In a pair of letters delivered to President Bush in the last few days, the American Trucking Assns.(ATA) endorsed the president's economic plan on one hand, and then issued a warning about the effects of climbing diesel prices
on the trucking industry.
In a letter delivered late last week to President Bush, ATA President and CEO Bill Canary said, "Your Economic Growth and Jobs Package represents insurance for an economy that is growing, but not as quickly as it should. This fact is reflected in the current freight volumes that our members are experiencing.
"ATA believes that by giving households permanent tax relief, a family's willingness to consume will also increase," said Canary. "With increased consumption, businesses like trucking, manufacturing and retailers will witness higher rates of growth. This will also serve to increase capital expenditures, which in turn will further increase truck freight volumes."
Canary said the package would also allow earlier tax write-offs for equipment purchases, a key provision to the trucking industry and especially to its smaller motor carriers.
But in a second letter, received by the president Tuesday, Canary said, "I would like to bring your attention to the rapidly escalating diesel fuel prices nationwide and the devastating effect they can have on the trucking industry.
"According to the U.S. Department of Energy, the price of diesel fuel is currently averaging more than $1.50 per gallon nationwide, the highest level in more than a year. Additionally, diesel inventories are well below last year's levels.
The ATA president pointed to a number of forces that could cause price volatility over the coming months, including the situation in Venezuela, increased tensions in the Middle East and low oil inventories.
"This makes me believe that, unlike the last time diesel prices reached their current levels, we are more likely to see higher prices than lower ones in the future."
Canary points out that 86 cents of every dollar spent on freight transportation goes to the trucking industry.
"It is apparent that the U.S. economy runs on trucks, and trucks run on diesel fuel. Fuel is typically the second highest expense for motor carriers, especially smaller ones. As a result, with every 10-cent increase in the price of diesel fuel, on average, 1,000 motor carriers with five trucks or more in their fleet will file for bankruptcy; and this excludes the potentially thousands of smaller truckers that will fail in the same environment."
Canary asked the president to watch the situation closely and, "take steps necessary to keep escalating diesel fuel prices under control, like potentially using the Strategic Petroleum Reserve. Trucking needs the economy to move into a higher gear as much as the economy needs a healthy trucking industry to keep it moving. To stay healthy, we need to make sure that there is enough diesel fuel available at a reasonable price."