Trucking Industry Perspectives Trucking Industry Perspectives on on

Transportation FundingTransportation Funding

Greg OwenGreg OwenHead CoachHead Coach

Ability/Tri-ModalAbility/Tri-Modal

Talking Freight – December 16, 2009Talking Freight – December 16, 2009

Top Five Trucking Industry Top Five Trucking Industry IssuesIssues

Based on ATRI’s 2009 survey of industry:Based on ATRI’s 2009 survey of industry:

1.1. The EconomyThe Economy

2.2. Government RegulationGovernment Regulation

3.3. Fuel IssuesFuel Issues

4.4. Congestion/ Highway Congestion/ Highway InfrastructureInfrastructure

5.5. Hours of ServiceHours of Service

Key Trucking RealitiesKey Trucking Realities

Deregulated?Deregulated? HOS/Equipment/Routing/InsuranceHOS/Equipment/Routing/Insurance

Highly Competitive/ Low Profit MarginsHighly Competitive/ Low Profit Margins 640K Carriers with U.S. DOT; <100K in last 5 640K Carriers with U.S. DOT; <100K in last 5

yearsyears Critical to US EconomyCritical to US Economy

68% of Tonnage; 86% of Revenue68% of Tonnage; 86% of Revenue 6%-7% of GDP6%-7% of GDP

7% of vehicles; 15.5% of VMT7% of vehicles; 15.5% of VMT

Transportation Funding Transportation Funding IssuesIssues

Congestion is worseningCongestion is worsening

Vehicle miles traveled Vehicle miles traveled are expected to increase are expected to increase more than 72% by 2025more than 72% by 2025

Transportation system Transportation system investment is needed:investment is needed: Research suggests the Research suggests the

need for over $100B need for over $100B annually simply to annually simply to “maintain” infrastructure “maintain” infrastructure up to $200B annually by up to $200B annually by 20152015

Proposed & Existing Proposed & Existing Highway Funding OptionsHighway Funding Options

Motor Fuels TaxMotor Fuels Tax TollingTolling Highway Privatization w/ Highway Privatization w/

TollingTolling Mileage Based TaxMileage Based Tax

All Options Will Draw Revenue from TruckingAll Options Will Draw Revenue from Trucking

Trucking Trucking Perspective on thePerspective on theMotor Fuels TaxMotor Fuels Tax

Motor Fuels Tax RealitiesMotor Fuels Tax Realities

No increase in federal motor fuel tax No increase in federal motor fuel tax since 1993since 1993

Inflation has decreased motor fuel tax Inflation has decreased motor fuel tax purchasing power >28%purchasing power >28%

Tax exemptions reduce user-based Tax exemptions reduce user-based revenuesrevenues

Highway user fees diverted to non-Highway user fees diverted to non-highway useshighway uses

Project “earmarking” diverts $$ from Project “earmarking” diverts $$ from critical projectscritical projects

Trucking Trucking Perspective on Perspective on

TollingTolling

Tolling EfficiencyTolling Efficiency

Fiscal Fiscal YearYear Toll AuthorityToll Authority

Toll and Toll and Related Related RevenueRevenue

Estimated Estimated Toll Toll

Operations Operations CostCost

Cost to Cost to RevenuRevenue Ratioe Ratio

20042004New Jersey New Jersey Turnpike Turnpike AuthorityAuthority

$828,919,60$828,919,6099

$251,389,10$251,389,1011

30.3%30.3%

20052005New York State New York State Thruway Thruway AuthorityAuthority

$511,200,00$511,200,0000

$123,822,15$123,822,1511

24.2%24.2%

20042004Ohio Turnpike Ohio Turnpike CommissionCommission $211,771,00$211,771,00

00$46,449,000$46,449,000 21.9%21.9%

Safety Impacts of Toll Safety Impacts of Toll DiversionDiversion

Between 1995 and 1999, Ohio Between 1995 and 1999, Ohio Turnpike Authority increased tolls on Turnpike Authority increased tolls on Ohio Turnpike by 82%Ohio Turnpike by 82%

As a result, commercial traffic As a result, commercial traffic diverted to alternate, non-tolled diverted to alternate, non-tolled roadsroads

High profile crashes (fatalities) on High profile crashes (fatalities) on alternate routes led to rollback in alternate routes led to rollback in tollstolls

Trucking Trucking Perspective on Perspective on PrivatizationPrivatization

Privatization IssuesPrivatization Issues

Non-Compete Clauses Hurt Non-Compete Clauses Hurt Adjoining SystemsAdjoining Systems

Pricing is UncertainPricing is Uncertain Interstate System is Critical for Interstate System is Critical for

U.S. EconomyU.S. Economy Privatization Success Stories?Privatization Success Stories?

Macquarie Financial Troubles..Macquarie Financial Troubles..

Trucking Trucking Perspective on Perspective on

Mileage-Based TaxMileage-Based Tax

Mileage TaxMileage Tax

Implementation will be costlyImplementation will be costly Enforcement appears difficultEnforcement appears difficult Technology not robust enough Technology not robust enough

for lane/facility differentiationfor lane/facility differentiation Overall, feasibility is Overall, feasibility is

questionablequestionable

SummarySummary HTF not meeting needsHTF not meeting needs Fuel tax most efficientFuel tax most efficient Tolls inefficient & create safety Tolls inefficient & create safety

impactsimpacts Privatization negatively impacts Privatization negatively impacts

seamless transportation networkseamless transportation network Mileage-based tax is not possible in Mileage-based tax is not possible in

the short-run the short-run Balkanization of system harms U.S. Balkanization of system harms U.S.

global competitivenessglobal competitiveness

The Bottom Line: The Bottom Line: Motor Fuel Tax is an Motor Fuel Tax is an

Efficient Way to Collect Efficient Way to Collect Revenue…Revenue…

Ultimate user fee; social equity Ultimate user fee; social equity compasscompass

Cost to collect federal motor fuel tax Cost to collect federal motor fuel tax approximately 0.2 percent of revenue approximately 0.2 percent of revenue collectedcollected

At the state level, cost of collecting At the state level, cost of collecting motor fuel tax 1-2 percentmotor fuel tax 1-2 percent

A tax increase would be inexpensive A tax increase would be inexpensive and quickly implementableand quickly implementable