Post by HardTimeTrucker on Aug 28, 2008 20:12:58 GMT -5
Traffic World
09-01-08
Clean Enough for Ports?; While three truckers sign on, shippers face peak worries, $1 billion in new costs from clean-air program
By John Gallagher
Ron Guss is starting to sweat the possibility that not enough trucks will be available to haul the annual fall surge of containers imported through Southern California's ports.
He's concerned a controversial plan to clean the air at the docks could leave fewer truckers able to serve the nation's most important port complex and leave freight on the docks.
"Right now there are only 20 applications submitted out of 1,500 trucking companies that need to sign up for the program," said Guss, president of Intermodal West, a harbor trucking company in Pico Rivera, Calif.
With the first phase of the clean truck plan scheduled to begin Oct. 1, there's not much time left for truck operators to sign up. "October, when things start to really heat up, might as well be tomorrow in the trucking business," Guss said. "Even if everyone applied today they still have to be processed. We're waiting to see what happens on Sept. 8."
That's when the U.S. District Court for the Central District of California will rule on the American Trucking Associations' challenge to the San Pedro Bay Clean Truck Program. The trucking association claims the ports' plan - which shippers say could add more than a $1 billion per year to drayage costs - violates the U.S. Constitution by hindering interstate commerce. The ATA is seeking a temporary restraining order that would prevent the ports from putting parts of their plan into action this October.
Industry opposition to the port programs didn't keep two truckload carriers, Swift Transportation and Knight Transportation, and National Retail Systems, a dedicated carrier and logistics operator, from signing up. "I think everyone in Southern California has an interest in seeing the program succeed," said David Berry, vice president of Swift. "No one wants to see goods stuck at any choke point in the supply chain, particularly at the ports." Swift and Knight plan to field as many as 2,000 trucks at the ports, currently served by 16,000 truckers, mostly owner-operators (see story, page 26).
"Will there be enough trucks? I think there's a risk, but how big a risk I don't know," said Berry. "But I do know that shippers are doing everything they can to mitigate that risk."
For shippers and carriers alike, the risks run from day-to-day operations to a single point in the supply chain to far larger concerns.
There is, of course, the basic worry over whether boxes can be moved smoothly through the nation's busiest port complex at the critical time when goods are being pushed to markets for the hoped-for holiday retail rush.
But the change at the industrial fringes of trucking called drayage also could amount to the largest regulatory rewrite of trucking operations in several years, a shift that could be nearly as far-reaching as changes in hours-of-service regulations in some corners of the business.
Many trucking industry executives believe key elements of the clean truck program mark a retreat from deregulation, which came first at the national level in 1980 and then to intrastate operations in 1994. Industry officials fear that by setting rules for trucking companies and not just the trucks and their emissions, the ports are blazing a new path to economic regulation other states could follow.
Down on the docks, shippers are bracing for the impact at the brief, historically inexpensive and necessary turning point in the supply chain. Energy and environmental surcharges have raised the costs and now the operating shift in Southern California are bringing new worries for shippers who used to be more concerned about congestion at the ports than a lack of truck capacity.
Rapid growth at the ports led to serious traffic - and pollution - problems early in the decade. The ports changed their schedules to accommodate off-peak loading and unloading of drayage trucks at night and on Saturdays with the PierPass system.
On average, there are more than 180,000 drayage runs to and from the ports each week. Shippers fear any significant reduction in the number of available trucks for those runs could lead to the kind of delays and cost increases not seen at the ports in years.
This may be one instance when shippers are grateful for the weak economy. Cargo volume at the nation's major container ports is expected to decline 4 percent in 2008 compared with 2007, according to the National Retail Federation.
Inbound container traffic at the Port of Los Angeles was down 3.9 percent in July, leaving some 14,750 fewer boxes, measured in TEUs, looking for a ride from the dock than the same month last year.
That means demand for trucks required to move the fall peak surge could be softer than last year and relieve some of the pressure on capacity at Los Angeles and Long Beach, says Paul Bingham, an economist with Global Insight, which provides analysis to the National Retail Federation. All U.S. ports covered by Global Insight's Port Tracker service - including Los Angeles and Long Beach - were rated "low" for congestion in August.
"The ports picked a good year (to implement the clean truck program)," Bingham said. "But that doesn't mean we still won't have a lot of cargo. If we lose just a quarter of the drivers, you've got a problem.
"Clearly the clock is ticking down. It's going to be who blinks first."
Shippers may be more worried about the overall cost of the program than about the availability of trucks in October.
The clean air program could have huge cost implications for the trucking industry and its customers.
In its Aug. 18 filing in support of the ATA, the NRF said the program would increase the cost of draying containers out of San Pedro Bay 80 percent based on usage fees. The more aggressive version of the Los Angeles plan will add $1.1 billion per year to total drayage costs, NRF said, with cumulative costs shooting to $4.6 billion over the first five years.
"Industry participants, like the NRF's members, believe the real costs will be higher, especially because both ports' versions of the concession plans will drive numerous firms and individual owner-operators out of business, thereby adding to upward market pressures on drayage prices," NRF said.
In addition, having two separate programs in an area accustomed to working as a single port complex could further impede the ability to shuttle freight and reposition equipment. "They're putting up a Berlin Wall between the ports that will cause more inefficiencies," said Patricia Senecal, vice president of Transport Express, a Southern California drayage company.
"Currently steamship lines allow truckers to pick up containers in one port and bring empties back to another if they need them repositioned. But if I'm an owner-operator that's not allowed to enter the Port of Los Angeles, I'm taking that empty back to Long Beach. It might require one company to have two sets of drivers running separate operations. That's a heck of a lot of costs added to an operation."
Proponents of the clean truck plan say that's exactly the kind of thinking they're fighting.
"It's immoral to place profit and politics above people and public health," Long Beach resident Mary Jo Bradshaw said on behalf the Coalition for Clean & Safe Ports, an alliance of environmental, community and labor organizations.
"Southern Californians are literally dying for clean air - not for a pair of sneakers that cost a nickel less," said Bradshaw, pastor of the North Long Beach Christian Church.
The standoff between the ports and the trucking industry has been simmering for almost two years, since the ports adopted a draft Clean Air Action Plan aimed at cutting pollution from idling trucks 45 percent by 2011.
The final plan, adopted by the two ports in June, requires trucking companies to obtain a license or "concession" to operate at the ports. All drayage trucks must be registered with the ports. Drivers must hold a federal Transportation Worker Identification Credential. No pre-1989 trucks will be allowed past port gates.
The Port of Los Angeles goes a step further than its sister port by requiring that carriers only use employee drivers - not owner-operators. Owner-operators, the port and its backers say, would not have the money to purchase and maintain new low-emissions heavy duty trucks.
ATA is challenging the concession scheme at both ports - even though the Port of Long Beach would allow drayage companies to use owner-operators or employee drivers.
"We are challenging only the intrusive and unnecessary regulatory structure being created under the concession plans," said Curtis Whalen, executive director of the ATA's Intermodal Motor Carriers Conference. "As Congress recognized when it created price, routes and services preemption, regulatory schemes like the concession plans burden interstate commerce and are bad for the American economy."
The ATA said it had never questioned the ports' objective to reduce emissions from its members' trucks. Local supporters of the plan aren't convinced.
"(The ATA's) claim to share the goal of port clean-up has always been disingenuous, empty rhetoric," said a spokeswoman for the Coalition for Clean & Safe Ports.
Industry observers have also held that the program, firmly backed by labor from the outset, is a step toward unionizing the port drayage industry - a goal the Teamsters union has worked toward for years. Independent contractors are prohibited from joining labor unions, but as employee drivers they have the right to organize.
Bingham says it's not too late for shippers concerned about whether there will be enough trucks to haul freight out of the ports.
"(Shippers) should be prudent and pay attention to the situation so that if things deteriorate, mitigating steps can still be taken. It should be no different than monitoring the [International Longshore and Warehouse Union] situation. But I don't think it will require anything as drastic as seeking an all-water route" as an alternative.
When it comes to making sure the Wal-Marts and Best Buys are stocked in time for Thanksgiving and Christmas, Bingham says, "at the end of day, I've got to believe people are going to be rational. Nobody wants to be accused of causing the store shelves to be empty. Especially in an election year."
09-01-08
Clean Enough for Ports?; While three truckers sign on, shippers face peak worries, $1 billion in new costs from clean-air program
By John Gallagher
Ron Guss is starting to sweat the possibility that not enough trucks will be available to haul the annual fall surge of containers imported through Southern California's ports.
He's concerned a controversial plan to clean the air at the docks could leave fewer truckers able to serve the nation's most important port complex and leave freight on the docks.
"Right now there are only 20 applications submitted out of 1,500 trucking companies that need to sign up for the program," said Guss, president of Intermodal West, a harbor trucking company in Pico Rivera, Calif.
With the first phase of the clean truck plan scheduled to begin Oct. 1, there's not much time left for truck operators to sign up. "October, when things start to really heat up, might as well be tomorrow in the trucking business," Guss said. "Even if everyone applied today they still have to be processed. We're waiting to see what happens on Sept. 8."
That's when the U.S. District Court for the Central District of California will rule on the American Trucking Associations' challenge to the San Pedro Bay Clean Truck Program. The trucking association claims the ports' plan - which shippers say could add more than a $1 billion per year to drayage costs - violates the U.S. Constitution by hindering interstate commerce. The ATA is seeking a temporary restraining order that would prevent the ports from putting parts of their plan into action this October.
Industry opposition to the port programs didn't keep two truckload carriers, Swift Transportation and Knight Transportation, and National Retail Systems, a dedicated carrier and logistics operator, from signing up. "I think everyone in Southern California has an interest in seeing the program succeed," said David Berry, vice president of Swift. "No one wants to see goods stuck at any choke point in the supply chain, particularly at the ports." Swift and Knight plan to field as many as 2,000 trucks at the ports, currently served by 16,000 truckers, mostly owner-operators (see story, page 26).
"Will there be enough trucks? I think there's a risk, but how big a risk I don't know," said Berry. "But I do know that shippers are doing everything they can to mitigate that risk."
For shippers and carriers alike, the risks run from day-to-day operations to a single point in the supply chain to far larger concerns.
There is, of course, the basic worry over whether boxes can be moved smoothly through the nation's busiest port complex at the critical time when goods are being pushed to markets for the hoped-for holiday retail rush.
But the change at the industrial fringes of trucking called drayage also could amount to the largest regulatory rewrite of trucking operations in several years, a shift that could be nearly as far-reaching as changes in hours-of-service regulations in some corners of the business.
Many trucking industry executives believe key elements of the clean truck program mark a retreat from deregulation, which came first at the national level in 1980 and then to intrastate operations in 1994. Industry officials fear that by setting rules for trucking companies and not just the trucks and their emissions, the ports are blazing a new path to economic regulation other states could follow.
Down on the docks, shippers are bracing for the impact at the brief, historically inexpensive and necessary turning point in the supply chain. Energy and environmental surcharges have raised the costs and now the operating shift in Southern California are bringing new worries for shippers who used to be more concerned about congestion at the ports than a lack of truck capacity.
Rapid growth at the ports led to serious traffic - and pollution - problems early in the decade. The ports changed their schedules to accommodate off-peak loading and unloading of drayage trucks at night and on Saturdays with the PierPass system.
On average, there are more than 180,000 drayage runs to and from the ports each week. Shippers fear any significant reduction in the number of available trucks for those runs could lead to the kind of delays and cost increases not seen at the ports in years.
This may be one instance when shippers are grateful for the weak economy. Cargo volume at the nation's major container ports is expected to decline 4 percent in 2008 compared with 2007, according to the National Retail Federation.
Inbound container traffic at the Port of Los Angeles was down 3.9 percent in July, leaving some 14,750 fewer boxes, measured in TEUs, looking for a ride from the dock than the same month last year.
That means demand for trucks required to move the fall peak surge could be softer than last year and relieve some of the pressure on capacity at Los Angeles and Long Beach, says Paul Bingham, an economist with Global Insight, which provides analysis to the National Retail Federation. All U.S. ports covered by Global Insight's Port Tracker service - including Los Angeles and Long Beach - were rated "low" for congestion in August.
"The ports picked a good year (to implement the clean truck program)," Bingham said. "But that doesn't mean we still won't have a lot of cargo. If we lose just a quarter of the drivers, you've got a problem.
"Clearly the clock is ticking down. It's going to be who blinks first."
Shippers may be more worried about the overall cost of the program than about the availability of trucks in October.
The clean air program could have huge cost implications for the trucking industry and its customers.
In its Aug. 18 filing in support of the ATA, the NRF said the program would increase the cost of draying containers out of San Pedro Bay 80 percent based on usage fees. The more aggressive version of the Los Angeles plan will add $1.1 billion per year to total drayage costs, NRF said, with cumulative costs shooting to $4.6 billion over the first five years.
"Industry participants, like the NRF's members, believe the real costs will be higher, especially because both ports' versions of the concession plans will drive numerous firms and individual owner-operators out of business, thereby adding to upward market pressures on drayage prices," NRF said.
In addition, having two separate programs in an area accustomed to working as a single port complex could further impede the ability to shuttle freight and reposition equipment. "They're putting up a Berlin Wall between the ports that will cause more inefficiencies," said Patricia Senecal, vice president of Transport Express, a Southern California drayage company.
"Currently steamship lines allow truckers to pick up containers in one port and bring empties back to another if they need them repositioned. But if I'm an owner-operator that's not allowed to enter the Port of Los Angeles, I'm taking that empty back to Long Beach. It might require one company to have two sets of drivers running separate operations. That's a heck of a lot of costs added to an operation."
Proponents of the clean truck plan say that's exactly the kind of thinking they're fighting.
"It's immoral to place profit and politics above people and public health," Long Beach resident Mary Jo Bradshaw said on behalf the Coalition for Clean & Safe Ports, an alliance of environmental, community and labor organizations.
"Southern Californians are literally dying for clean air - not for a pair of sneakers that cost a nickel less," said Bradshaw, pastor of the North Long Beach Christian Church.
The standoff between the ports and the trucking industry has been simmering for almost two years, since the ports adopted a draft Clean Air Action Plan aimed at cutting pollution from idling trucks 45 percent by 2011.
The final plan, adopted by the two ports in June, requires trucking companies to obtain a license or "concession" to operate at the ports. All drayage trucks must be registered with the ports. Drivers must hold a federal Transportation Worker Identification Credential. No pre-1989 trucks will be allowed past port gates.
The Port of Los Angeles goes a step further than its sister port by requiring that carriers only use employee drivers - not owner-operators. Owner-operators, the port and its backers say, would not have the money to purchase and maintain new low-emissions heavy duty trucks.
ATA is challenging the concession scheme at both ports - even though the Port of Long Beach would allow drayage companies to use owner-operators or employee drivers.
"We are challenging only the intrusive and unnecessary regulatory structure being created under the concession plans," said Curtis Whalen, executive director of the ATA's Intermodal Motor Carriers Conference. "As Congress recognized when it created price, routes and services preemption, regulatory schemes like the concession plans burden interstate commerce and are bad for the American economy."
The ATA said it had never questioned the ports' objective to reduce emissions from its members' trucks. Local supporters of the plan aren't convinced.
"(The ATA's) claim to share the goal of port clean-up has always been disingenuous, empty rhetoric," said a spokeswoman for the Coalition for Clean & Safe Ports.
Industry observers have also held that the program, firmly backed by labor from the outset, is a step toward unionizing the port drayage industry - a goal the Teamsters union has worked toward for years. Independent contractors are prohibited from joining labor unions, but as employee drivers they have the right to organize.
Bingham says it's not too late for shippers concerned about whether there will be enough trucks to haul freight out of the ports.
"(Shippers) should be prudent and pay attention to the situation so that if things deteriorate, mitigating steps can still be taken. It should be no different than monitoring the [International Longshore and Warehouse Union] situation. But I don't think it will require anything as drastic as seeking an all-water route" as an alternative.
When it comes to making sure the Wal-Marts and Best Buys are stocked in time for Thanksgiving and Christmas, Bingham says, "at the end of day, I've got to believe people are going to be rational. Nobody wants to be accused of causing the store shelves to be empty. Especially in an election year."