With Congress approving a financial bailout of the federal highway fund last week, the nation's infrastructure and its need for improvements are in full focus. During today's OnPoint, Bill Graves, president and chief executive of American Trucking Associations and a former governor of Kansas, highlights the most important issues facing his industry in the short and long terms. Graves outlines six initiatives the trucking industry has recommended in order to reduce its carbon footprint. He also gives his take on what kind of funding mechanism would be most appropriate for infrastructure improvements.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is Bill Graves, president and CEO of American Trucking Associations and a former governor of Kansas. Governor, thanks for being here.
Bill Graves: My pleasure, Monica.
Monica Trauzzi: Governor Graves, with high fuel prices, competition from the rail industry, the nation's transportation infrastructure in need of improvements, the trucking industry sort of finds itself in a very interesting position these days. What would you highlight as the most important issue facing your industry?
Bill Graves: Well, I think, Monica, a lot of people would expect me to say, and probably near term it is, fuel prices and energy. But very candidly, I think in the long term our biggest concern really is infrastructure. We've got to have more capacity, the ability to move product, to not be stuck in traffic burning valuable fuel, using up the precious time of our drivers. And so we have our eye really focused on the next reauthorization of surface transportation because we think eliminating congestion is our number one issue.
Monica Trauzzi: And you think that that can be done by increasing the fuel tax?
Bill Graves: Well, we certainly prefer the fuel tax as a source of funding preferable to about anything else that we've had described to us. In just about every privatized poll kind of initiative there is usually some sort of profit margin built in and we prefer not to pay that. And we think the efficiency of collecting fuel taxes and distributing them has worked actually quite well for the last 50 years and we still favor that system.
Monica Trauzzi: So, basically, you're willing to pay more as long as all that money is going towards improving infrastructure?
Bill Graves: We certainly would like to see reform to the current program and get a little more bang for the buck, if you will, in the current program. And any improvements or where we go from here, we're definitely going to be insisting that there be some accountability and that we get congestion relief as a part of what we pay for.
Monica Trauzzi: And there's some question now as to how this should be approached. There are those that think that there should not be a fuel tax hike, but a complete restructuring of the funding mechanism. Where do you see this debate going?
Bill Graves: Well, I mean that's understandable and, especially again, if you would have told me six years ago when I joined ATA that we would be talking about being willing to support a fuel tax, I would have thought you were crazy, and now telling me that when fuel was four plus, almost five dollars a gallon not long ago. But nonetheless, you can't have something for nothing. We need a lot of work done to maintain what we've got in our roads and bridges. We need to expand our capacity nationwide and we need to take a focus on freight movement in this country through all modes. And to do that, we have to have more resources. And we believe, again, that the current system of fuel taxes is the best way to fund that.
Monica Trauzzi: How much of a trickle-down effect is there to the shippers when it comes to high fuel prices? Are they really being passed along, all the additional costs?
Bill Graves: Well, I think there's always an ebb and flow in pricing of freight, depending on how much capacity is available and who's willing to move it at what price. But at the end of the day, there isn't any doubt that the cost of moving product, the cost of products themselves ultimately gets passed through to consumers. So, at the end of the day, the American public pays for this one way or the other.
Monica Trauzzi: The trucking industry has come out with six recommendations as to how the industry can reduce its carbon footprint. Talk about those six recommendations and why it's so important for you guys to be cleaner?
Bill Graves: Well, again, we're the first ones to understand how important it is to be more fuel-efficient, especially, again, as prices started to approach five dollars a gallon. But over a year ago we started we started talking about how to do a better job in terms of greenhouse gases. So, we came up with six recommendations. We think we ought to slow down. We think everyone ought to slow down. That's not only good in terms of saving fuel; it's also good for safety in our country. We'd like to see strategies to reduce all of the idling that we do and that the nation's motorists do, both what we call discretionary idling and nondiscretionary idling. We'd like to see more productive vehicles. We think that we can maximize the use of our trucks and our drivers and our fuel and still move more products safely. We do support, as I said, a carbon tax as a way to support infrastructure investment, which helps us move more efficiently throughout the country. I've got to get all six clicked off here. There's been a lot of discussion about cap and trade. We have some concerns about how that would actually work for a mobile source industry like our own. So we've come out pretty aggressively to say we're prepared to do our part, but, again, we have to have some trade-offs, some things that are going to help our industry be more efficient.
Monica Trauzzi: There's this interesting volley happening right now between the rail industry and your industry, a big PR push by the rail industry saying that they're the clean ones. That they're going to be able to propel the nation in the future when it comes to cleaner energy and a cleaner economy. Any fears that you may be overshadowed by the rail industry, that you won't be able to compete in terms of the cleanliness of your vehicles?
Bill Graves: Monica, not really. I mean, first of all, we've been using clean diesel technology now since the early 2000s combined ultra-low sulfur diesel fuel, which has made us, in terms of particulate matter and nitrous oxides, I mean we have been cleaning up our act for quite some time now. As I said, we're focused on fuel-efficiency, which contributes to saving greenhouse gas emissions more than anyone else. At the end of the day, we need all our modes to work for this nation, for this economy. Right now, 70 percent of the freight in America moves by truck, 80 percent of communities in America only have trucks to deliver freight to them. Those kinds of numbers, I mean I don't care whether it's rail or barge or air parcel, whatever it might be. If they can't bring it to your door you're always going to need a truck and that's why this economy has built up around the trucking industry. And I expect it will stay that way.
Monica Trauzzi: And the total goods carried by trucks dropped this summer. Is that attributed to the slowing economy? Why did we see that number drop in July?
Bill Graves: Well, I would expect that a lot of it had to do with the slump in the housing market. So much of what we move are housing materials and we saw a real softness there. We have a lot of weight moved in the automotive industry and we've had quite a slump there. So I'd say, generally, it's the economic doldrums we face, but there's been a couple of specific industry sectors that probably contributed more than anything else.
Monica Trauzzi: There's big talk right now in Congress about an energy package and your group has come out in support of a bipartisan approach. What are your thoughts on what we're hearing in the House and Senate and the different proposals that have been put out?
Bill Graves: Monica, we clearly need one of those packages that has a little bit for everybody to like and a little bit that everybody will probably not like. I mean, we obviously need more domestic energy production in this country. We obviously need a better path transition to alternative fuels and alternative power for vehicles, not just trucks, but automobiles. I mean in all aspects. And right now, I think we're just, unfortunately, caught in that political silly season, where the gridlock of the politics of '08 is impeding our ability to create good public policy. I think there will be a moment, and it may not be until after the first of the year, when we will actually see everybody sit down and reasonably work towards realistic goals for the future of this nation.
Monica Trauzzi: So, you support increased domestic drilling?
Bill Graves: Absolutely. We have yet to see any clear alternatives to moving 80,000 pounds of freight over the Rocky Mountains other than a diesel powered engine. We're seeing lots of new, creative initiatives on shorter haul, sort of commercial dump trucks, city buses, those kinds of things where hybrid kinds of energy is starting to be deployed. But as of yet, anything that's really over the road is still relying on diesel and we need diesel fuel.
Monica Trauzzi: All right, we're going to end it right there on that note. Thanks for coming on the show.
Bill Graves: My pleasure, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
[End of Audio]