Tuesday, April 22, 2008

Risks Of Truckers' Strikes

I have previously noted in Risk Analysis Update – A Forward Looking View Of The U.S. Economy that one of the signs of the further downward spiral of the U.S. economy was the risk of increased frequency and duration of truckers’ strikes, which would negatively affect businesses’ supply and product chains. While truckers’ strikes have been sporadic and unorganized to date, it appears that the truckers are getting better in organizing a major strike soon.

According to Technorati, a site dedicated to monitoring trends in the Internet blog space, the frequency of the blogs and social websites that had posts about ‘truckers strike” increased exponentially in the last few weeks. While most of the sites appear to be individual rants, there are some sites that seem well organized to generate serious consideration.
One of these sites is truckerstrike08, a blog on myspace, which has detailed directions of the planned strike set for April 28 in Washington, D.C. This direction was posted on today, April 21. In case they make the post private, here is a page shot of the directions: If this strike does occur, which I think it will since the independent truckers have nothing more to lose, then do expect the truckers’ movement to pick up speed. According to other websites[i] sympathetic to the truckers, there is another planned strike, this time nationwide, on May 5.

While the end result of the independent truckers’ strike may be only limited delay for the business, the congress and the President should take notice of the plight of the hard working men and women in the country that are trying to do things right and they are not getting a break. It would seem disingenuous for our government to work on trying to save borrowers who are in default of their mortgage while not working to save the network of truckers who delivery everything that we purchase to our local stores.

One option may be for the Federal Government to provide relief to the trucking industry from the Federal tax of 24.4 cents per gallon of diesel fuel. Since diesel consumption in 2007 was about 46.6 billion gallons[ii], the total cost of the diesel fuel tax relief would be approximately $11.4 billion per annum. While this would seem like a lot of revenue lost, it is far less than the estimated $30 billion to $100 billion for the homeowner bailout. Moreover, nearly 100% of all durable and non-durable goods are transported at one stage or another by trucks and these two items account for 28.3% of the 2007 GDP of $13.84 trillion, or $3.9 trillion. So if the national truckers strike is successful, then each day that the truckers are on strike will result in a loss potential of $10.7 billion to the GDP.

Perhaps the truckers’ strike will wake up the folks in Washington, D.C. to the plight of the hard-working folks trying to make an honest living as truckers and to acknowledge how vital they are to the U.S. economy.

Ed Kim
[i] Here are the links to the websites:
[ii] According to the EIA, approximately 46,645,142,880 gallons of diesel fuel (labeled as distilled fuel oil) was consumed in 2007. Relaxing the $0.244 tax on the distilled fuel oil would cost the U.S. approximately $11.4 billion

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