Last June, reports noted the New York State Thruway Authority’s consideration of imposing a 45% toll hike on commercial vehicles, effective as early as September 30th, in an attempt to raise $85 million to repair damage caused by trucks.
The Thruway Authority held three sessions last week in Buffalo, East Syracuse, and Newburgh, accepting public comments on the toll hike which would require trucks with an E-ZPass to pay nearly $40 more and cash paying truckers $42 more for a trip from Newburgh to Buffalo. 1
Attendees, which included shippers, manufacturers, and carriers, lashed out against the tolls, noting the increase as “intolerable,” “unfathomable,” “a lunacy” and “ridiculous.” 2
Although some demonstrated their support towards the hike, including Midlakes Navigation owner Peter Wiles who said that the increase would “cost less than a ½ cent per pound for produce shipped on the Thruway,” several businesses noted the negative affects that the tolls would have on their company, employees, and customers. 2
One issue that came to light among carriers was the great impact the tolls would have on their net profit. One trucking company acknowledged that they would be hit with a cost of nearly $660,000 due to the polls while another noted that the hike would deduct nearly a third of their profit. 2 As one carrier explained, “This could put us out of business,” expecting the tolls to affect half of his company’s net income. 2
To account for profit deficits, companies in return resort to lowering costs within, including eliminating pay raises for drivers who are in desperate need in the industry. “I’ve got people in the back of this room waiting three and four years for raises,” one company owner noted. 2
Additionally, trucking companies are choosing to take alternate routes in order to avoid tolls, which could ultimately lead to greater congestion on roads and longer routes, eating up a driver’s hours-of-service.
Still yet, carriers are finding no choice but to raise their costs/fees in order to account for this hike, thus impacting shippers and manufactures.
As Byrne Dairy owner Carl Byrne explained, dairy farmers who pay shipping costs “are going to get squeezed.” 2 He is expecting to pay an additional $200,000 annually due to the toll hike.
But it’s not just the dairy industry that will be affected but all shippers utilizing the Thruway to ship their products. One farmer made a dramatic impression when he held up an asparagus fern he sells for $2 explaining that he would need to grow 1,800 more to account for the additional $3,600 he would owe if the toll hike becomes affective. 1
Manufactures, especially those in the food industry, are therefore charging more for their products, trickling costs down to wholesalers, and ultimately, to consumers.
Likewise, the state of Maine is facing similar toll increases which would increase rates by 40% ($5 to $7) for those traveling the length of the Maine Turnpike, “$1 at the York toll plaza and by 50 cents at toll plazas in West Gardiner and New Gloucester.” 3
This toll, which the Maine Motor Transport Association deems as “necessary” given that the last increase occurred in February 2009 and would result in an additional $21.1 million annually, would become effective November 1st. 3
Calculate tolls costs for the NY Thruway at http://www.thruway.ny.gov/travelers/tolls/calc/index.html and current tolls on the Maine Turnpike at http://www.maineturnpike.com/Tolls/Cash-Toll-Calculator.aspx.
What circumstances do you foresee toll increases as having on your company? On others?
In the past we introduced to you “The Perfect Storm for Capacity Shortage,” which correlates health care costs, credit markets, generation-x drivers retiring, CSA 2010, hours-of-service, fuel and equipment costs, and the lingering recession to the factors leading up to capacity shortage.
Do you think that increasing toll prices are the newest contributor the perfect storm? List your comments below.