California is well-known for its many transportation laws and regulations. The latest one, implemented on November 1, 2017, is named S.B. 1, and it will have an immediate impact on freight costs coming in and out of the state.
According to Transport Topics December 11, 2017 issue, carriers and 3pls are raising rates to accommodate the increase caused by this new law, which encompasses several rate hikes, most notably a diesel fuel excise tax of 20 cents per gallon and adjusted registration fees.
The article notes that the diesel sales tax will go from 1.75% to 5.75%. This is a significant rise in the cost of doing business in the state and will be reflected in rates that shippers must pay to get their product delivered into California or picked up from the state.
“We are headquartered on the East Coast but are a nationwide 3PL,” said Steve Covey, executive vice president at Choptank Transport. “We‘ve just started addressing this issue with our California-based shippers and will have to expand that conversation to all shippers wanting freight moved in and out of California. It’s our job to be transparent and proactive regarding market rates and conditions, and new state legislation is often a factor that affects the industry.”
Oregon is also planning to raise fuel taxes as of January, 1, 2018 as well as raise the weight fee on trucks. This could be the beginning of a nationwide trend in rising fuel taxes. Let’s hope not!