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The Supply Chain and Infrastructure Back in the Spotlight

The big news of the month will undoubtedly be the passing of the bipartisan infrastructure deal. Improvements to the nation’s infrastructure have been an oft-sought goal for many an administration. Yet, it has remade elusive. Until now. The question is, what does the infrastructure bill mean for the trucking industry?

How Did We Get Here?

Spurred by a devastating loss in Virginia, where the Democratic candidate for governor lost to their Republican opponent, a unified Democratic Congress finally heaved the infrastructure package over the finish line. The final vote tally was 228-206, with some Republicans voting for the bill. It was a wide array of Republican congressmen and woman who cast those votes, hailing from the likes of Nebraska, Alaska, and New York.

The infrastructure bill had already been passed by the Senate during the summer of 2021. It had been waiting to make its way through the House, where it was held hostage by progressive Democrats. There, it was held up alongside a massive social spending bill. The progressive Democrats refused to let the infrastructure bill pass without assurances their social spending bill got a vote. They got those assurances and, still feeling the sting from their losses, House Democrats quickly pushed the bill through.

To be fair, it is no small achievement to get this bill passed, in political terms. Termed the Infrastructure Investment and Jobs Act, the bill goes on to fulfill one of Biden’s core campaign promises, which was to pass something in a bipartisan fashion. As to what happens with the rest of Biden’s agenda, only time will tell. It could be that this is the only bipartisan piece of legislation we see for the foreseeable future, as much of the political world’s focus next year will be on the mid-term elections.

Now, the question is, what does the infrastructure bill mean for trucking companies and those working in the trucking, warehousing, and transportations sectors? While the political achievement is notable, it is what’s under the hood of the bill that really matters. It is a big bill, and that matters to everyone. And since it goes beyond railroads, ports, airports, and public transportation, there are all sorts of provisions you might not expect.

Infrastructure Bill Highlights and Unintended Benefits

One of the major pillars of the new infrastructure bill is certainly the $550 billion included to fund transportation projects across the country. Within that sum, there is $110 billion set aside for road and bridge projects, $66 billion to freight and passenger rail projects, and $39 billion for public transportation improvements. Yet, it doesn’t stop there. Another $65 billion is carved out to upgrade U.S. broadband access.

There are also some interesting subsidies in the bill. For example, there is a provision subsidizing internet access for low-income families. While one in four households are expected to be eligible for a $30 monthly subsidy to help pay for internet access, the buildout will also benefit businesses that have been operating in “no cell zones,” including trucks on the road. This results in an unintended benefit for trucking companies from a social provision in the bill.

Fleets will also be interested in the funding provided to improve the nation’s poorly maintained electric grid. $65 billion, for example, is going to upgrade U.S. electric lines. Thousands of miles of new transmission lines will be installed across the country. And new smart-grid technologies will increase efficiency.

The bill also calls for installation of $7.5 billion to be set aside for electric vehicle charging stations across the country, which will benefit truck drivers beginning in 2024. Another $5 billion will be set aside to retrofit the USPS and other federal fleets with zero emissions vehicles. This will have the knock-on effect of accelerating electric vehicle adoption in the commercial motor vehicle sector as well.

Under 21 Apprenticeship and Safety Studies

Of special note to the trucking sector, the infrastructure bill will require the FMCSA to set up an apprenticeship pilot program for CDL holders under the age of 21 who intend to operate across state lines. The bill calls for lawmakers to set up specific probationary periods for apprentices. It also calls for an experienced truck driver to be in the cab with the apprentice as they train. Finally, CMVs operated by apprentices must be:

  • Active braking systems
  • Collision mitigation systems
  • Automated or automatic transmission
  • Forward-facing video event capture system
  • A governed speed of 65 mph

The bill also directs the DOT to study and potentially mandate automatic emergency braking systems on new commercial motor vehicles. Other safety measures included call for a strengthening of side underride guards. Finally, it calls for an Advisory Committee on Underride Protection. There is some question as to whether these provisions will survive different political administrations, but as of the time of this writing, government agencies are directed to act like they will.

Tucking Companies and Advocacy Groups React

It is rare that a piece of legislation elicits cheers from the disparate trucking groups. But that is what happened in the case of the Infrastructure Investment and Jobs Act. Should we be surprised? Probably not. Given the abysmal state of America’s road and bridges, not to mention the other major investments that will positively impact freight transportation, it’s no wonder the bill has received a positive reception from trucking companies and the groups that act on their behalf.

Almost immediately after the bill passed the House on November 5, the American Trucking Associations (ATA) issued a statement speaking warmly of the package. In their prepared statement, President and CEO Chris Spear said:

 “Roads and bridges are not political — we all drive on them. A majority in the House realized this today and did what’s right for the country, not themselves. Lawmakers who put their constituents before themselves to help seal this achievement have cemented a lasting legacy that the American people will now see, feel, and use for many decades to come. After countless hearings and meetings on Capitol Hill,” he added, “ATA members will finally see the fruits of their labor — a 38% increase in road and bridge funding, and an infusion of highly-trained, younger talent into our workforce.”

And the ATA was not the only industry trade association that came out in favor of the bill. The Truckload Carriers Association also praised the bill after its passage, calling it “a significant investment in our nation’s roads and bridges [that] delivers a desperately needed injection into the Highway Trust Fund to keep it solvent.”

In their prepared statement, they said that the bill “provides an opportunity to expose a younger demographic to an industry that welcomes them and are pleased with the commitments the bill makes to establishing long-term improvements for infrastructure. Even more importantly, Congress has heard our message concerning threats to the independent contractor business model and opted not to include any language regarding the PRO Act that would have jeopardized a business practice that has a long history of success in our industry.

Times Have Changed

The cost of the infrastructure bill speaks to how much has changed since the days when Congress passed the “federal highway bill” every three to five years in a bipartisan manner. Federal highway bills of the past stuck to building and repairing roads, and everyone applauded. It was always a bipartisan affair that avoided political rancor. But oh, how times have changed from the 20th century to the 21st century.

The change came when we made a transition from “highways” to “surface transportation” legislation, which happened around 30 years ago. That change in terminology accommodated provisions for rails, mass transit, waterways, and airports, with associated increases in spending. And that is where the problems began.

Once you open up a bill for lawmakers to add their own pet projects, as long as they at least minimally related to infrastructure, you are going to also open it up to partisan bickering and disputes. Then it became more of an issue of political ideology as opposed to basic infrastructure improvement spending.

How Will It Be Paid For?

The final question focuses on how this bill will be paid for. Many are worried they will get hit with a high tax bill, yet it might not be as simple as that. Pay fors have also been a bone of contention for lawmakers, as Republicans and Democrats remain divided on funding mechanisms.

Traditionally, highway users paid for roads through state and federal fuel taxes, registration fees, the federal highway user tax, and excise taxes on lubricants and new vehicles. The last major federal transportation bill, the Fixing America’s Surface Transportation Act, or FAST Act (2015) moved pieces around so that taxes won’t even be a consideration.

This time, most members of Congress don’t show interest in raising the federal fuel tax rate, which hasn’t been touched since 1993. Instead, Congress is discussing a few other taxes, including a vehicle mileage tax for trucks. The breadth of “infrastructure” has generated thought about taxes on non-highway users, such as a “wealth tax” or possible increases in the rates for estate taxes, corporate taxes, and capital gains.

No matter what happens, get ready to see construction cones and cranes coming to a street near you. And don’t be surprised when you see the words “Build Back Better” plastered all over construction sites. With the infrastructure bill finally passed, long-awaited road improvements are finally coming.

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