THE POLITICS OF SUPPLY CHAIN

In the several decades I have been in this industry I cannot recall a time when the supply chain and the political environment were so closely entwined. For the past few years, and particularly since the last election, every month or so we have read about some new piece of supply chain legislation either contemplated or introduced in Congress. Hours of service rules have remained a hot topic, and efforts continue by some in the Senate to bring back partial rail regulation.

Recently, the major focus has been on President Trump’s infrastructure plans, but action on that has lagged behind legislation keeping the government open for business, immigration reform, and health care. There has been a renewed interest in the entire country in fixing the infrastructure. Time Magazine, for example, devoted almost one entire issue to infrastructure needs and solutions. The major problem is two-fold. The situation has been ignored for so long, a solution seems formidable; and if one can be found who will pay for it? The taxpayers will naturally; but in what form – tolls, taxes, user fees? So far, no workable plan has been suggested except the logical one – increase the fuel tax. Congress however, is not going to risk the political consequences of that. Due to their inaction, several states have increased their own fuel taxes; and while this helps the states pay for needed improvements, it moves us further away from any interstate coordination. Bottom line, with everything else going on in Congress, don’t look for any meaningful action on infrastructure for some time.

As if this were not enough, once again Congress has moved dangerously close to another reauthorization deadline. Reauthorization of the Federal Aviation Administration (FAA) must be approved by the end of September. One of President Trump’s key budget provisions was the privatization of the air traffic control system. This plan would transfer the activity to a private corporation, along with 30,000 FAA employees. The FAA would still maintain safety oversight.

Last week, both the House and Senate committees advanced bills to reauthorize the FAA; but at this point there are some significant differences. The major inconsistency centers on the privitation issue. The House bill includes it, but the Senate bill does not. Another sticking point will be the training requirements for pilots contained in the Senate version. They would be relaxed somewhat, allowing pilots to receive training by alternate means such as flight schools. Opponents worry that there would not be enough hands – on training before a pilot steps into the cockpit for the first time. There are several points on which the two versions agree. It no longer will be legal to drag passengers off a plane once they have been seated, and there will be new minimums for seat sizes and leg room, hopefully allowing adequate space for normal sized passengers.

Finally, as often happens with bills of this type, the Senate version contains an important provision having nothing to do with aviation. California and several other states have laws for meal and rest breaks for all workers, including truck drivers. These conflict with the final version of the hours of service rules. The Senate bill would prohibit states from passing legislation applying to drivers that would not conform to federal rules.

Whatever the end result, when the legislation is finalized it will have both positive and negative impacts on the industry, particularly airlines and trucking companies.

Written By: Clifford F. Lynch