Bob Massman, co-owner and vice
president of L.A. trucking company Dependable Logistics Services, is on board with being environmentally friendly, and he’s spent truckloads of money to get his diesel-powered fleet in compliance with state and local environmental regulations.
But now he and other trucking executives are worried they’ll have to spend even more – before they recoup what’s been spent already – on yet another round of environmental requirements.
Gov. Jerry Brown announced in July that he wants freight vehicles in the state to be emission free or nearly so and to be powered by renewable energy sources. His executive order doesn’t give a deadline for those requirements, but it tells state transportation and environmental agencies they have a year to come up with a plan on how to bring the goals to fruition.
Even without a deadline, the possibility of having to invest in yet another round of new, cleaner – and expensive – equipment has Massman thinking about heading on down the road.
“That’s when you say, ‘Wait a minute. We just spent a million dollars doing this,” he said. “We have 14 terminals, including one in Arizona and two in Nevada. I’m starting to think I could operate much cheaper there.”
California Trucking Association, a Sacramento trade organization, called Brown’s announcement the latest example of years of costly regulations plaguing trucking companies that haven’t yet recuperated from the last round.
“I think the main point is that truckers are spending $1 billion a year on existing environmental mandates that are contributing greatly to cleaning the air,” said Chris Shimoda, director of policy for the association. “However, the rules of the game are now changing again.”
Industry impact
Because it’s reliant on fossil fuels, the state’s freight industry contributes to poor air quality and greenhouse gas emissions, according to the California Air Resources Board, one of the agencies required under Brown’s order to help form the state’s new sustainable freight strategy. The board and other agencies argue the freight industry isn’t going to become environmentally sustainable on its own.
Trucks are not alone in Brown’s vision. The order will also affect ships, locomotives, aircraft and other equipment that haul the state’s freight.
But trucking companies, which are generally smaller than their counterparts in the ocean shipping business, could be the hardest hit. Already, trucking businesses have found that environmental regulations that require them to buy new technology have not only been costly but often prove to be nuisances that harm operations.
In one example, after requirements mandated in 2008, Massman said that his company spent about $35,000 to retrofit engines of refrigerated trucks to make them run cleaner. But new devices installed during the retrofit damaged the engines and cost Dependable thousands of dollars more to replace.
In another case, the company bought six trucks fueled by liquid natural gas, a fuel that burns cleaner than diesel. Though three of those trucks were subsidized by regulators, Massman said the money spent wasn’t worth it. The trucks, which cost about $130,000 each, are prone to frequent breakdowns. They can leak gas and have to be towed to natural gas fueling stations to be refilled.
The LNG trucks have only about 150,000 miles on them – young for trucks – and Massman wants to sell them, but he can’t because of the trucks’ bad reputation.
“It costs a fortune and is a nightmare,” he said. “We’re still stuck with them.”
Now, Brown’s call for zero- and near-zero-emission vehicles threatens to devalue Massman’s latest investment.
Two years ago, Dependable spent $9 million on 85 new trucks, ones with cleaner-burning engines needed to comply with state environmental regulations. If those trucks are barred from the road under Brown’s proposed rules, Massman would have to replace them, and he said he likely won’t get much of his initial investment back.
After all, he wouldn’t be able to sell the trucks in California because they would be noncompliant. Selling them in other states wouldn’t bring him a fair price, both because trucking companies in states with lower environmental standards wouldn’t pay a premium for the cleaner-burning engines and because California trucking companies would be flooding the market as they tried to unload trucks of their own.
“If all of a sudden I had to replace trucks, that would bring down the value, because everybody would know I had to get rid of them,” Massman said.
Taking a loss
It’s a similar story at Liberty Linehaul West Inc. of Montebello. President Greg Dubuque said the company bought 12 trucks in 2012 for $1.8 million to comply with statewide air quality requirements. He also just bought three new trucks – at $162,000 apiece.
Liberty had already spent $20,000 to rebuild model year 2005 and 2006 truck engines to make them comply with new regulations, only to have the regulations change again to require trucks made in 2007 or after. The company had to sell the trucks before recouping the retrofit costs, Dubuque said. Those retrofitted trucks? He bought them new for $115,000 apiece but sold them for just $23,000 each.
“Those retrofitted trucks turn people away,” Dubuque said.
Trucking companies that want to embrace zero- or near-zero-emission trucks will be hard-pressed to find the technology, should Brown’s sustainable freight strategy have a deadline that comes quickly, said trucking company executives and diesel fuel experts. Dubuque agreed, saying freight-hauling trucks with that equipment are just not available now.
“Zero-emission technology is being used for small, lightweight and nimble deliveries – where trucks can come back to home base, two to three times a day and the truck doesn’t do heavy weights and large mileage,” he said. “The technology just doesn’t exist in a tractor-trailer technology.”
But Heather Arias, chief of the Air Resources Board’s freight transport branch, said there is – or soon will be – cleaner freight-hauling equipment on the market.
“There are a multitude of technologies currently available or will be available in the near future to help transition California’s freight transport system to one powered with zero and near-zero equipment that is fueled by renewable fuels,” she said.
A report from the board mentions
some technology available now, such as aerodynamic side panels on a truck’s trailer and improve fuel efficiency. But the report notes that other technology, such as an experimental truck that aims to be 50 percent more fuel efficient than current benchmarks, might not be commercially available for another decade.
With no feasible technology out there to meet Brown’s mandate and the potential for more costs to comply somehow with the order, Dubuque said he feels blindsided.
“We’re in the middle of the game and they’ve just totally changed the rules,” he said. “The technology doesn’t exist; it’s not something you can look at as an option. These 2016 trucks (that I just bought), it might be two to three years out of when this executive order takes place. That scares me.”
