A Pacific Northwest LTL carrier is adding a surcharge to shipments starting or ending in Oregon or Washington, citing regulatory requirements in those two states that the company says have reached a “tipping point.”
Peninsula Truck Lines, based in Federal Way, Washington, announced this week that the $3 per shipment surcharge will go into effect April 6. In response to a list of questions submitted to Peninsula by FreightWaves, the company said customers were informed of the change several weeks ago.
“This surcharge reflects a portion of the additional costs required to operate in an increasingly complex regulatory environment, while continuing to provide the high level of service our customers expect.” Tim Vander Pol, the company’s president and chief steward, said about the surcharge in a prepared statement.
The surcharge applies to shipments with an origin or destination in Oregon and Washington. The company is headquartered in Federal Way, Washington, south of Seattle.
High-rated LTL carrier
In the closely-watched Mastio survey of top LTL carriers, Peninsula was rated number 4 in the 2024 survey. It has 354 power units.
The company said in its email response to FreightWaves that it believes that no other company has implemented such a regulatory-driven surcharge in the Pacific Northwest. However, it did cite a surcharge of just under $2 in California from almost 15 years ago, and that the charge–which has risen–is now widespread in that state.
It added that it is not carrying surcharges for any other reason.
What a $3 per shipment would mean at Peninsula as a percentage can not be determined. Citing the average revenue at Old Dominion Freight Lines (NASDAQ: ODFL) of $494.17, the company said in its response to questions that it is a regional LTL carrier and its average revenue per shipment was “much lower,” without offering a specific number.
“Over the past several years, both Washington and Oregon have enacted a range of transportation, labor, environmental, and payroll regulations that have significantly increased the cost of providing freight services,” the company said in its statement announcing the surcharge. “These measures include fuel-related programs, payroll and benefits mandates, and transportation funding packages that increase fuel taxes, registration and weight fees, and administrative requirements.”
Two laws stick out
In its response to the questions submitted by FreightWaves, Peninsula cited two specific charges as standing out among the others: the Washington Climate Commitment Act and the Oregon Corporate Activity Tax.
In that response, Peninsula said the Washington Climate Commitment Act had added 81 cents/gallon to the price of diesel in Washington.
The daily American Automobile Association average of gasoline and diesel prices for Friday showed Washington with an average diesel price of $4.656/g. The price in Oregon is $3.987. In famously high-priced California, it was $4.883/g.
The AAA national average was $3.554/g.
The Oregon CAT, according to a fact sheet published by the state, “applies to taxable Oregon commercial activity more than $1 million.” The tax is applied as $250 plus 0.57% of “taxable commercial activity” in excess of $1 million.
The CAT was implemented in May 2019.
“The cumulative impact of these regulations has reached a tipping point, where we could no longer absorb the increased costs within our standard rate structure,” Peninsula said. It also said the decision to implement the surcharge had been under consideration for several years.
Peninsula “brought the receipts” and released a list of what it called “key statewide items” of Oregon and Washington regulations that it said were contributing to the decision to implement the surcharge.
Lengthy list of taxes and rules laid out
There are nine regulations for Washington, as well as a proposed payroll tax. All of them have gone into effect in the last 10 years.
For Oregon, there are also ten regulations or taxes listed by Peninsula.
There are overlaps, such as the low carbon fuel standard in both states that seeks to incentivize–but also has penalties–the use of cleaner burning fuel, such as renewable diesel. But there are other mandates, such as mandatory paid leave in both states, and various taxes in Oregon to fund both transit and preschool programs.
“Peninsula Truck Lines has made extensive efforts to absorb these costs internally and improve efficiency before implementing the surcharge,” Vander Pol said in his prepared statement. “The company will continue to evaluate operational efficiencies while maintaining its focus on safety, reliability, and regulatory compliance.”
Peninsula said it did not work with the trucking associations of the two states in designing its surcharge, the company said in its responses to FreightWaves questions.
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