It’s been predicted that the billion-dollar plan by the region’s twin ports to clean up their act could lead to consolidation among freight carriers. Already, at least one merger has taken place.
J & M; Express Inc., a small trucking firm in Gardena, has been acquired by Dependable Highway Express Inc., the trucking division of Dependable Logistics Services, a family-owned transportation and logistics company based near downtown Los Angeles.
Michael Rapp, the former owner of J & M;, said he knew he would be unable to buy a new fleet of cleaner trucks as is required by the ports’ Clean Trucks Program, especially given the $100,000 cost of each vehicle.
“I just saw the writing on the wall. I knew I couldn’t get the financing,” said Rapp. “I was looking for something secure and Dependable was just that. They do more than just trucking, like warehousing and air freight, which I think makes them more stable.”
Rapp said his decision was cemented by the worldwide economic slowdown, which cut cargo shipments by double digits in the last few months and creating more competition among motor carriers for the remaining business.
He ended up at the doorstep of Dependable, and after a few months of negotiation, the two companies just announced a deal in March. It will allow J & M;’s 45 independent owner-operator drivers to stay on, as well as most of the administrative staff. Rapp took the position of director of intermodal business development at the merged company.
The deal allowed Dependable to move all of its port operations to J & M;’s former headquarters in Gardena, closer to the harbor than Dependable’s previous location in Commerce. J & M; is the 11th company Dependable has acquired since 2000, said Chief Executive Ron Massman.
“We chose J & M; because their container drayage and harbor operations were highly compatible with ours,” said Massman. “Now we can operate closer to the ports, which cuts down some transportation costs, so we’re pretty lucky to have that option amid this climate.”
Consolidation is likely in the regional trucking industry over the next couple of years, said Julie Sauls, a spokeswoman for the California Trucking Association, based in Sacramento.
“We’ve been hearing more and more about trucking companies looking to save and share costs by consolidating,” Sauls said. “With so many regulations on the horizon, from the state level to a local level with the Clean Trucks Program, trucking companies are not all going to be able to meet the cost of staying in business in California.”
Off Track?
After three years of delays, the Metropolitan Transit Authority might backtrack on a deal with AnsaldoBreda Inc., an Italian firm contracted to provide up to 150 Metro rail cars at a potential cost of $300 million.
But if transit officials don’t pull the plug, one big reason would be the company’s pledge to assemble the cars at a new local plant that would create as many as 1,500 local jobs.
Top agency officials have been critical of AnsaldoBreda’s handling of a contract to build 50 light rail cars for the Gold Line extension. Only 17 of the 50 were deemed by the MTA to be usable, and the rest are 6,000 pounds too heavy or incompatible with the rest of the rail fleet, according to Marc Littman, an MTA spokesman.
But after pleas by Mayor Antonio Villaraigosa and the rail company’s chief executive, Salvatore Bianconi, the board voted to give AnsaldoBreda until the end of May to address the MTA’s concerns.
In an effort to retain the contract, Bianconi wrote a letter to the MTA’s board that the company would assemble the cars here, though not manufacture them as some had believed. The plant, he said, would create 850 to 1,500 jobs either directly or indirectly.
Still, the board could vote to cancel the contract and shop for proposals from other companies closer to Los Angeles. Littman said the MTA needs almost 200 new rail cars by 2017 for both the Metro rail and light rail lines.
Bus-tling Business
In other transit news, municipal bus operators in Los Angeles County are slated to get more than $81 million from the stimulus package recently passed by Congress and it should be a boon to local companies.
Foothill Transit, which services communities in the San Gabriel and Pomona valleys, stands to gain the most at $21 million, with Long Beach getting $16 million and Santa Monica $13 million.
By law, these funds are to be used exclusively for capital projects, such as engines, and bus-stop and other improvements, but not for daily operating expenses.
Funds should start rolling in by late summer and various transit agencies are looking for local companies to contract with, said Stephanie Negriff, director of transit services for Santa Monica’s Big Blue Bus.
Santa Monica is buying 16 gasoline-electric hybrid buses manufactured by ElDorado National, based in Riverside.
Staff reporter Francisco Vara-Orta can be reached at [email protected] or (323) 549-5225, ext. 241.
