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Are you a highway user who wants to travel on safe, less congested roads?
Join Andrew Stasiowski, President and CEO of the American Highway Users Alliance, as he speaks with leading experts about the latest policies impacting the transportation community. Each month, Andrew will cover topics of critical importance to the highway user community, from reducing congestion on roads, to reforming highway trust funds, to increasing global competitiveness.
Listen to new episodes of “Driving Forward” wherever you get your podcasts.
The American Highway Users Alliance is a nonprofit organization advocating for public policies that promote roadway safety, increase freedom of movement, and preserve opportunities for all people to live, work, shop, and travel unencumbered.
To learn more about AHUA, you can visit our website.
Andrew Stasiowski [00:00:06]:
Hello and welcome to the Driving Forward Podcast. I'm your host, Andrew Stasiowski of the American Highway Users Alliance. We have a great interview for you today talking about trucking, the impact of the Highway Trust Fund, and what this could mean for the next highway bill. The current highway bill expires in September of 2026, and significant work will need to be done to find a new funding source for the Highway Trust Fund. Our interview today discusses what the shortfall within the Highway Trust Fund could mean for trucking's ability to operate efficiently and what that could mean for the broader driving public. Joining us today is Andrew Okuya. Andrew is the Vice President of public affairs at UPS. In this capacity, he leads UPS's federal advocacy on all modes of surface transportation, legislative and regulatory issues.
Andrew Stasiowski [00:00:50]:
Before joining Amazon, Andrew served as a professional staff member on the US House of Representatives Transportation Infrastructure Committee. Andrew, welcome to the Driving Forward podcast.
Andrew Okuyiga [00:00:59]:
Thanks for having me, Andrew.
Andrew Stasiowski [00:01:01]:
Absolutely. So, you know, obviously ups, big trucking fleet, you guys have all kinds of vehicles, employees all over the world. It's the holiday season that obviously has to have a big impact on your logistics capabilities. A lot of people are getting packages delivered to their houses these days. You're seeing your employees a lot more at their house. I know we are. Can you talk about ups, the size of fleet, types of vehicles you have, and kind of how you guys operate across all these different modes that you work on?
Andrew Okuyiga [00:01:31]:
Absolutely. This is our busiest time of the year. It's what we call peak season. And this is really what our transportation network is built for, to be able to deliver great service to our customers around the country and around the world at the busiest time of the year, the peak holiday season here in the United States. We're the largest package delivery company in the world and we run one of the largest ground fleets of commercial vehicles in the world. In the United States, we've got about 120,000 commercial vehicles. Those are split into mainly two different types of trucks, what we call feeder trucks. We have about 20,000 of those.
Andrew Okuyiga [00:02:15]:
Those are Class 8 commercial vehicles, what you would think of as an 18 wheeler. Those move goods between our UPS hubs across the country. And the remaining roughly 100,000 vehicles are mostly what we call package cars. Those are the beautiful brown last mile delivery vehicles that go door to door, deliver about 20 million packages every day, driven by our UPS drivers.
Andrew Stasiowski [00:02:42]:
20 million packages a day. That's incredible.
Andrew Okuyiga [00:02:45]:
Yeah, it is. It is a massive operation and a massive commercial vehicle fleet.
Andrew Stasiowski [00:02:51]:
Yeah, I mean, I think it's crazy to Think today you can order something online and you know, one of your guys is delivering it maybe that day. It's just, it's hard to imagine how this, you know, this system works and how, you know, how much work must go into the logistics side that you guys have built.
Andrew Okuyiga [00:03:08]:
Yeah. And you know, while you might likely know your local UPS driver from your neighborhood or at your office, that's not the only types of deliveries we do. So these drivers also service warehouses, retail establishments, hospitals. You know, we make lots and lots of E commerce deliveries, but we also do heavier, bulk, bulkier deliveries as well. And so, you know, I talked about those last mile package cars. All of the vehicles in our fleet are really significant commercial vehicles using our roadways and highways across the country.
Andrew Stasiowski [00:03:41]:
So, you know, with that big fleet and obviously different types of vehicles and different uses or aspects of what, how those vehicles are being operated within your logistics system, are you seeing an increase in kind of your heavier vehicles or your more brown, you know, the last mile brown trucks that you guys are going to my house or everyone else's houses?
Andrew Okuyiga [00:04:02]:
Yeah, it's really a mix of different types of vehicles to fit one, whatever operational situation we're in. So the types of vehicles that might service Manhattan or a dense city neighborhood are often different from what we're using for a rural area or a suburban delivery situation. So while many of our vehicles fall in that weight range that I quoted, we've got smaller vehicles, we've got some larger vehicles depending on the situation.
Andrew Stasiowski [00:04:31]:
So, you know, with that large fleet and obviously, you know, you're going to be reliant on our highway infrastructure and increasing. That's, you know, I think what we really wanted to talk about today. What are the taxes that you guys pay into the Highway Trust Fund? I know trucking pays a large portion of the overall trust fund that funds our roads and bridges across the country. So, you know, what are the taxes you guys are paying today?
Andrew Okuyiga [00:04:57]:
The Highway Trust Fund is really important to ups, to the trucking industry and to the country. It does the, the bulk of funding for road and bridge maintenance. And the roads and bridges of this country are the offices for our UPS drivers. We at UPS and in the trucking industry in general help fund the Highway Trust Fund through a variety of taxes and fees levied on the fuel we use and the vehicles we use. So we pay a 24.4 cent per gallon tax on every gallon of diesel that we buy. We pay an 18.4 cent per per gallon tax on every gallon of gasoline that we buy. We also pay a 12% excise tax on heavy duty trucks when we purchase those. And we pay additional taxes on truck tires.
Andrew Okuyiga [00:05:49]:
There's a heavy vehicle use tax, and there are some additional smaller fees that go into the Highway Trust Fund that we also pay. But all this kind of goes together to help fund the system of roadways that we use every day to get goods to customers.
Andrew Stasiowski [00:06:06]:
There's so many taxes that you guys have to pay, and obviously there's a lot of compliance. I know with the federal excise tax, there's a significant amount of compliance that goes into that. But you know, what we're seeing today, obviously, is we have this shortfall. I know a lot of people want to blame it on EVs because they're not paying into it. But you as the purchaser, how does the EV requirement impact you guys?
Andrew Okuyiga [00:06:32]:
I think the issue with the Highway Trust Fund as it is today is that we are spending. I think in 2024, there will be about $65 billion spent from the Highway Trust Fund on the various road, bridge, other types of construction and maintenance projects that are needed to keep our highways running, to reduce congestion, to improve safety on the national highway network. But we're only taking in through those sources of taxes that I mentioned earlier, about $47 billion. And so that gap is a big problem. I think since 2008, Congress has kept the Highway Trust Fund afloat by transferring more than $200 billion into the highway Trust Fund through deficit spending or essentially borrowing to close that gap. But there are a few reasons for the shortfall. Electric vehicles not paying into the Highway Trust Fund is one of them. But really, that's probably the smallest of three major reasons that there's a shortfall.
Andrew Okuyiga [00:07:38]:
The biggest is that the gas and diesel taxes have not been raised since 1993. So inflation alone has eroded half the purchasing power of that 24 cent and 18 cent diesel and gasoline tax. In addition, cars and trucks are much more fuel efficient. So to drive the same number of miles, we need fewer gallons of diesel or gasoline. And so passenger cars and trucks pay less per mile than they were 30 years ago the last time the gas and diesel taxes were raised. And then, as you mentioned, alternative fuel vehicles, especially electric vehicles, pay nothing into the Highway Trust Fund as they don't buy gasoline or diesel. Those only account for about, I think, a little less than 1% of vehicles on US roads today and an even smaller percentage of vehicles in the trucking industry. But that will grow and that will be a bigger problem in terms of Highway Trust Fund revenues in the future.
Andrew Okuyiga [00:08:37]:
So trying to figure out a way to resolve all those three issues, figuring out alternative revenues or increasing existing revenues is a must.
Andrew Stasiowski [00:08:46]:
No, absolutely. I think that's going to be. As we look at the next highway bill, probably funding is probably going to be the biggest issue facing our ability to kind of do another highway bill on time. Because if, you know, we don't know where the revenue is going to come from or how we're going to get it, obviously it's going to be a lot harder to pass a lot of the important policies that we're going to want to see on the next highway bill. Along those lines, with this instability of the trust fund with, you know, we don't know if we can do another one on time. We don't know where the revenue is going to be. You know, we need probably a more sustainable source of revenue. What does that mean for your ability to operate? How does that instability of the trust fund really impact your day to day operations?
Andrew Okuyiga [00:09:24]:
I think how it really flows down to UPS and the trucking industry in general is that we hear from state departments of transportation who are really responsible for doing the highway and interstate improvement projects that we use every day, that it makes it difficult for them to plan, that they delay committing and starting projects because they don't know if they'll have funding to finish those projects. And it reduces the overall level of investment and the speed of investment in our national highway network. For us, those costs of congestion raise our operational costs. So several years ago we put pencil or paper and looked at the delays and how it impacts what we do. And we calculated that for an additional five minute delay for each UPS vehicle every day, that would cost us about $105 million every year in increased operating costs. So a five minute delay per vehicle per day would be more than $100 million every year. And so we're one company and you know, those types of cost increases to deliver goods aggregated across the trucking industry really raise prices for everyday consumers. And that flows down to the goods that, that you and I buy.
Andrew Okuyiga [00:10:48]:
You know, we say in the trucking industry, if you bought it a truck, a truck brought it, and, and, and that's, you know, true. Trucking moves about 70% of the freight in this country. And so when our costs increase, the, the cost and everyday goods increase. I mentioned that we're just one trucking company. I know you've had Rebecca Brewster from the American Transportation Research Institute on this podcast and they do aggregate those costs across the whole trucking Industry and they were looking, they've looked at annual truck congestion costs in general, and several years ago, and they hit a peak of almost $100 billion a year, $94.6 billion. And so those are costs that for the most part, flow through the system and get passed on to consumers in the forms of increased prices in the goods they buy. And it just reduces the overall level of commerce that we do across the country. When you have congestion, that raises prices and reduces productivity.
Andrew Stasiowski [00:11:48]:
Yeah, I mean, we had. Rebecca was actually our first guest. So glad to know that you're a consistent listener, of course. But, you know, I think that's such an important point. You know, I think as we're looking at the next highway bill and we're looking at how we invest, you know, I think oftentimes we think about it as just, okay, maybe we're gonna add a new road here or add, you know, connect, you know, communities that might not have been able to get to each other quickly before or things like that. But, you know, using this to add capacity, to be able to reduce congestion. There may still be traffic on the road, but the difference between congestion and traffic is so important, I think, for people who are, who are building out these proposals and these plans. If we can just eliminate congestion in areas by adding capacity, and yeah, you're gonna have more trucks on the road.
Andrew Stasiowski [00:12:37]:
But the economic impact you just described by that is, I mean, $100 billion, that's immense. So, you know, it's so important, I think, to make sure we're adding capacity and investing in reducing congestion.
Andrew Okuyiga [00:12:53]:
Yeah, 100%. The amount of freight that is going to be moved across the United States is going to increase by double digit percentages over the next five years and even more over the next 10 years. And so that is going to happen whether or not we invest in our roads, in our bridges, in our multimodal transportation system. And so you can either move those goods and services more quickly, more efficiently, or you can do so more slowly with added costs. And one route is, is good for the economy and promotes economic growth, and the other route makes economic growth much more difficult.
Andrew Stasiowski [00:13:32]:
Yeah, totally. I mean, I stick it back to the interview with Rebecca and one of the things she, she mentioned that I really, I really held onto, I thought was a really important point that I don't think we always think about is, you know, we're constantly talking about how population is shifting. You know, the population in this country is always increasing, but people are moving to new areas. And, you know, when you see large Influxes into new areas, the amount of trucking and goods and services that need to come in to accommodate that can sometimes overwhelm the existing infrastructure. So I'm sure for you guys, you know, as you're seeing more good, more shipments going to, you know, wherever Nashville, my go to place for some reason, when I'm using this as an example of a growing area, you know, that has to kind of put a strain on your ability to meet your goals for delivery times and all that, right?
Andrew Okuyiga [00:14:24]:
100%. When we see, you know, population growth, business growth in a particular area, we've got to invest in our resources, in our facilities, in our vehicles, in our people to make sure that we have the right resources, placement of resources, capital investments and the like to meet the demand in a new area. And sometimes that new demand is created by growing economy, sometimes it's created by a shift from, you know, one area to the next. And we have to adjust, change our network, make sure that we are kind of balancing our network to meet our customers where they are. In the same way, you know, it's important that the infrastructure follows that when there is new population in a particular suburb, in a particular metropolitan area, in a particular rural area. You know, we saw patterns of movement over Covid where there were boom towns that were rural or exurban areas that are now much more populated. And that can put strain on the infrastructure. And allowing giving state dots through these gas tax revenues through the highway Trust Fund the resources to keep up with those changing demand patterns is important not just for ups, but for the trucking and transportation network as a whole.
Andrew Okuyiga [00:15:46]:
And, and those types of investments to, to modernize, expand capac capacity and roadways help UPS help the trucking industry. They also help people get to work on time. They also ensure that when people are driving in their passenger cars, they're able to get from point A to point B safely and efficiently. So these types of things have lots of positive knock on benefits that are really important for economic growth.
Andrew Stasiowski [00:16:12]:
So I mean, it would seem to me, and I think we're hearing this a lot more when we're having conversations with all different types of groups that the ability to maintain the highway Trust fund as is, you know, with declining revenues, as you laid out, just doesn't seem like it's going to be working for trucking anymore. Why do you think we need to reform the trust fund now? Find a, you know, whether it's adding to increasing the gas tax or whatever solution it is, but we need to have a better fix for the Trust fund now to improve supply chain and help trucking.
Andrew Okuyiga [00:16:44]:
Yeah.
Andrew Stasiowski [00:16:45]:
Is now the time or should or we think we're okay still?
Andrew Okuyiga [00:16:48]:
Yeah. Like I mentioned earlier, over the last 15 years or so, Congress has supplemented the Highway Trust Fund with general fund taxpayer dollars to the tune of about $200 billion. The Highway Trust Fund and the surface transportation program will be up for reauthorization again in 2026. The current Infrastructure Investment and Jobs act expires September 30, 2026. And we don't think we're going to be able to depend, and we don't expect that Congress is going to authorize another very large general fund transfer to essentially bail out the trust fund, as they've done in the past. Each time that Congress has done so in the past, in each of the last three surface transportation reauthorization bills, the need to bail out the trust fund has led to extensions of existing policy and existing spending levels, rather than an updating of spending levels and policy in a timely manner. So generally, Congress has said we haven't been able to figure out what to do about the Highway Trust Fund. We haven't been able to figure out a sustainable funding source.
Andrew Okuyiga [00:18:09]:
So we are going to forget one month or three months or six months, just use taxpayer money to lock in current spending levels for a short amount of time while we figure out the situation each of those three times. Eventually they've come to the table and figured out how to either do spending cuts elsewhere or more commonly, just figuring out how to deficit finance in order to bail out the trust fund. But with the increasing fiscal pressures that we're seeing in general with the budget deficit, increasing budget debt, we don't think we're going to be able to rely on that come September 30, 2026. And so figuring out a new solution for sustainable funding for the Highway Trust Fund is critical if we want to, in a timely manner, pass that reauthorization and give states the certainty that they'll need in order to embark on and continue lots of large transportation investment projects that have been started over the past five years. Yeah.
Andrew Stasiowski [00:19:11]:
One of the things we've talked about a couple of times, I remember when Alex actually was on from agc, we talked about this, but we've consistently increased the amount of money we're spending annually for our infrastructure investments. You know, IJA, I think authorized around 70. I think you mentioned 67 or 68 billion for this year. I think next year it's being closer to 70. If we can't find A funding source source that kind of removes general fund and is stable on its own. Are we looking at reduced infrastructure investments? And what would that mean if we're not even funding at the same level we are now for trucking and your ability to operate efficiently?
Andrew Okuyiga [00:19:49]:
Yeah, I think when we look at road bridge maintenance, construction, we know the need is there and that spending reflects the really big backlog of construction and maintenance projects that built up over years and years and years of underinvestment in our turfist transportation system. Before we passed the most recent infrastructure bill, the Infrastructure Investment and Jobs act, the United States had fallen from seventh to the 18th in overall quality in our roads. That was in 2019, before the most recent bill passed. So the country is on the way to improving our standing thanks to significant investments that were made in that bipartisan legislation. But in order to keep up that or even a similar level of spending. And there will be debates in Congress about how much to spend, about how to focus that spending, and about what programs to focus that spending on. But if we want to get somewhere near that, somewhere in that spending ballpark range, we're going to need to figure out a sustainable source. Because like you said, the alternative is either a general fund bailout, which we don't think is likely and certainly we don't think will be timely, or are serious cuts that would leave our roads, our bridges, underinvested and back into a state of disrepair that we're just trying to pull ourselves out of after several decades of disinvestment prior to the Infrastructure Investment and Jobs Act.
Andrew Stasiowski [00:21:28]:
And this isn't really a UPS question per se, I'm going to weigh in a little more on your T and I experience. But if we do have, if we do reduce our investments and leave it at whatever the Highway Trust Fund generates through the taxes that we currently charge. What does that mean for projects? I would assume the state's going to have to prioritize which projects they can fund and they're going to have to no longer fund other projects. Is that how it would work?
Andrew Okuyiga [00:21:55]:
Yeah, absolutely. You know, states have to work within the fiscal constraints that they're given with their estate taxes and the supplements that they're given from the Highway Trust Plan. And I think those Highway Trust Fund dollars are limited in certain ways. They have to be spent on what's called the National Highway Network, which includes the Interstate System, plus associated roads that really have a regional or national impact. And those roads that are the most important for freight transportation are expensive to maintain. They are also the Roads that are most important for interstate commerce, moving goods from state to state to state and so ensuring the continued investment in viability in those big, expensive, but economically necessary and significant projects really goes to the core of the federal responsibility here and the reason that the federal government is invested in the highway program to begin with.
Andrew Stasiowski [00:23:03]:
Understood, I appreciate that. All right, well, we're going to move into our last question that we've asked every single guest, so I will ask you and you can give us your response. So if you could do one policy, wave your magic wand. This is the thing that we think is the most important for trucking. It doesn't have to be specifically to ups, but what you think is the most important for your industry, for the transportation network and how we invest in highways, whatever it may be. What would it be?
Andrew Okuyiga [00:23:33]:
Well, that's a really good question. We focused our conversation today on the Highway Trust Fund infrastructure spending and the challenges there. I think if I could wave my magic wand, you know, I would figure out, I think the magic wand would help figure this out. But get a politically viable and sustainable long term solution for the funding of the Highway Trust Fund, making sure that the, the money that we're spending is covered by some manner of user fees. And you know, what we've had traditionally is a system where users of our roads, of our bridges, of our surface transportation pay through that bevy of taxes that I mentioned earlier into our transportation network. And figuring out a way to maintain that linkage between users of the system, revenues and spending in a way that could help us meet our needed investments, I think is the challenge that has really stymied Congress over the last 15 plus years. And so figuring that out and getting to a solution between now and September 30, 2026 is what I would do with my magic wand. And I hope that magic wand wish becomes a reality as we work with groups like the highway users and lots of folks who are invested across the transportation network to get a solution over the next year and a half.
Andrew Stasiowski [00:25:05]:
That is a great answer. Andrew Okwiga, thank you so much for joining us today. I really appreciate your thoughts and hope to have you back on the Driving Forward podcast again soon.
Andrew Okuyiga [00:25:14]:
All right, thanks Andrew.
Andrew Stasiowski [00:25:16]:
Thank you. Okay, well, I want to thank Andrew for coming on again today. I thought that was a great interview. Really appreciate his thoughts not only on what the trust fund means for UPS trucking more broadly, but also kind of his thought as a former TNI staffer and what shortfalls and fundings could mean for states abilities to current projects and future projects. This will be the last podcast of the year. I want to thank all of our listeners for joining us this year and I want to wish everyone a Happy Holidays, Happy New Year, and we'll talk to you again in the New Year. Thank you for listening to the Driving Forward Podcast. Please remember to subscribe to the Driving Forward Podcast wherever you get your podcasts.