I’ve asked Chris Ferrell, Director of the Tompkins Supply Chain Consortium, to share some recent insights on the current regulatory environment for transportation. I’m also interested in your thoughts on the impact of new and developing transportation regulations on supply chain performance.
At the recent Supply Chain Leadership Forum, I had a chance to learn the latest on all the transportation regulation changes from one of the foremost subject matter experts on this topic – Jason Craig, of C.H. Robinson.
This included early commentary on: the real impact of new Hours of Service (HOS) regulations that went into effect July 1 (the predicted productivity hit is real, but it’s still too early quantify a precise number); proposed refinements to CSA2010; insight into the battlegrounds of the new highway bill that is being negotiated; and a great discussion on the California Air Resources Board (CARB) amendment to the Transportation Refrigeration Unit (TRU) / Green House Gas rule, or simply CARB TRU for short.
The CARB TRU amendment hasn’t been discussed as much as the others, but it is yet another decree from the state that has consistently served as an early-adopter of regulations that eventually become federal mandate. In short, CARB TRU imposes major fines on shippers who do not perform enough due diligence in ensuring that CARB-compliant equipment is being used.
As Jason rightly noted, this marks a pretty dramatic expansion in the scope of responsibility, which has typically been carrier-focused. Unfortunately, the CARB TRU amendment offers no guidance into what is required to meet the “due diligence” threshold, but the mere threat of fines will be enough to place a premium on compliant capacity.
In fact, this sums up my overall takeaway from Jason’s discussion at the forum: While there has been a steady procession in new, refined, tighter transportation regulation over the past few years, the Great Recession – and the agonizingly slow, industry-specific recovery that has followed – has muted the cumulative effect all these changes are having on transportation capacity.
So what does this regulatory environment mean for transportation costs in our supply chains?
Ultimately, it makes an even stronger case for the movement to demand-driven supply chains that place a premium on the precise movement of comparatively limited inventory. Demand-driven serves to both reduce dependence on transportation and withstand the higher per-shipment expense associated with reduced truckload capacity.