By RICHARD CLOUGH
There are more than 1,000 trucking companies responsible for moving billions of dollars in goods to and from the bustling San Pedro Bay port complex, one of the main arteries supplying Orange County warehouses.
But those 1,000 companies have one big problem,a clean air plan that could put hundreds of them out of business.
After months of discussions, truckers have failed to reach a compromise with the Los Angeles and Long Beach ports over the $1.8 billion plan to junk the existing fleet of 16,000 short-haul diesel trucks and replace them with cleaner burning vehicles.
They haven’t offered an alternative that has gained any traction against the plan, which also would require independent owner-operators to become employed drivers of companies licensed to do business at the ports.
“There’s a lot of difference of opinion among the companies,” said Fred Johring, president of Golden State Logistics, a Rancho Dominguez motor carrier with about 25 trucks.
As a result, the entire port trucking industry may ultimately be subject to the will of the courts.
It’s not as though truckers don’t have a collective voice.
The California Trucking Association, the state’s largest industry trade group, has proposed that the ports simply set emissions standards and then offer a low-interest loan program that would be available to all applicants to buy new trucks. But the industry has failed to rally around the plan.
Trucking companies said that any truck replacement program is going to be expensive in the beginning when they will face a series of unknown expenses, including higher insurance and maintenance costs,even if the ports themselves come through with a proposal to subsidize costs of the new trucks, each of which will run at least $100,000.
Trucking companies don’t think they can pass that kind of expense off to retailers like they could a rate hike or surcharge that would be used to support environmental clean-up,an idea that many companies support.
But truckers legally aren’t allowed to propose a rate hike under the Sherman Antitrust Act, which prevents companies from working together to set prices.
The ports are behind a much different plan. Under the original plan, the ports would subsidize the cost of new trucks. But the trucks would have had to be operated by fewer, bigger companies which could open the door to unionized drivers. That would kill off the many little companies that contract with non-union drivers.
The ports dropped some provisions of that plan but have not given many details of what they’re now planning.
Political Pressure
Part of the reason that the plan may never have materialized was the tight timeline the ports initially set for passing its clean air plan. It was introduced in April and originally set for a vote last summer. The ports have been under political pressure from Los Angeles Mayor Antonio Villaraigosa, as well as environment and community groups, to move quickly.
Johring, who has been among the most vocal trucking company owners, said truckers were interested in the rate hike proposal, but found it impossible to pursue it given the need for an antitrust act exemption from the Department of Justice.
“We talked about trying to get antitrust immunity, but there was just no time,” he said. “The reason we’ve stood back from it is that any counterproposal would have to include pricing, which we don’t have the legal ability to talk about.”
Max Blecher, an antitrust lawyer in downtown Los Angeles, said it is rare for the government to grant such an exemption, but it has happened.
After the terrorist attacks of 2001, airlines saw passenger travel drop and fuel prices jump. A number of airlines took a financial hit and asked for and were granted temporary immunity in order to raise prices and regain their footing.
“It’s not an extraordinary thing for these immunity deals to occur in certain instances,” Blecher said. “But it’s not a routine thing.”
The difficulty with obtaining such an exemption, he said, is that motor carriers would have to prove not only that they would be severely injured by the Clean Trucks Program, but also that there are no better alternatives than colluding to raise rates. And even if they are successful, it could take six months before the ruling comes down.
Voluntary Initiative
In the meantime, Seal Beach-based Clean Energy Fuels Corp., back by legendary oil man T. Boone Pickens, opened a liquefied natural gas truck fueling station last week to serve new cleaner trucks. The station is next to trucking company Southern Counties Express Inc., which expects to launch 71 natural gas trucks in the next two months.
The trucks were partially funded by the ports’ financial aid program. Nine other companies have committed to deploying 158 trucks in the initial phase.
And other major companies are banding together to try to push environmentally friendly goods movement.
Target Corp. and Japanese shipper NYK Line Inc. joined a trucking company to form the Coalition for Responsible Transportation, a Sacramento-based group aiming to help truckers lease or purchase cleaner rigs.
The group has purchased a fleet of 100 liquefied natural gas trucks.
In accordance with the group’s mission, the two companies have said they are prepared to pay higher freight rates in order to fund the cleaner but more costly vehicles.
The coalition has encouraged others to follow suit, and two companies,Nike Inc. and Southern Counties Express,have joined the coalition. But the effort has largely failed to catch on with retailers and shippers who don’t want to voluntarily pay higher rates.
Clough is a staff writer for the Los Angeles Business Journal.
