Post by HardTimeTrucker on Mar 19, 2009 15:28:53 GMT -5
Drivers, Drayage and Shortages
David Bensman
Two responses to your March 6 blog, "A Puzzling Port Report". First, I made a mistake in referencing the ICC Termination Act. As you point out, I should have referenced the Motor Carrier Act of 1980.
Second, I think your comments denying that there was a shortage of port truckers in New Jersey and at other American ports between 2002-2008 are incorrect. You state that anyone who knows Economics 101 would know that if there was a shortage of drivers, companies would raise rates to attract additional drivers.
This is incorrect. Economists have developed the idea of “market failure” extensively. I suggest you look at the study by John Husing, Peter Crosby and Thomas Brightbill entitled “San Jose Bay Ports Clean Air Action Plan: Economic Analysis.” Right in the executive summary, the report states: “As the port drayage sector is currently organized, neither the Licensed Motor Carriers nor their Independent Owner Operators have the financial strength to solve the new challenges facing them. The lack of barriers to netry into the sector has led to ferocious price competition and left them with little bargaining power vis-à-vis the shipping lines and beneficial cargo owners for whom they work. This has left the firms in the sector with low net incomes and little net worth. Thus, the LMCs do not have the internal ability to lure them into the field.”
Third, you say my description of a labor shortage do not jibe with reality. My report was based on surveys conducted in March of 2008. At that time, most trucking firms had signs up saying “Drivers Wanted.” Despite the labor shortage, independent contractors were making only $28,000 a year net. This figure is consistent with Kristen Monaco’s findings for independent contractors in Los Angeles and Long Beach, and with other studies at Oakland, Seattle, Vancouver and Miami.
Today, a year later, the situation is different. Now shipping is down, and truckers are suffering from a lack of orders. The one thing that remains the same is the fact that independent operators are still struggling to make ends meet, and they still lack the financial wherewithal to modernize their vehicles.
David Bensman
Rutgers University
David Bensman
Two responses to your March 6 blog, "A Puzzling Port Report". First, I made a mistake in referencing the ICC Termination Act. As you point out, I should have referenced the Motor Carrier Act of 1980.
Second, I think your comments denying that there was a shortage of port truckers in New Jersey and at other American ports between 2002-2008 are incorrect. You state that anyone who knows Economics 101 would know that if there was a shortage of drivers, companies would raise rates to attract additional drivers.
This is incorrect. Economists have developed the idea of “market failure” extensively. I suggest you look at the study by John Husing, Peter Crosby and Thomas Brightbill entitled “San Jose Bay Ports Clean Air Action Plan: Economic Analysis.” Right in the executive summary, the report states: “As the port drayage sector is currently organized, neither the Licensed Motor Carriers nor their Independent Owner Operators have the financial strength to solve the new challenges facing them. The lack of barriers to netry into the sector has led to ferocious price competition and left them with little bargaining power vis-à-vis the shipping lines and beneficial cargo owners for whom they work. This has left the firms in the sector with low net incomes and little net worth. Thus, the LMCs do not have the internal ability to lure them into the field.”
Third, you say my description of a labor shortage do not jibe with reality. My report was based on surveys conducted in March of 2008. At that time, most trucking firms had signs up saying “Drivers Wanted.” Despite the labor shortage, independent contractors were making only $28,000 a year net. This figure is consistent with Kristen Monaco’s findings for independent contractors in Los Angeles and Long Beach, and with other studies at Oakland, Seattle, Vancouver and Miami.
Today, a year later, the situation is different. Now shipping is down, and truckers are suffering from a lack of orders. The one thing that remains the same is the fact that independent operators are still struggling to make ends meet, and they still lack the financial wherewithal to modernize their vehicles.
David Bensman
Rutgers University
