The US freight industry is becoming more efficient, with vehicle and component firms, trucking fleets, logistics companies, shippers, and others in the private sector driving the change. Public policy is clearly also playing a role in the quest for greater freight efficiency – though that role has not always been either a clear or positive one.
The Obama Administration has taken a series of steps aimed in part at increasing the efficiency of the commercial trucks that move goods across the US. Most notably, the Administration has enacted federal standards requiring cuts in fuel consumption and greenhouse gas (GHG) emissions from medium- and heavy-duty vehicles. These standards affect virtually all Class 2b-Class 8 commercial vehicles with a gross vehicle weight rating above 8,500 lbs., including heavy-duty pickup trucks and vans, vocational vehicles, and Class 7-Class 8 combination tractors. The rules started to take effect in model year (MY) 2014 and will be fully effective in MY 2017.
These standards, building on more stringent federal limits on heavy-duty vehicles’ and engines’ emissions of “criteria” pollutants, are helping to encourage developments in emissions-control technology, weight reduction, and aerodynamics that are increasing US freight efficiency. Federal regulators are now working on a new set of heavy vehicle fuel consumption and GHG emissions standards that would take effect starting in MY 2018. They expect to publish a proposal in the spring of 2015. Continuing a cooperative approach that has recently characterised the writing of vehicle emissions standards, federal regulators are now meeting with stakeholders – including vehicle and engine producers, trucking and environmental groups, among others – to discuss the forthcoming regulatory proposal. Those standards, which are expected to pose a significantly greater compliance challenge than the MY 2014-17 rules, may include standards for trailers as well.
In addition to regulating fuel consumption and emissions, the federal government is involved in several other programs aimed at boosting freight efficiency. The long-running SmartWay program, for example, certifies fuel-efficient trucks and trailers for use in freight transport. SmartWay, a voluntary collaborative program of the Environmental Protection Agency, helps encourage trucking fleets to use those fuel-efficient trucks and trailers and freight shippers to use such fuel-efficient fleets. Similarly, the Energy Department’s National Clean Fleets Partnership works with some of the nation’s large private trucking fleets to cut fuel use.
Get smart
Cooperative development and testing of advanced transportation technologies is another route through which public policy is encouraging improvements in freight efficiency. For example, the heavy vehicle industry and the federal government cooperate on developing and testing advanced vehicle technologies through the 21st Century Truck Partnership. This collaborative R&D effort, involving four federal agencies and more than a dozen heavy-duty vehicle producers and suppliers, is focused on developing the technologies needed to improve the efficiency of heavy commercial vehicles.
The commercial freight industry may also benefit from research supported by the Department of Transportation into advanced vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) technologies. The Obama Administration has been supportive of efforts by passenger and commercial vehicle producers and IT companies to develop such technologies, which could potentially reduce fuel consumption significantly by easing congestion, allowing ‘smart’ routing of trips, or enabling the virtual platooning of long-haul tractor-trailers. While private firms are behind developments in this area, public policy is playing an important role on such issues as liability, wireless spectrum, data security, and infrastructure.
The increased use of natural gas also offers commercial vehicle operators an opportunity to reduce their vehicles’ emissions while cutting their fuel costs. The revolution in US natural gas production has led to a dramatic increase in the use of natural gas to fuel transit buses, refuse trucks, and certain short-haul or regional trucks – though natural gas use by long-haul trucking fleets has grown far more slowly. Public policy has played a limited role in the natural gas vehicle (NGV) market, largely through procurement by public transit firms and government agencies. But private companies have turned to NGVs in local or regional trucking largely due to the comparatively low price of natural gas – though the recent decline in diesel prices has narrowed the fuel-cost advantage of natural gas. The federal government could restore lapsed tax incentives for the purchase of NGVs or investment in natural gas fuelling infrastructure, but support for such incentives is relatively weak in Congress.
The recent US midterm elections may in fact limit the role that Washington plays in providing incentives to advance freight efficiency. With Republicans capturing control of the Senate and retaining control of the House in November’s elections, there is little prospect for increased federal support for alternative fuels or advanced vehicle technologies – though existing vehicle technologies programs may have enough bipartisan support to survive without major funding cuts.
Working on the highway
The best way for Washington to help increase freight efficiency would be to improve the nation’s often-crumbling transportation infrastructure. The American Society of Civil Engineers (ASCE) has given the US highway system a barely passing grade of “D,” noting that congested highways cost an estimated US$101bn in wasted time and fuel annually. The Federal Highway Administration estimates that US$170bn in capital investment would be needed annually to make a significant improvement in the conditions of US highways. ASCE gives the nation’s system of bridges a grade of C+, noting that one of every nine bridges in the US is structurally deficient.
Despite the obvious need, about which there is unusual bipartisan consensus, Congress has been unable to pass a long-term authorisation of federal surface transportation programs since 2005. Congress enacted nine short-term extensions after that five-year authorisation expired in 2009, making it difficult for states and localities to undertake the long-term planning required for major infrastructure projects, before enacting a two-year extension in 2012. When that was about to expire in October 2014, Congress again enacted another short-term authorisation that also kept the troubled Highway Trust Fund (HTF) from running out of money until May 2015. The federal government uses the HTF, which is funded through revenues from federal gasoline and diesel taxes, to help states pay for highway projects. The HTF has been in a state of perpetual crisis for some time, as drivers are using less fuel and federal fuel taxes, which are not indexed for inflation, have not been increased in decades.
In April, the Obama Administration proposed a US$302bn plan to reauthorise federal surface transportation programs for four years, with a big increase in spending on transit and intelligent transportation system programs and proposals to reform infrastructure financing and permitting procedures. The House and Senate considered their own long-term funding bills as well, but failed to act on the matter.
As a result, the Republican-controlled Congress will need to take up the issue of highway, transit, and rail funding early in 2015. Lawmakers will also need to explore ways to ensure the long-term solvency of the HTF, either by raising federal fuel taxes, reforming those taxes (by shifting to a miles-travelled tax, for example), or completely changing the system for financing highway projects. Conservative Republicans, for example, want to “devolve” the system almost entirely back to the state level. National trucking and transportation groups are wary, noting that it could create an inefficient patchwork of state-level approaches to highway funding.
If the Obama Administration and the incoming Republican-controlled 114th Congress truly want to increase freight efficiency, they should agree on a long-term funding solution to improve the crumbling US surface transportation infrastructure. Such a step, combined with ongoing advances in vehicles, engines, and advanced communications technologies, would go a long way toward making the US freight system far more efficient.
