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OIG to audit FMCSA’s oversight of compliance of state CDL programs

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In initiating the audit, the Department of Transportation Office of the Inspector General not that there had been an 11% increase in fatalities in crashes involving large trucks or buses. (©2019 FOTOSEARCH)

WASHINGTON — A fatal traffic accident in Massachusetts involving a tractor trailer has prompted the Office of Inspector General of the Department of Transportation to initiate an audit of the Federal Motor Carrier Safety Administration’s review of state commercial driver’s license programs to determine whether those programs comply with CDL regulations.

The OIG Tuesday notified the FMCSA of its intent.

The notice said that earlier this year, a fatal crash involving a commercial driver led to an internal investigation by the Massachusetts Registry of Motor Vehicles (RMV) that found that RMV had not systematically processed out-of-state paper notifications of driver convictions in about five years.

The OIG said that investigation also identified a software flaw that hindered RMV’s ability to process out-of-state electronic notifications in a timely manner.

Consequently, this past summer, RMV issued thousands of CDL suspensions, based on previously unprocessed out-of-state notifications.

“Accordingly, our objective for this self-initiated audit is to assess FMCSA’s oversight of state driver’s licensing agencies’ actions to disqualify commercial drivers when warranted,” wrote Barry J. DeWeese, assistant Inspector General for surface transportation audits. “We will begin the audit immediately and coordinate with your audit liaison to schedule an entrance conference. We will conduct our audit at FMCSA.”

DeWeese noted that the FMCSA’s primary mission is to reduce crashes, injuries, and fatalities involving large trucks and buses, but said that in recent years, the number of large trucks and buses on the roads has increased.

Similarly, he said, according to FMCSA data as of June 2019, fatalities in crashes involving large trucks or buses have grown from 4,455 in 2013 to 4,949 in 2018, an 11% increase.

A spokesman for FMCSA said as it always does, the agency would cooperate with the OIG to complete the audit.

 

 

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California Trucking Association two owner-operators seek relief from California AB5

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California Trucking Association CEO Shawn Yadon said AB 5 threatens the livelihood of more than 70,000 independent truckers and that the bill wrongfully restricts their ability to provide services as owner-operators and, therefore, runs afoul of federal law. (©2019 FOTOSEARCH

SACRAMENTO — The California Trucking Association (CTA) and two California independent owner-operator truck drivers Tuesday filed an amended complaint with the U.S. Southern District Court seeking declaratory and injunctive relief against the employment test set forth in the Dynamex Operations West, Inc. v. Superior Court (Dynamex) decision, which was subsequently codified by the California Legislature in the form of Assembly Bill 5 (AB 5).

AB 5 was passed by the California Legislature and signed into law on September 11 by Gov. Gavin Newsom.

“AB 5 threatens the livelihood of more than 70,000 independent truckers,” said CTA CEO Shawn Yadon. “The bill wrongfully restricts their ability to provide services as owner-operators and, therefore, runs afoul of federal law.”

In the suit, plaintiffs argue that the classification test in the Dynamex decision and codified by AB 5 is preempted by the supremacy and commerce clauses in the U.S. Constitution and is in direct conflict with the Federal Motor Carrier Safety Act (FMCSA) and the Federal Aviation Administration Authorization Act of 1994 (FAAAA).

The CTA said the new test denies a significant segment of the trucking industry the ability to continue operating as independent owner-operators in California, forcing them to abandon $150,000 investments in clean trucks and the right to set their own schedule and become their own boss.

AB 5, rather than addressing the issue of employee misclassification for all California workers, replaced a longstanding multi-factor test for determining independent contractor status with a one-size-fits-all method, consisting of highly restrictive criteria, riddled with carve-outs and exemptions for specific businesses and industries. Under the new test, independent truckers will be forced to work as employees.

Meanwhile, the International Brotherhood of Teamsters reiterated its support for AB5.

“For decades, companies like Lowe’s, Rio Tinto Mines and Target have enjoyed unprecedented profitability and shareholder value off the backs of the hardworking truck drivers who haul their imported cargo from our nation’s seaports to their warehouses,” said Fred Potter, vice president at large of the Teamsters, who is director of the union’s port division. “It’s no surprise that their trucking contractors are going to court to perpetuate a scheme – deemed illegal by multiple regulatory agencies and courts long before Assembly Bill 5 was introduced in the California Legislature – that has robbed the typical driver of tens of thousands of dollars a year due to their misclassification as independent contractors. The gig is up and it’s time for the drayage industry to comply with local, state, and federal laws or risk being kicked out of the ports altogether, and it’s time for the cargo owners  — America’s largest retailers  to stop doing business with recidivist lawbreakers.”

Robert R. Roginson, an attorney for the CTA, said AB 5 has implications that go beyond employment classification in California.

“With more than 350,000 independent owner-operators registered in the United States, the new test imposes an impermissible burden on interstate commerce under the U.S. Constitution’s commerce clause and infringes upon decades-old congressional intent to prevent states from regulating the rates, routes and services of the trucking industry,” he said.

The CTA said for decades in California, more than 70,000 predominantly minority-owned truckers have built their businesses as independent owner-operators. These truckers have just recently invested hundreds of thousands of dollars in their vehicles to meet the nation’s strictest air quality laws.

“Independent truckers are typically experienced drivers who have previously worked as employees and have, by choice, struck out on their own. We should not deprive them of that choice. Some of the country’s most successful trucking companies were started by entrepreneurial independent truckers,” Yadon said. “We can protect workers from misclassification without infringing upon independent truckers’ right to make a living in California.”

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ACT Research freight forecast: TL contract rates turn lower with more to go

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This chart provided by ACT Research shows that after two years of rates favoring motor carriers, truckload rates in 2019 have generally favored the shippers. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. — ACT Research released the November installment of the ACT Freight Forecast, U.S. Rate and Volume OUTLOOK report covering the truckload, intermodal, LTL and last mile sectors and the gauge still shows the rates favoring shippers.

The ACT Freight Forecast provides three-year forecasts for volumes and contract rates for the truckload, less-than-truckload and intermodal segments of the transportation industry, and for the truckload spot market, the report forecasts the next twelve months. The Freight Forecast provides unmatched detail on the future of freight rates, helping businesses across the supply chain plan for the future with confidence.

Based on ACT’s For-Hire TL Carrier Database, TL contract rates fell to $2.28 per mile in Q3, down 2% year over year, following a 3% increase in the second quarter.

“We’re seeing evidence that a bottoming process is beginning in the truckload cycle from truck order and survey data,” said Tim Denoyer, ACT Research’s vice president and senior analyst. “It will be gradual, but we think spot rates will turn positive in mid-2020. Meanwhile, for-hire freight volume continues to be soft, pressured by ongoing private fleet capacity additions, so we don’t think we’ve seen the worst of the contract rate pressure yet.”

Denoyer cautioned carriers not to jump to the conclusion that capacity is tightening because of carrier failures.

“Those are not unusual in this business and the fact is U.S. fleets bought more new Class 8 tractors in September than any month in history,” he said. “So, capacity is not yet tightening, and build plans are still above replacement for the next six months. Rather, roughly 10k net new tractors were added to US highways in September, mainly by private fleets.”

Denoyer said freight had softened since the September 1 tariff imposition, because in part of the temporary strike at GM, and declines have broadened to every major rail category except petroleum.

“As GM ramps production back up, the major declines in fourth quarter to-date rail volumes should moderate somewhat,” he said.

ACT Research is a leading publisher of commercial vehicle truck, trailer and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies.

More information can be found at www.actresearch.net.

 

 

 

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FTR, ACT Research report Class 8 orders in October at 22,100 units

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Class 8 orders were the star of October, rising to an 11-month high, according to ACT Research President and Senior Analyst Kenny Vieth. (Courtesy: DAIMLER TRUCKS NORTH AMERICA)

The two companies that track and analyze the large truck market both reported North American Class 8 October orders at 22,100 units.

FTR said the order level was the highest since November of 2018, but still far below a year ago.  October 2019 order activity was the weakest performance for an October since 2016.

FTR said that while October orders were the highest this year and up 79% month over month, they were 51% lower than October 2018, signifying a subdued beginning to the traditional start of the ordering season.

FTR said the order level was boosted by a couple of big fleets placing large orders into 2020, but otherwise smaller orders were placed for the first quarter build.  Cancellations are expected to remain elevated as OEM’s shake out excess 2019 orders from the backlog. Class 8 orders for the past 12 months have totaled 192,000 units.

“Orders increased in October as expected, however, caution prevails,” said Don Ake, vice president commercial vehicles. “The trade and political turmoil are producing a highly uncertain business environment. Fleets are only ordering for their immediate needs. They are not willing to speculate much beyond the first quarter of next year. The OEMs have plenty of open capacity right now, so carriers are willing to approach 2020 a step at a time.”

Ake said orders were fair in October.

“Freight growth is flat, as the industrial sector slows and manufacturing struggles a bit. Orders are expected to stay in this range for a few months until there is more confidence in the economy and less turbulence in the trade war and political arena,” he said.

Kenny Vieth, ACT’s president and senior analysts, noted that the industry kicked off  “order season” in an encouraging fashion with preliminary order rising to a six-month high in October.

“Class 8 orders were the star of October, rising to an 11-month high,” he said. “While freight market conditions remain weak, the market is arguably benefiting from a substantive change in the “must-have” tractor spec.”

Regarding the medium duty market, Vieth said the fade that started in medium-duty orders during the summer lingered into the start of quarter four and if the preliminary order read stands as printed, October will represent a 40-month order low.

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