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Draft of vaccination rule released; trucking didn’t get an exemption

Compliance date is Jan. 4

Photo: Jim Allen/FreightWaves

(Adding additional information from earlier article.)

There is no exemption for trucking in the proposed federal mandate governing vaccination.

The primary specifics of the rule were “pre-published” Thursday morning by the Biden administration in what is known as a preamble.

Trucking industry organizations had called for the sector to be exempted. 

Jan. 4 is the effective date for the mandate, termed an Emergency Temporary Standard (ETS). While that date is not mentioned in the preamble, a White House briefing Wednesday evening, a transcript of which was published Thursday, said Jan. 4 will be the effective date.

Under the mandate, companies with 100 or more employees must ensure workers are fully vaccinated or that they undergo regular COVID testing.

In conjunction with the release of the almost 500-page preamble prior to the publication of the formal federal rule, the Department of Labor released a prepared statement spelling out the primary requirements of the vaccination regulation.

– Companies will be required to determine the vaccination status of all their workers.

– Employees are required to let their employers know if they test positive for COVID-19.

– Companies must ensure that unvaccinated workers get tested weekly. Employers are not required to pay for that testing unless such a requirement is otherwise covered, such as under a collective bargaining agreement.

– Employees who aren’t fully vaccinated are required to wear a mask indoors or if in a vehicle with a co-worker. Employers don’t need to pay for masks either.

Penalties for noncompliance range from $13,600 to $136,500 per violation, depending on if the Occupational Safety and Health Administration (OSHA), which is administering the rules, determines a violation to be willful or egregious.

The lack of any exemption for trucking drew negative reactions from the Truckload Carriers Association.

“To the dismay of TCA and our partners across the transportation sector, trucking was not exempted,” the TCA said in a statement released on the heels of the preamble publication.

“TCA repeatedly called on the Administration to heed our warnings regarding this mandate’s impact on the already constrained supply chain, yet they chose to proceed with a disastrous mandate which will undoubtedly ensure the trucking industry loses a substantial number of drivers,” the organization said. “These are the drivers the country is relying upon to deliver food, fuel, and presents for the upcoming holiday season, yet our national leadership has decided these needs must go unmet.”

TCA also pointed to pushback against the mandate by various organizations and officials.

“Efforts are currently underway — by private sector companies, nonprofit groups, and roughly a dozen state governors, to name a few — to file suit against the mandate,” it said in its statement. “While we do not yet know whether these lawsuits will result in a delay or eventual overturning of the mandate, we are optimistic that they will ultimately be successful, and we will work to support these initiatives as much as we can.”

NATSO, which represents truck stops and travel plazas, has been supporting efforts to increase vaccinations through partnerships with state agencies and pharmacies.

However, a federal vaccine requirement “will have a significant negative impact on our industry and its ability to keep truck drivers on the road,” said NATSO President and CEO Lisa Mullings in a statement.

“Losing additional employees on top of the current labor challenges could force some retailers to close their doors and lead to limited fuel supplies. We will continue to work with OSHA as it further reviews its rule to ensure that the vaccine and testing mandate does not further challenge those businesses that are struggling to remain open.”

At least one Wall Street firm considers the new requirements as a potential blow to trucking operations, at least in the short term and particularly in the truckload sector.

A snap survey conducted by investment firm Cowen & Co. found that fleets could lose 20% of their drivers, “which would likely lead to a massive increase in unseated fleets,” the firm stated in a research note on Tuesday. The note was entitled “Armageddon or Exemption?” The second half of that choice is now off the table.

During USA Truck’s (NASDAQ: USAK) third quarter earnings call last week, Cowen asked CEO James Reed about market implications of the vaccine requirements if there were to be no carve out for trucking.

“Mr. Reed believes freight rates could go to $8-$10 a mile, an increase that would have severe consequences for carriers, shippers, and consumers,” Cowen noted. “However, the loss of drivers, cost of unseated tractors, lowered productivity and cost of testing should offset increased spot pricing (which accounts for 12-18% of business for most large carriers).”

(FreightWaves reported the $8 to $10 mile figure in its coverage of the USA Truck earnings call.)

Cowen added that there could be “significant and material negative impacts” among carriers in its coverage in addition to USA Truck, including Knight-Swift Transportation (NYSE: KNX), Werner Enterprises (NASDAQ: WERN), Schneider National (NYSE: SNDR), Covenant Logistics Group (NASDAQ: CVLG), Landstar System (NASDAQ: LSTR), and Daseke (NASDAQ: DSKE).

Stocks among that group of carriers were trading mixed at midday Thursday, up or down 1-3%.

Prasad Sharma, an attorney with Scopelitis, Garvin, Light, Hanson & Feary who has been closely tracking the issue, predicted the potential for shifting among vaccine-hesitant drivers from larger to smaller companies given the rule’s 100-or-more-employee threshold.

“As numerous groups representing all parts of the supply chain informed the Biden administration, the ETS can be expected to result in drivers seeking to move to smaller employers or leave the industry altogether, resulting in a further ratcheting or pressure on an already stressed supply chain,” Sharma told FreightWaves in a statement.

One section of the preamble seeks to put costs on complying with the mandate, assuming a variety of factors like time off needed to get vaccinated, 

For example, the preamble estimates that the total cost per entity in truck transportation is just under $7,000, for an industrywide cost of about $18.1 million. 

OSHA counted 2,597 “entities” and 15,684 “establishments” in the NAICS category of truck transportation that would face the mandate.  Entity describes a for-profit business, a non-profit organization or a local governmental unit, OSHA said. An establishment is a physical location, so an entity can have multiple establishments.

The count does give one of the first clear estimates of how many 100+-employee companies will face the mandate. 

The preamble does not address issues of specific industries and whether they would be more impacted by the mandate than others. It concedes that “employer vaccination mandates could lead to employee turnover; employees could either leave on their own volition or employers who have instituted strict vaccination policies may fire workers who are not vaccinated, or place them on unpaid leave.”

But the preamble also says there exists “countervailing evidence to suggest that employers who implement a vaccine mandate will be met with an influx of potential workers.”

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  1. Lucy Mauterer

    Do not comply. You are playing Russian roulette with your life. Survival rates from Covid are above 95 percent for most people. There are lawyers lining up to help people.

  2. Performance records show

    Covid 19 is Fake , it’s seasonal allergies. People that have been vaccinated cannot drive anymore, night runs are over. Vaccinated people say they’re no longer human. Vaccinated people get blood clots in their eyes and go blind

  3. TC

    Finally, an edict from the all powerful & all knowing govt. that will help small trucking companies….We are hiring and you don’t need a “jab for a job”

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