Post by truckerusa on Aug 30, 2008 19:17:24 GMT -5
check out this story.
Truckers Grind Gears Over Subsidies
By RICHARD CLOUGH - 9/1/2008
Los Angeles Business Journal Staff
A recent move by the Port of Los Angeles to spur interest in its fast-approaching program to replace old diesel trucks is drawing outrage from small local motor carriers that believe they are being unfairly driven out of the port freight business.
The port unexpectedly approved a pair of incentive programs Aug. 21 that would award as much as $30,000 per truck to motor carriers operating less-polluting new diesel rigs as a way to encourage them to service the port.
But since most of the small local trucking companies will have to pay tens of thousand of dollars to buy new trucks, they are at a distinct disadvantage to larger firms, some motor carriers say.
“I’m disgusted that (officials) are taking port money and funding someone who is not a player at the port now and completely ignoring people who have served the port for several decades,” said Fred Johring, president of Rancho Dominguez-based motor carrier Golden State Logistics. “People ought to be appalled. It’s going to seriously disadvantage the small trucker.”
The new incentives were prompted, officials said, by concerns that there will not be enough approved short haul trucks when the program starts Oct. 1. On that date, all trucks built before 1989 will be banned from the port. Even cleaner trucks will be required in the future.
However, the result has been that at least three big out-of-state motor carriers that have new fleets already meeting the program’s guidelines are in line to receive millions of dollars in subsidies – while taking work away from smaller, local carriers.
Secaucus, N.J.-based National Retail Systems Inc. and Swift Transportation Co. and Knight Transportation Inc., both of Phoenix, have signed up for the program. The latter two companies currently have a combined 200 trucks already servicing the ports.
In parting ways with other trucking companies, those out-of-state carriers also have broken ranks with the American Trucking Association, a national trade group which has sued the port claiming the truck replacement program violates federal law.
Meanwhile, smaller local trucking companies say the way the port’s incentives are now structured is tilted in favor of large carriers, some of whom not only may be out of state but may even have never served the ports.
Also, many of the smaller carriers have long claimed that the Port of Los Angeles wants big truck companies to operate there, instead of drivers who are independent owner-operators. That way, some motor carriers say, a union can organize the workers.
As recently as early August, no motor carriers had begun the sign-up process for the Clean Truck Program. But with the new incentives, that logjam appears to be breaking up.
“It’s fair to say there was concern at the ports that they would throw a party and no one would come,” said David Pettit, a senior attorney with the Natural Resources Defense Council, an influential environmental group that has fought to reduce port pollution. “That fear has proved to be unfounded. There are plenty of people who want to come to the party.”
Port officials have noted that at least 40 motor carriers are in the process of signing up to service the port under the program, and the majority of those are local small motor carriers.
In addition, they note, the ports previously committed to subsidize as much as 80 percent of the cost of new clean diesel rigs for every motor carrier that participates in the program. For that reason, officials have said, the incentive program does not favor larger companies.
“There is somebody out there that doesn’t like just about everything,” said John Holmes, director of operations for the Port of Los Angeles, dismissing criticism the incentive system is unfair. “We’ve made all these programs available to all the companies.”
However, with the new rigs costing roughly $100,000, that still means that companies operating dirtier rigs will have to pay the $20,000 difference for each new rig they buy. That would put the smaller companies at a tremendous cost disadvantage to the bigger carriers with existing new fleets that are getting money under the new program, trucking officials say.
Currently, the best estimate is that about 1,000 motor carriers operate about 16,800 short haul, or so-called drayage, trucks to and from local destinations. The program would not apply to the far smaller number of trucks that haul freight out of state.
Paul Bingham, an economist and trade analyst with Global Insight Inc., a Waltham, Mass.-based consultancy, said that under the terms of the incentive program it’s clear that large numbers of small carriers will be forced out of business.
“The composition of the people serving the port will change. It’s inevitable that some of the people there will be put out of business,” said Bingham. “The ports are sort of with a carrot and a stick saying, ‘Hey, you might get shut out or you might go out of business if you don’t comply on our terms.’”
Changing rules
The landscape is rapidly changing for local companies that believed until recently that they could gain leverage over the ports by refusing to sign up for the program.
They’ve also been counting on a lawsuit from the American Trucking Association that was filed July 29 in U.S. District Court in Los Angeles.
The 37,000 member industry trade group has taken issue with the ports’ requirement that companies obtain concessions to continue working in the harbor. The concessions would force companies to open their financial records for vetting and give the ports say over which company can and cannot haul cargo, something the ATA claims is illegal regulation of the industry.
The ATA did not return calls for comment.
Many companies had planned to wait to see if the ATA could obtain an injunction blocking all or part of the program before deciding whether to submit applications. But unless a federal court judge issues the injunction at an upcoming Sept. 8 hearing or soon thereafter, an influx of new trucks by big carriers could render moot much of the lawsuit as it winds through court.
Both Knight and Swift are members of the trade group, and Swift Vice President David Berry said the ATA raises legitimate issues. But for Swift, the decision to join the program came down to what made sense for the company.
“We’re members of the American Trucking Association and we think there are some legitimate issues with the program,” he said. “I only know about Swift and (the program) looked like a fair arrangement for Swift. It made sense for us both from a business perspective and a customer perspective. What we’re trying to do is provide service to our customers in an environmentally sound way.”
While Swift and Knight currently operate only about 200 trucks at the ports, the companies plan on upping that total to roughly 2,000 rigs, which would displace other carriers.
Port officials originally planned to limit the number of carriers to fewer than a dozen large players in order to more easily administer the program. They dropped that provision amid outrage from small carriers, but the ports have not shaken the perception that they favor large companies.
“There’s been this assertion that we’re not friendly to small companies and we’re big-company centric, but it’s the desire of the port to make sure that the companies that do drayage are responsible companies,” Holmes said. “We want responsible companies; we don’t care how many.”
Surprise incentives
Still, many local companies feel slighted by the way the ports handled the incentive programs, which will offer companies $20,000 for each privately funded truck meeting 2007 emission standards, as well as $10 per cargo move for those new trucks that visit the ports at least 600 times per year. That per-cargo fee will be capped at $10,000, which means many of those trucks will get a $30,000 bounty.
The incentives, officials said, were necessary because there was previously nothing to encourage companies already operating clean trucks to join the program.
Knight Chief Executive Kevin Knight acknowledged that he has been talking with port officials for months about the outlines of some kind of incentive program.
“The Port of Los Angeles has spent a lot of time with us over the last few months,” said Knight, who insisted the structure of the program is fair because his company has served the ports for years even though it is not locally based. “We’ve been there serving with them for the last 18 years and we are just going to continue to provide that service.”
However, a number of smaller local motor carriers said they were completely unaware that such talks were going on and should have been informed of the incentives before the Board of Harbor Commissioners passed them with little prior public notice.
“I’m shocked that they can do that without an RFP or without public notice or without generally offering it to the industry. It’s always been an under-the-table deal,” said Johring, who said some local trucking executives are considering pursuing a class-action lawsuit against the port over the incentives.
However, the opponents of the program will have to deal with dissension in their ranks.
Hawthorne-based All Cartage Transportation Inc., which has 35 total trucks and just 12 in service at the port, is in the process of signing up for the program and are in the process of ordering new trucks that will qualify for the 80 percent subsidy.
All Cartage President George Aiello said he is not completely satisfied with the port’s plan, but he did not want to lose his business when the program begins. Ultimately All Cartage will have to buy all new trucks but for now is only replacing a few of the oldest that won’t meet the Oct. 1 requirements.
“We needed to sign up to make sure that we can continue our relationship with the two ports,” he said. Aiello added that as some companies fold under the new financial burdens, he expects to be able to grow and capture new customers.
But experts say that kind of pragmatism could shatter any hope of a unified opposition to the program, hampering the industry’s ability to fight back against particular elements of the ports’ plans. Bingham, of Global Insight, said most motor carriers are driven less by the idealism of the ATA and more by what will benefit them individually.
“The trucking industry has been notoriously diverse and not necessarily speaking with one voice,” he said.
Truckers Grind Gears Over Subsidies
By RICHARD CLOUGH - 9/1/2008
Los Angeles Business Journal Staff
A recent move by the Port of Los Angeles to spur interest in its fast-approaching program to replace old diesel trucks is drawing outrage from small local motor carriers that believe they are being unfairly driven out of the port freight business.
The port unexpectedly approved a pair of incentive programs Aug. 21 that would award as much as $30,000 per truck to motor carriers operating less-polluting new diesel rigs as a way to encourage them to service the port.
But since most of the small local trucking companies will have to pay tens of thousand of dollars to buy new trucks, they are at a distinct disadvantage to larger firms, some motor carriers say.
“I’m disgusted that (officials) are taking port money and funding someone who is not a player at the port now and completely ignoring people who have served the port for several decades,” said Fred Johring, president of Rancho Dominguez-based motor carrier Golden State Logistics. “People ought to be appalled. It’s going to seriously disadvantage the small trucker.”
The new incentives were prompted, officials said, by concerns that there will not be enough approved short haul trucks when the program starts Oct. 1. On that date, all trucks built before 1989 will be banned from the port. Even cleaner trucks will be required in the future.
However, the result has been that at least three big out-of-state motor carriers that have new fleets already meeting the program’s guidelines are in line to receive millions of dollars in subsidies – while taking work away from smaller, local carriers.
Secaucus, N.J.-based National Retail Systems Inc. and Swift Transportation Co. and Knight Transportation Inc., both of Phoenix, have signed up for the program. The latter two companies currently have a combined 200 trucks already servicing the ports.
In parting ways with other trucking companies, those out-of-state carriers also have broken ranks with the American Trucking Association, a national trade group which has sued the port claiming the truck replacement program violates federal law.
Meanwhile, smaller local trucking companies say the way the port’s incentives are now structured is tilted in favor of large carriers, some of whom not only may be out of state but may even have never served the ports.
Also, many of the smaller carriers have long claimed that the Port of Los Angeles wants big truck companies to operate there, instead of drivers who are independent owner-operators. That way, some motor carriers say, a union can organize the workers.
As recently as early August, no motor carriers had begun the sign-up process for the Clean Truck Program. But with the new incentives, that logjam appears to be breaking up.
“It’s fair to say there was concern at the ports that they would throw a party and no one would come,” said David Pettit, a senior attorney with the Natural Resources Defense Council, an influential environmental group that has fought to reduce port pollution. “That fear has proved to be unfounded. There are plenty of people who want to come to the party.”
Port officials have noted that at least 40 motor carriers are in the process of signing up to service the port under the program, and the majority of those are local small motor carriers.
In addition, they note, the ports previously committed to subsidize as much as 80 percent of the cost of new clean diesel rigs for every motor carrier that participates in the program. For that reason, officials have said, the incentive program does not favor larger companies.
“There is somebody out there that doesn’t like just about everything,” said John Holmes, director of operations for the Port of Los Angeles, dismissing criticism the incentive system is unfair. “We’ve made all these programs available to all the companies.”
However, with the new rigs costing roughly $100,000, that still means that companies operating dirtier rigs will have to pay the $20,000 difference for each new rig they buy. That would put the smaller companies at a tremendous cost disadvantage to the bigger carriers with existing new fleets that are getting money under the new program, trucking officials say.
Currently, the best estimate is that about 1,000 motor carriers operate about 16,800 short haul, or so-called drayage, trucks to and from local destinations. The program would not apply to the far smaller number of trucks that haul freight out of state.
Paul Bingham, an economist and trade analyst with Global Insight Inc., a Waltham, Mass.-based consultancy, said that under the terms of the incentive program it’s clear that large numbers of small carriers will be forced out of business.
“The composition of the people serving the port will change. It’s inevitable that some of the people there will be put out of business,” said Bingham. “The ports are sort of with a carrot and a stick saying, ‘Hey, you might get shut out or you might go out of business if you don’t comply on our terms.’”
Changing rules
The landscape is rapidly changing for local companies that believed until recently that they could gain leverage over the ports by refusing to sign up for the program.
They’ve also been counting on a lawsuit from the American Trucking Association that was filed July 29 in U.S. District Court in Los Angeles.
The 37,000 member industry trade group has taken issue with the ports’ requirement that companies obtain concessions to continue working in the harbor. The concessions would force companies to open their financial records for vetting and give the ports say over which company can and cannot haul cargo, something the ATA claims is illegal regulation of the industry.
The ATA did not return calls for comment.
Many companies had planned to wait to see if the ATA could obtain an injunction blocking all or part of the program before deciding whether to submit applications. But unless a federal court judge issues the injunction at an upcoming Sept. 8 hearing or soon thereafter, an influx of new trucks by big carriers could render moot much of the lawsuit as it winds through court.
Both Knight and Swift are members of the trade group, and Swift Vice President David Berry said the ATA raises legitimate issues. But for Swift, the decision to join the program came down to what made sense for the company.
“We’re members of the American Trucking Association and we think there are some legitimate issues with the program,” he said. “I only know about Swift and (the program) looked like a fair arrangement for Swift. It made sense for us both from a business perspective and a customer perspective. What we’re trying to do is provide service to our customers in an environmentally sound way.”
While Swift and Knight currently operate only about 200 trucks at the ports, the companies plan on upping that total to roughly 2,000 rigs, which would displace other carriers.
Port officials originally planned to limit the number of carriers to fewer than a dozen large players in order to more easily administer the program. They dropped that provision amid outrage from small carriers, but the ports have not shaken the perception that they favor large companies.
“There’s been this assertion that we’re not friendly to small companies and we’re big-company centric, but it’s the desire of the port to make sure that the companies that do drayage are responsible companies,” Holmes said. “We want responsible companies; we don’t care how many.”
Surprise incentives
Still, many local companies feel slighted by the way the ports handled the incentive programs, which will offer companies $20,000 for each privately funded truck meeting 2007 emission standards, as well as $10 per cargo move for those new trucks that visit the ports at least 600 times per year. That per-cargo fee will be capped at $10,000, which means many of those trucks will get a $30,000 bounty.
The incentives, officials said, were necessary because there was previously nothing to encourage companies already operating clean trucks to join the program.
Knight Chief Executive Kevin Knight acknowledged that he has been talking with port officials for months about the outlines of some kind of incentive program.
“The Port of Los Angeles has spent a lot of time with us over the last few months,” said Knight, who insisted the structure of the program is fair because his company has served the ports for years even though it is not locally based. “We’ve been there serving with them for the last 18 years and we are just going to continue to provide that service.”
However, a number of smaller local motor carriers said they were completely unaware that such talks were going on and should have been informed of the incentives before the Board of Harbor Commissioners passed them with little prior public notice.
“I’m shocked that they can do that without an RFP or without public notice or without generally offering it to the industry. It’s always been an under-the-table deal,” said Johring, who said some local trucking executives are considering pursuing a class-action lawsuit against the port over the incentives.
However, the opponents of the program will have to deal with dissension in their ranks.
Hawthorne-based All Cartage Transportation Inc., which has 35 total trucks and just 12 in service at the port, is in the process of signing up for the program and are in the process of ordering new trucks that will qualify for the 80 percent subsidy.
All Cartage President George Aiello said he is not completely satisfied with the port’s plan, but he did not want to lose his business when the program begins. Ultimately All Cartage will have to buy all new trucks but for now is only replacing a few of the oldest that won’t meet the Oct. 1 requirements.
“We needed to sign up to make sure that we can continue our relationship with the two ports,” he said. Aiello added that as some companies fold under the new financial burdens, he expects to be able to grow and capture new customers.
But experts say that kind of pragmatism could shatter any hope of a unified opposition to the program, hampering the industry’s ability to fight back against particular elements of the ports’ plans. Bingham, of Global Insight, said most motor carriers are driven less by the idealism of the ATA and more by what will benefit them individually.
“The trucking industry has been notoriously diverse and not necessarily speaking with one voice,” he said.
