New World Dawns After September 11
Oct 1, 2001 12:00 PM, Charles E Wilson
FIRST CAME the September 11 terrorist attacks in New York City and Washington DC that destroyed the World Trade Center towers and damaged the Pentagon. Thousands died in these heinous acts of mass murder that sent shock waves rippling across the United States and around the world.
Then on October 7, the United States and Great Britain launched a response in the form of air strikes on targets throughout Afghanistan. The key objective of the ongoing military assault is to bring to justice Osama bin Laden, the man who is believed to have directed the terrorist attacks.
Even as we try to get back to normal with our lives and businesses, it's clear that we've entered a new era. The war on world terrorism is now well underway. Tank truck carriers, storage terminal operators, shippers, and receivers face an uncertain economy and a multitude of new operating considerations.
This isn't just an American issue, either. International companies that ship, transport, or handle hazardous materials will be affected, especially if those products are moving to or from the United States. Companies in Canada and Mexico began feeling the impact (in the form of border-crossing delays and increased security) within hours of the September 11 events.
On the economic front, the United States has teetered on the brink of recession throughout 2001. Economic activity virtually came to a halt on September 11, and the stock market plunged in the days following the terrorist attacks.
Billionaire investor Warren Buffet says the United States is now in a recession, and many US tank truck carriers say they were experiencing recessionary conditions even before September 11. Unemployment claims are at a nine-year high.
The economic situation is not totally bleak, though. Fuel prices have dropped, partly because airlines cut their schedules by about 20% immediately after the September 11 attacks.
The Federal Reserve on October 2 cut its benchmark federal-funds interest rate to 2.5% from 3%, and more may be on the way. Including the emergency rate cut just before US stock markets reopened on September 17, the Fed has slashed US rates by a full percentage point since September 11 and by four percentage points since the start of the year.
Automobile sales fell in September but less than expected. Some of the tech companies have shown much better performance than expected. Aircraft manufacturing has gotten a boost from some foreign orders. All indications are that the US economy remains fundamentally solid.
Despite resistance from some in Congress, an economic stimulus package worth approximately $60 billion probably will be finalized and will be signed by President Bush. Among other things, this will provide fresh funding for public works and infrastructure projects.
Still, tank truck carriers, in particular, face especially tough times in coming months with some carrier executives predicting that meaningful economic improvement for the industry may not occur until 2003. More consolidation is a virtual certainty. A recent Ernst & Young survey predicts a flurry of mergers and acquisitions across all industry sectors in early 2002.
Storage terminal operations seem to be faring somewhat better. One reason is that storage capacity is in line with demand, which has enabled this industry sector to keep rates at a realistic level. Significant barriers inhibit the entry of new competitors.
Regardless of relative economic health, most companies that handle hazardous materials will face new challenges on the insurance front. Insured losses from the collapse of the World Trade Center towers are estimated to be at least $25 billion, and some estimates put the losses at $40 billion. Tank truck carriers already saw significant insurance increases over the past year, and the rates are certain to go higher now. It seems more likely that carriers with questionable safety records will find that insurance is unavailable at any price.
Companies that transport and store hazardous materials face a multitude of new requirements that will increase operating costs. Tank trucks hauling hazardous materials are being inspected more frequently. Some shippers reportedly have discussed requiring two drivers on the most hazardous of shipments, limiting or banning stops en route, and telling drivers not to leave trucks unattended. Routes are being altered to keep hazmat rigs away from heavily populated areas.
At least 18 people have been arrested after it was determined that they received fraudulent commercial driver licenses with hazardous materials endorsements. These arrests came during a Justice Department investigation that was prompted by possible new terrorist threats that would involve tank trucks hauling hazardous materials. Federal officials have initiated an investigation of all 2.5 million CDLs that have hazmat endorsements.
Yet another sign of the changed times came when the Department of Transportation (DOT) canceled a meeting on HM-223, a proposed rule in which it was promoting a rather narrow definition of the limits of its oversight of hazmat shipments. One would suspect that DOT would want more, not less, oversight in light of the risks that now exist.
The postattack terrain certainly presents a new environment. We all have to adjust to the new world that has resulted from the terrorist attacks on the United States and the war now being waged on terrorism. Business as usual took on a new meaning after September 11, and many of the changes will be permanent.
© 2013 Penton Media Inc.
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