high diesel fuel prices, new trucking companies soon will have to face a barrier that until now hasn’t posed much of a problem for new entrants: The Federal Motor Carrier Safety Administration. The agency, under fire at times from critics who say the motor carrier regulator has been too friendly to business, is preparing stringent new requirements for trucking companies entering the marketplace. The FMCSA says it expects the demands, including tighter mandates for training, drug and alcohol testing and insurance, could cause some 30 to 40 percent of new applicants to hit the brakes.

The rules could tighten the lid on capacity as the sagging American economy is pressing larger trucking companies to scale back fleets and pushing many smaller truckers and independent drivers into bankruptcy or out of the industry altogether. “This is a much more thorough program and it’s got some teeth in it,” said Stephen F. Campbell, executive director of the Commercial Vehicle Safety Alliance. “Saying ‘I didn’t know,’ it will not be a defense.”

By the agency’s own admission, its past oversight of new carriers has been less than stringent. Under the current program, new trucking companies could operate without drug and alcohol testing program, although they would have to put one in place within 18 months. “Our entrant program was designed to be more of an educational format,” FMCSA Administrator John Hill said. “Carriers can tell [us] they are doing something and that is all we are required to do … we don’t really do a lot of our verification.”

All that is about to change. The agency is gearing up to complete its New Entrant Motor Carrier Safety Assurance Process in the next few months, the culmination of a process launched by the Motor Carrier Safety Improvement Act in 1999. FMCSA expects to issue final rules shortly that will govern the 18-month provisional period and the accompanying audits of new trucking companies. These rules will replace interim final rules issued in 2003. The new rules represent the biggest change in entrance requirements for new truckers since deregulation stripped many economic regulatory requirements from the books.

At the heart of the rule will be 11 regulations, including stringent requirements for drug and alcohol testing programs, insurance and use of records. Unlike the current system, a single violation would result in automatic failure. The new requirements – which were proposed in December 2006 – would be effective 30 days after the final rule is published. Hill says they will not make the entry process easier.

“We estimate through some early analysis that 30 to 40 percent of the new entrants will have difficulty” meeting the new standards, Hill told the National Industrial Transportation League’s Spring Policy Forum on April 8. Hill noted that safety audits required for Mexican carriers participating in the agency’s crossborder trucking program place stricter requirements on Mexican companies than on American operators. “We really ought to do that with the American companies as well,” Hill said.

The FMCSA’s strict new carrier requirements come in the face of mounting criticism from safety groups and others that the Bush administration has not taken a strong enough regulatory role. This new rule may be part of the agency’s answer. The agency has more than seven rule-makings coming out this year ranging from issues addressing intermodal container chassis to sleep apnea.

Although instigated by a lawsuit, the agency’s recently proposed entry-level driver training rules – which will require 120 hours of classroom training time – are another example of tougher requirements in the pipeline. The agency says its figures show highway safety improving in recent years. The large truck fatality rate has fallen to its lowest level since the Department of Transportation began tracking the figure in 1975, for instance, while traffic on U.S. highways has increased 22 percent over the past 10 years. And the FMCSA says since autumn 2007 it has published several rules and regulations ranging from fire extinguisher requirements to Unified Carrier Registration fees.

But many fear the new requirement on new carriers could end up harming the trucking industry and its shipper customers just as the freight downturn is expected to subside. “It’s becoming more and more onerous on small operators,” said Brigham McCown, an attorney and former general counsel at the FMCSA. “More and more regulations at some point starts to push the little guy out of business. … At some point you just say ‘To hell with it, it’s not worth it.'”

Small carriers make up approximately 90 percent of trucking companies, accounting for roughly 50 percent of capacity in the market, according to David Ross, a transportation analyst for investment firm Stifel Nicolaus. “These increased regulations will make capacity tighter in the upturn and will favor the large trucking companies already out there,” Ross said. Many large truckload carriers have parked hundreds of trucks over the past year in response to waning demand, but broad figures on trucking activity in recent months belie the negative reports about the larger economy and may even suggest an upturn is on the way. The American Trucking Associations reported increases in its trucking tonnage index in the first two months of 2008, including a 3.5 percent increase in February over the same month last year.

“You’ll get back into the tight demand environment; when that happens the pricing power goes back into the hands of the carriers rather than the hands of the shippers, where it is now,” he said.

“The agency has to balance the realities,” said Donald Schaefer, executive vice president of the Mid-West Truckers Association. “You can put regulations on the industry, but if you put half of them out of business then you’ve created an all-new set of problems.”

Not everyone thinks there will be a problem. The American Trucking Associations supports the new-entrant rule. “It does make sense from our standpoint to make this process tougher,” said Dave Osiecki, the ATA’s vice president of safety, security and operations. “What I hope it does is ensure a more safe company coming into the industry.”

And the Owner-Operator Independent Drivers Association, whose smaller companies would most likely be the ones affected by the rules, supports the new regulations as well. “Generally, we don’t have a lot of problems with it,” said Rick Craig, OOIDA’s director of regulatory affairs. He said new trucking companies that fail one of the requirements can always reapply. “I don’t think they are going to give up,” Craig said.

But Craig, and Todd Spencer, OOIDA’s executive vice president, also have their concerns, questioning the accident data used to develop the rule and whether the rule emphasizes paperwork over safety operations. “While most of the new carriers have shortcomings,” Spencer said, “they weren’t crashing trucks.”

Leave a Reply

Your email address will not be published. Required fields are marked *