News / US clampdown on 'non-dom' drivers could see trucking sector stagnate

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The US administration’s retreat from one battlefield in its war with state authorities over non-domiciled truck drivers is not likely to change the outcome of the campaign to restore profitability to the industry, but instead could cement stagnation.

States declared victory after the US Department of Transportation (DOT) withdrew its appeal against a court ruling on its attempt to link transport funding to compliance with its campaign to eliminate non-domiciled commercial driver licences (CDLs) and weed out truck drivers with low levels of English language capabilities.

In November a court agreed with a legal challenge from 21 state authorities against the DOT’s announcement to withhold funding and ruled that the federal agency had overstepped its authority.

According to most observers, however, the agency’s signal of defeat does not stop the government’s push. It has merely shifted its tactics and goes after individual states.

This month the DOT cancelled $160m of highway funding for California as the state had not met a deadline to revoke 17,000 licences issued to legal immigrants. Previously, the administration had blocked $40m in response to California’s refusal to enforce English language requirements for truckers.

New Jersey resumed issuing CDLs to non-citizens of the state, but most states have hit the pause button. Washington started a lawsuit and Oregon filed a complaint, but both states, along with Pennsylvania, have suspended processing new CDL applications from non-domiciled drivers.

Meanwhile, Tennessee has announced that it will require CDL holders to show proof of citizenship or lawful US presence, and North Carolina is expected to follow suit, ITS Logistics reports in its latest Rail Ramp Freight Index, noting that the Federal Motor Carrier Safety Administration (FMCSA) announced that more than half of sampled non-domiciled CDLs issued by the state were in violation of federal guidelines, and that the regulator expects the state to “act expeditiously to achieve substantial compliance”.

Truckers that employ non-domiciled drivers are in a bind. Looming large over the industry is the DOT’s emergency final interim rule from September, which is languishing under a DC Circuit Court stay. It would severely restrict eligibility of non-domiciled drivers. According to the FMCSA, this would effectively bar about 194,000 drivers.

Pressure is also building on the commercial front: citing safety concerns and potential issues with vetting, the US Postal Service announced this month it would require its contractors to phase out using non-domiciled drivers.

A study commissioned by JB Hunt found that Washington’s CDL and English language mandates could mean the loss of 214,000-437,000 trucking licences in the coming two to three years. Combined with other immigration-related campaigns, as many as 614,000 drivers – nearly 16% of the trucking pool – could be forced out of the industry.

Some see this as a unique opportunity to finally return the industry to profitability, notably the truckload sector. A survey of owner-operators by US trucking publication Overdrive among its readers found 88% expressed support for the DOT’s emergency rule that has been held up by a court, and 70% expecting rates to climb as a result of its implementation.

Other commentators believe a massive reduction in the driver pool would finally end the trucking recession and restore profitability to the industry, as the tighter capacity would drive up rates.

Satish Jindel, president of ShipMatrix, does not think such a scenario would address the industry’s fundamental failure to develop a pricing mechanism that adequately reflected costs and loads hauled.

“I don’t see profit margins of ten years ago coming back, even with 200,000 CDLs gone. I don’t see the truckload industry doing better than low single-digit margins for the foreseeable future,” he commented.

And he added: “Shame on an industry that expects help from the government in terms of supply.”

Viewed in this light, a forced capacity reduction could serve as an excuse for complacency and hanging on to a broken business model.