After some local governments in northeastern states and California mandated that new homes use green energy-based heating systems, trucking officials in New Hampshire went to their legislature to prevent such a regulatory trend in the Granite State.
Shippers in New Hampshire feared they had a lot on the line and could lose their propane, natural gas, biofuel and heating oil businesses. The New Hampshire Motor Carrier Association has asked Gov. Chris Sununu and the Legislature to allow residential consumers to choose electricity and ban local mandates on fuels such as natural gas and propane.
In the Northeast, known for its tendency toward regulation, tolls, taxes and fees aimed at trucking, the association, led by President and CEO Bob Sculley, could face a loss at the Statehouse in Concord.
Instead, Bob Sculley and a group of aligned trade unions scored a victory in August. Local governments should leave it up to consumers and homebuilders. Sununu signed Senate Bill 86 was signed into law last August.
The ban on the mandate was not surprising in a state where the motto is “Live Free or Die.” The Granite State, trending more purple and modest in recent years, stands out from most of the Northeast, often described as one of the most challenging regions for trucking.
A pile of northeast problems
It is not just the business environment that is discouraging carriers from shipping to the Northeast. The normal seasonal environment throws ice and snow on the roads. Traffic congestion cuts through Boston, New York and New Jersey.
Online, truckers will readily share other problems that seem unique or particularly acute in the region: short distances, narrow roads, and tolls — lots of tolls. Carriers often charge more to ship things to New England or New York because the area doesn’t have much to offer trucks on the way back, creating empty miles.
Now comes a growing regulatory environment in which state governments in the Northeast have been accused of using trucks as a targeted source of revenue to drain coffers.
The American Trucking Associations and several haulers are suing Rhode Island for enacting truck-only tolls that target tractor-trailers. In September 2020, a federal judge allowed the tolls to continue pending the lawsuit. ATA and the carriers claim the tolls are a violation of the Commerce Clause of the US Constitution.
The complex challenges have led some fleets to offer incentives to transport to the region. In June, Forward Air said it will increase destination-based compensation for fleet partners in LTL and TL units. For most of the northern half of the continental United States, solo drivers could make a range of 2.5 cents per mile to 12.5 cents per mile. The only area that qualifies for the 12.5 cents per mile? The Northeast.
“Off-road drivers are interested in maximizing their service hours, as this is key to their individual success,” Ryan Gilliam, Forward Air’s vice president of talent, said in an email. “The only way to offset the lower utilization seen in New England and the greater Northeast is to increase compensation per mile.”
A Forward Air spokesman said drivers tend to find the northeast has higher costs for fuel, food, maintenance and parts. Traffic is congested and even gas stations can extend stopping time. Northeast roads are in worse condition than other parts of the country, leading to more tire and suspension repairs, the spokesman said. So the wage increase for the North East has helped generate more driver interest, the spokesman said.
People, businesses are leaving the Northeast
Connecticut was once one of the top business jewels in the Northeast. Its capital, Hartford, was an insurance capital. Its southwestern suburbs were populated by wealthy residents who commuted to New York to run business empires.
The state often benefited when its northeastern neighbors raised taxes or passed regulations, largely because Connecticut had no income tax. Businesses and residents would come from Massachusetts and New York, meaning more retail goods had to be shipped to Connecticut destinations on a regular basis. And many of these cargoes were profitable to ship.
Then Connecticut made a change: It passed an income tax in 1991 to boost revenue. And a larger culture of regulation took root in Hartford.
Now the state is steadily losing people and businesses with them, said Joe Sculley, president of the Connecticut Transportation Association (who is Bob Sculley’s son). The US Census Bureau reported that in 2020, Connecticut had 3.6 million people, up just 0.9% from 10 years earlier. In contrast, the nation had a population increase of 7.4% in a decade.
Trucks in Connecticut, by the numbers
58,400
Connecticut trucking industry jobs in 2017.
8,210
Trucking companies located in the state in 2017.
281 million dollars
Amount paid for the Connecticut trucking industry in federal and state road taxes in 2016.
Joe Sculley doesn’t blame most of it on the weather or the residents of the states running for warmer states like Florida or Tennessee, with 0% income tax. Shows New Hampshire and Massachusetts, once called “Taxachusetts.” Those states have the same New England weather, but now have better business environments, Joe Sculley said.
“Businesses left Connecticut for Massachusetts,” said Joe Sculley. “I bet people would never have thought of that.”
When the owner of a Connecticut carrier can’t handle the state’s economic and regulatory environment, it will sell to another association member or an out-of-state carrier, Joe Sculley said.
“The only way to offset the lower utilization seen in New England and the greater Northeast is to increase compensation per mile.”
Ryan Gilliam
Vice President of Talent at Forward Air
In June, the Connecticut General Assembly passed a highway use tax aimed at trucks. The tax, which could raise $90 million a year, starts in January. The tax comes after years of Connecticut Gov. Ned Lamont seeking to raise revenue by adding truck-specific tolls and then general tolls. Those efforts failed, so the effort shifted to a tax formula based on miles and tonnage.
The result is a tax that is “notoriously difficult” to collect from carriers, according to Marc Fitch, an investigative reporter for the Yankee Institute for Public Policy, a free-market think tank based in Hartford, Connecticut.
“They’re going on the honor system to collect the tax,” Fitch said.
Double trouble in the Empire State
Connecticut’s passage of the truck use tax is seen as having a regional impact on the efforts of trucking officials. The New York Trucking Association annually targets its use fee, which has been in place since the 1950s, when it lobbies at the Capitol building in Albany.
But this time, repealing New York state’s use tax will be a tougher argument, with Connecticut having passed one, said Kendra Hems, president of the Trucking Association of New York.
Trucks in New York, by the numbers
292,850
New York trucking industry jobs in 2019.
46,040
Trucking companies located in the state in 2020.
1.3 billion dollars
The amount the New York trucking industry paid in federal and state road taxes in 2019.
The Empire State also has double trouble. On the west side, expenses are lower when it comes to real estate and the like. However, carriers must pay state tolls on Interstate 90 and Interstate 87, Hems said.
And then there’s New York. Officials in the United States’ largest city were quick to praise the trucks as drivers fueled the Big Apple with cargo during the early days of the 2020 winter COVID-19 pandemic.
More than a year later, New York’s famous red tape has reasserted itself, Hems said, with commercial delivery spaces drying up (often used by restaurants motivated to add outdoor spaces) and more aggressive fare. And nearby Fort Lee, New Jersey, hosts it leading truck bottleneck in the USA
“The environment in New York seems to be getting worse instead of better,” Hems said.
The dual problems help make New York one of the most expensive states in which to operate trucks, Hems said. Asked if the Northeast deserves a reputation as a costly place for carriers with significant regulatory burdens, Hems simply replied, “Yes.”
But one aspect of the national economic recovery has New York state officials sympathetic to trucks. The state and cities have struggled to find school bus drivers. Hems said New York officials now want to streamline licensing and has been fortunate enough to discuss extending license branch hours and promoting some CDL businesses online.
New York officials have also looked at other pain points with Hems, willing to remove them to improve the flow of goods. But Hems understands the challenges ahead of the change.
“Trucking in New York has always been a challenge,” Hems said.