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Washington, DC 20001
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OPPOSE ECONOMIC RE-REGULATION OF TRUCKING INDUSTRY THROUGH MANDATORY FUEL SURCHARGES
• The House recently passed its version of the surface transportation bill, which included a provision that would undo 25 years of free-market transportation policy and would lead to the economic re-regulation of the trucking industry.
• Section 4139 of the House-passed bill would require that shippers, carriers, and intermediaries pay a government-mandated and established “fuel surcharge” to motor carriers. A fuel surcharge is an additional charge, over and above normal shipping charges, to recoup the costs of fuel which exceed a pre-determined benchmark fuel price.
• In the today’s free market, shippers and carriers typically negotiate fuel surcharges when they contract for shipping. Section 4139 would eliminate that contractual freedom. It would dictate that any contract or agreement that provides for truckload transportation or service involving a motor carrier, broker, or freight forwarder include a requirement that the payor of transportation charges pay a fuel surcharge that is no less than an amount established by law.
• To determine the appropriate fuel surcharge, the House bill mandates use of a very complex statutory formula that takes three pages of bill text just to describe. Among other things, the formula makes it difficult to determine the current diesel fuel price which must then be subtracted from a benchmark fuel price.
• Section 4139 purports to apply only to truckload carriers, a narrow segment of the trucking industry, but even a cursory reading of the language indicates that it would apply virtually across-the-board. The House bill would require that a government-mandated fuel surcharge be included in every contract for a “service” involving a motor carrier, broker, or freight forwarder. Since a large percentage of truck shipments are procured through a broker or freight forwarder, the fuel surcharge requirement would effectively be mandated on almost every segment of the trucking industry.
• Section 4139 is bad public policy for which there is no demonstrated need. The current marketplace, in which fuel surcharges are freely negotiated, is working well. Failure to include a fuel surcharge as part of a contract for shipping is the exception rather than the rule. Section 4139 is an ill-advised and unnecessary return to government price regulation of the trucking industry.
• Twenty-five years ago Congress made a deliberate decision to get the Federal Government out of the business of regulating interstate truck prices because government regulation simply doesn’t work. When Congress in 1995 terminated the Interstate Commerce Commission, the last vestige of price regulation, it observed: “The trucking industry today is a mature, highly competitive industry when competition disciplines rates far better than tariff filings and regulatory intervention.”
• Section 4139 is a retreat to the failed regulatory policies of the past and must not be enacted into law.