July 16, 2004 -- The US Court of Appeals (District of Columbia Circuit) has thrown out the new Hours of Service (HOS) rules that went into effect on January 4, 2004, and has sent the case back to the Federal Motor Carrier Safety Administration (FMCSA) for review.
According to Morgan Stanley analyst James Valentine, the status quo is likely to remain in place for some time. “Despite today's decision, it is our understanding that trucking companies will continue to operate under the recently-implemented HOS rules until the issue reaches a final decision pending more appeals (which could take months if not years),” Valentine says.
If the new HOS rules are ultimately thrown out, the results are likely to be more negative than positive, Valentine believes. “Assuming that we revert back to the former rules at some point in the future, carriers would have higher equipment and driver productivity, which in turn could be viewed as benefiting individual truckload (TL) company's earnings per share, but looked at on a macro level, this would create 1%-3% more capacity in an industry that has historically been plagued by overcapacity (although this is not the case at present),” he says.
Click here to read the court’s ruling: http://pacer.cadc.uscourts.gov/docs/common/opinions/200407/03-1165a.pdf
