By  on September 18, 2007

WASHINGTON — A U.S. Court of Appeals decision that reduces the number of hours a day a commercial truck driver can be on the road to 10 hours from 11 hours has some in the supply chain concerned about its impact on getting goods to the stores during the critical holiday season.

The Appeals Court for the District of Colombia partially overturned a Federal Motor Carrier Safety Administration rule limiting the number of hours a truck driver can be on the road, as well as the 34-hour restart provision that allowed drivers to restart their weekly count of hours after they have taken a break of 34 hours. The decision, handed down July 24, vacated two of the rules, citing various procedural issues identified during the rule-making process, but "did not say those rules were unsafe," according to the American Trucking Association.

The court's decision stemmed from a lawsuit filed by Ralph Nader's Public Citizen watchdog group and other safety organizations that argued that fatalities by long-haul truckers were on the rise under a two-and-a-half year-old federal rule that bumped up the number of hours a commercial trucker could drive.

"The court has once again sided with public safety and rejected the FMCS's illogical proposition that driving longer hours and working longer days will somehow solve truck driver fatigue," Judith Stone, president of Advocates for Highway & Auto Safety, said in a statement. "The ruling reassures us that public health and safety should always come first, and must be the highest priority of federal transportation officials."

Public Citizen noted in a press release that 5,000 people are killed annually and more than 110,000 are injured in large truck crashes, with truck driver fatigue being a major factor in the crashes.

The court's ruling prompted the ATA, a trade group that represents primarily commercial trucking fleets, as well as some private fleets including Wal-Mart Transportation, to file a motion for a stay with the appeals court. The ATA cited a potential for "serious disruption to trucking operations" in its motion.

There are more than 700,000 registered interstate motor carriers operating 26 million trucks in the U.S., according to the ATA. The industry employs more than 3.4 million truck drivers, who log more than 220 billion miles annually and generate more than $600 billion in gross revenue.The Federal Motor Carrier Safety Administration said in a statement, "We are analyzing the decision...to understand the court's findings as well as determine the agency's next steps to prevent driver fatigue, ensure safe and efficient motor carrier operations and save lives."

For retailers like Wal-Mart Stores Inc., which owns one of the largest private truck fleets in the country and has one of the most extensive logistics and supply chain networks, a reduction in hours could lead to significant increases in transportation costs and cut into the bottom line, according to supply chain experts.

Tim Yatsko, senior vice president of transportation at Wal-Mart, told a House panel hearing last year that Wal-Mart moves 1.3 million loads on its truck fleet inbound to its distribution centers annually. The company had at the time 117 distribution centers, ranging from 800,000 square feet to 4 million square feet. Of that total, the company had 39 general merchandise distribution centers, including seven centers that handled the company's fashion shipments exclusively. In all, Wal-Mart's distribution centers shipped about 1.6 billion cartons a year.

Fewer hours for truckers could put enormous pressure on retailers' supply chains and increase costs, according to Erik Autor, vice president and international trade counsel at the National Retail Federation.

"This has caught the attention of retailers," said Autor. "It could potentially drive up trucking costs and inventory costs and slow down the entire supply chain."

Autor gave an example of a retailer with distribution centers in Southern California that has a high concentration of distribution centers, and needs the truck driver to load the container on the truck, get out of the port and navigate through highly congested freeways to a distribution center. Some companies only have one distribution center nationally and many others have centers that service a particular region.

Gary Petty, president and chief executive officer for the National Private Truck Council, which has members such as Wal-Mart Transportation, VF Jeanswear Inc., Milliken & Co. and Target Corp., said a change in the rule would be costly for trucking companies.

He noted that one hour less a day translates into 20 hours less a month, meaning trucking companies may be forced to hire new drivers and buy new equipment to maintain delivery times."To maintain the level of deliveries and the volume of cargo under the old rules that have just been overridden by the court in key part will mean either companies...are not going to meet the expectations of the past or they will have to add capacity by some means to meet the same level they realized before," said Petty. "If they don't add to the capacity, it will slow the whole process down and take products longer to reach their destination."

For retailers that are dependent on quick inventory turns, delays could hurt the bottom line.

"It could mean spottiness in terms of inventory selection and shortages of apparel lines," Petty said. "Maybe customers will have to come back two or three times to get the selection because of breaches in the supply chain or companies will have to pay more to make sure [the selection is available], which will cut into their margins. That is the dilemma."

The ATA argues that the safety groups that filed the lawsuit focused on just one element of a rule change that went into effect in 2005 that increased on-the-road hours by one hour but also reduced the total number of hours a driver could work on a daily basis from 15 hours to 14. The federal rule that went into effect in 2005 also increased the number of hours of rest for drivers from eight hours to 10 hours, he said.

"What we found with a lot of companies was they needed an extra hour to deal with congestion where drivers had to sit in traffic," the ATA spokesman said. "It was a package deal. One extra hour of driving was a trade off for the one hour less of total work and two hours more of rest."

He said it was a good trade-off for trucking companies and drivers, and the safety record bore that out, pointing to a 4.7 percent decrease in large truck accident deaths in 2006, the largest drop in fatalities in 14 years.

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