Biden’s Emissions Rule For Trucks Could Crush Small Companies And Jack Up Costs, Truckers And Supply Chain Experts Say

The Biden administration’s latest climate rule for heavy-duty vehicles could seriously harm smaller and independent trucking companies, disrupt supply chains and drive prices up, experts on the trucking industry and supply chain management told the Daily Caller News Foundation.

The Environmental Protection Agency (EPA) finalized emissions standards for heavy-duty vehicles on Friday, and the rule could effectively force manufacturers to ensure that electric or zero-emissions vehicles comprise up to 25% of new long-haul trucks sold and 40% of all new medium-sized truck sales by 2032. The regulation will be especially burdensome for smaller independent trucking companies and could drastically alter supply chains in a way that raises costs for consumers, trucking industry and supply chain experts told the DCNF.

“Ninety-six percent of trucking is made of small businesses, which are sensitive to market conditions and frequently operate on very tight margins … Nearly every consumer good is transported by truck at some point. Small business trucking is the backbone of America’s supply chain as evidenced by truckers’ ability to keep our supply chain functional during the worst of the COVID-19 pandemic,” Todd Spencer, the president of the Owner-Operator Independent Drivers Association, told the DCNF. “The rule directly applies to manufacturers, so EPA does not particularly study (or care) about the impacts for the small-business consumer. This siloed, shortsighted, bureaucratic approach to policymaking has resulted in a regulation that not only diminishes consumer choice, but could also have devastating repercussions on our supply chain.”

The current proportion of all heavy-duty trucks sold in America that are EVs or fueled by zero-emission power is about 2%, and electric trucks can cost up to three times as much as diesel-powered models, according to The New York Times. Electric trucks also require very powerful chargers, and there are approximately 5,000 of them nationwide at present; about 1 million electric truck chargers will be needed to meet the EPA’s goals.

The Biden administration has implemented a multibillion-dollar initiative to subsidize the construction of a nationwide charging network for smaller EVs, but the funding has only resulted in seven operational charging stations going online to date.

“There are significant efforts already underway to develop and expand heavy-duty vehicle electric charging, hydrogen refueling, and grid distribution buildout infrastructure. The U.S. government is making large investments in these through the Bipartisan Infrastructure Law and the Inflation Reduction Act,” an EPA spokesperson told the DCNF, adding that private sector investment will also advance low-emissions trucking. “Employment and economic growth are largely affected by the state of the macroeconomy, and if there are increases in electrification and associated infrastructure impacts, that could be expected to lead to a net increase in jobs.”

To fully electrify all medium- and heavy-duty vehicles in the U.S., fleets and charging station operators will need to invest about $620 billion, while needed power grid upgrades and investment in charging stations could cost in excess of $500 billion, according to a March report by Roland Berger, a global management consulting firm.

Of all the trucking companies in the U.S., more than 96% operate 10 trucks or less, and more than 99% operate 100 trucks or less, according to the American Trucking Associations (ATA). By comparison, Penske, one of the largest trucking companies in the country, operates more than 400,000 trucks, according to its website. Overall, trucks are responsible for moving approximately 73% of the country’s freight by weight, according to ATA.

The added expenses of buying electric trucks, as well as the additional time spent charging and reductions in the amount of cargo electric trucks can haul due to the size of their batteries, will more adversely disadvantage smaller and independent trucking companies, trucking industry and supply chain experts told the DCNF. That pressure will invariably lead to fewer trucks on the road, altering supply chains and making shipped goods more expensive for consumers as additional costs are passed along.

“Between the California Air Resources Board (CARB) and Biden’s EPA, they are attempting a ‘shotgun’ marriage between trucking and zero-emissions (primarily electric trucks) that everyone in the industry knows is going to fail,” Joe Rajkovacz, the director of governmental affairs and communications for the Western States Trucking Association, told the DCNF. “It’s not a matter of total opposition to zero-emissions trucks, it’s that the timelines are too aggressive and the infrastructure (charging facilities, transmissions upgrades, and especially the electrical generating capacity) are and will continue to significantly lag behind any ability for the industry to buy these vehicles without having ‘stranded assets’ when they are unable to charge. If the timelines were less aggressive, perhaps this all becomes doable.”

The rule will impose higher costs on operators, which will in turn be passed along to the consumer, Rajkovacz added. Professor Alex Scott, an associate professor of supply chain management at the University of Tennessee’s Haslam College of Business, expressed similar sentiments.

“Cleaner trucks are often more expensive to produce and can be more difficult to maintain, which tends to favor larger carriers and disadvantage smaller carriers. As companies are required to measure and report emissions in their supply chains, this will also make carriers with cleaner trucks more attractive. This also tends to favor larger carriers over smaller carriers,” Scott told the DCNF. “A mandate requiring the widespread use of heavy-duty electric trucks would be bad policy, in my opinion, because there are several tradeoffs required to make electric trucks work in a supply chain (utilization, cost, and safety being some of those tradeoffs). There are other areas where electrification should be pursued before we think of doing it in the heavy-duty trucking sector.”

Wesley Boyce, the director of the University of Nebraska’s masters program for supply chain management, generally agreed with Scott.

“The new regulations will be costly for all firms, but small, independent companies could work hard to make it work from a financial perspective. A realistic worst-case scenario for many of these firms is that they will go out of business unless they are presented with financial assistance, such as tax rebates,” Boyce told the DCNF. “Small trucking firms are an essential piece of the transportation puzzle. They create jobs, are often considered better to work for, and serve remote areas that may not otherwise get the goods they need. Under the new regulations, it will likely be more costly to operate, and firms will likely have to pass these costs on to consumers.”

It is possible for charging infrastructure to develop sufficiently to meet the changes to trucking that the rule will cause, but not without some growing pains and potential price increases that would negatively impact other businesses and consumers, Boyce told the DCNF.

The White House did not respond immediately to requests for comment.

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