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I write today to urge opposition to any legislation or efforts to place tolls on Interstate 80. This highway is a major thoroughfare for business and adding tolls as discussed with Act 44 will be a severe detriment. The companies that will be hurt the most are the small businesses of Pennsylvania who must use this highway to operate. This toll will be such a competitive disadvantage that companies such as ours will be forced to analyze whether or not this can sustain our business.
Calex Logistics, located in Pittston, PA, has been in business since 1974. Never before have we experienced such a potential roadblock to business, which is especially difficult in the trying economic times that exist today.
Logistics
The logistics industry is a growing industry in Pennsylvania. Our location and work ethic has proven attractive to companies looking to serve all of the major metro areas of the northeast and mid-Atlantic while also allowing relatively easy access to the mid-West and beyond via Interstate 80.
Logistics is also an industry with tremendous competition. The lowest price is continually the factor that retains business. According to NAICS data, there are 424 companies involved in logistics and transportation in Northeastern Pennsylvania. Consequently, profit margins are razor thin with little room for error. While fuel skyrocketing, and equipment, healthcare and insurance costs on the rise, revenue in the marketplace is very slow to move up. Margins between profit and loss are tighter than ever.
Competitive Disadvantage
The competitive disadvantage that will occur by placing tolls on Interstate 80 so severe that it is staggering. Our company is small in the world of logistics, but we use Interstate 80 frequently heading east to New Jersey, New York City and Long Island and heading west to Ohio, the mid-west and the west coast. We estimate traveling the length of Interstate 80 approximately 140 times per week. That means an added cost of $13,020 per week, $52,080 per month and $677,040 per year.
Here is another scenario. The average line haul rate for a round trip delivery to Ohio is approximately $1,300 before the fuel surcharge is considered. This toll will add approximately $186 ($93 x 2) to that fee. That’s a 14% increase to the line haul charge with no added value. Business to and from Ohio will cease, as no company would accept a 14% increase in price for exactly the same service as before.
After the first year, tolls are scheduled to rise 3% each year. These increases are going to be exceedingly hard to keep up with. Transportation companies such as Calex, have resorted to all out begging just to raise the fuel surcharge levels to combat skyrocketing fuel. Fuel has risen $.85 per gallon or 26% since this time last year. All additional spending regarding transportation has been diverted mitigating fuel costs, leaving the line haul rate to flounder at deplorable levels.
In the last year, Calex paid over $208,000 to Pennsylvania in Motor Carriers Road Taxes. The rate for Pennsylvania is $.3810 per gallon, the highest rate of any state in the country.
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