The new FAST Act may have a financial impact on transportation and trucking companies that can be eased with accounts receivable financing.
Two financial impacts include the cost to implement hair follicle drug testing and the cost driven by the opportunity to recruit and train additional drivers.
FAST Act – Fixing America’s Surface Transportation Act – was signed into law in December 2015 bringing additions and changes to existing Federal transportation programs. Many have an impact on the transportation and trucking industry.
One is the National Freight Program, which now includes a five-year, $6.2 billion allocation for the Secretary of Transportation to work with individual states to designate a network of highways and roads that are “critical to the safe and efficient shipment of freight.” The states are required to create a freight investment plan in order to receive funding.
Another is the Nationally Significant Freight and Highway Projects Program, which will provide an average of $900 million in grants each year for highway, bridge, rail-grade crossing, intermodal freight, and freight rail projects to improve movement of cargo and people. The program goal is to increase competitiveness, reduce bottlenecks, and improve intermodal connectivity.
Other important provisions to transportation companies include:
- The Hours of service for interstate drivers of commercial motor vehicles used for construction has been widened. Drivers operating within a 75-mile radius can restart their work week after only 24 hours, compared to the 34 hour standard for other drivers.
- Advanced technology deployment and Intelligent Transportation System (ITS) program goals have been expanded. Grants for traveler information systems, transportation management technologies, public transportation systems, and safety systems including vehicle-to-vehicle communications can total up to $60 million each year.
- A reform of the Federal Motor Carrier Safety Administration’s (FMCSA) Compliance, Safety, Accountability scoring and ranking program includes a temporary removal of reports from public view while the system is overhauled for more accuracy and consistency.
Potential financial impacts of FAST Act and other FMSCA guidelines on transportation companies:
- The bill allows carriers to conduct drug testing via hair-follicle testing. Traditionally, companies have used urine testing, though hair-follicle testing is typically considered more reliable and can detect drug use over a longer time period. As hair-follicle guidelines are established, trucking and transportation companies will likely want to implement the latest testing technology.
- The Country has been struggling with a driver shortage. In order to help ease it, the bill makes it easier for veterans returning from service to secure truck driver jobs if their service included operating trucks and heavy machinery. It also includes a study of the impact of allowing drivers who are 18-21 to cross state lines. Recruiting and training these newly available drivers may have a significant financial impact on trucking companies.
How accounts receivable financing can help:
Transportation is a very cash-intensive industry including fuel costs, insurance, registration, and the need to recruit and train drivers. Accounts receivable financing allows immediate conversion of loads into cash. Having an accounts receivable facility combined with comprehensive reporting means drivers can get documentation quickly and the company can invoice and pay quickly, which can free-up senior management time.
U.S. Department of Transportation
American Road & Transportation Builders Association
American Trucking Association