Truckers Drive Away From Battle at Ports

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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.


Yet instead of finding strength in numbers, the companies have found themselves virtually powerless as they have unsuccessfully fought a clean air plan that could put hundreds of them out of business.


Chalk at least some of that disarray up to a not-so-obscure federal law: the Sherman Antitrust Act, which prevents companies from colluding on prices, among other prohibitions.


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.


Nor have they offered an alternative that has gained any traction against the plan, which also would require independent owner-operators to become employee drivers of companies licensed to do business at the ports.


“There’s a lot of difference of opinion among the companies,” admits Fred Johring, president of Golden State Logistics, a Rancho Dominguez motor carrier with about 25 trucks. “I don’t think we can sit down and try to get consensus.”


As a result, the entire port trucking industry may ultimately be subject to the will of the courts, whatever that may be.


And 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 contend that any truck replacement program is going to be hard going 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.


Instead, several local motor carriers have at least verbally proposed at public meetings a plan that would involve the local trucking industry agreeing to a consistent rate hike or surcharge it could slap on hauled freight for at least a short time.


Truckers say the extra money which essentially would come from retailers and likely passed off to consumers in the form of higher retail prices also would attack the issue of the carrier’s historically thin margins.


However, given that such a proposal would run up against the Sherman act, the companies proposed that the ports ask the federal government for a temporary exemption from the antitrust law. After about six to 12 months, the truckers say the market will work itself out and freight rates should climb high enough to support them.


However, the trucking industry never developed a formal plan, nor formally asked the ports to pursue an exemption. Los Angeles Harbor Commission President David Freeman said the idea was just one that was bandied about in public discussions but failed to come to fruition.


“It’s been very useful for me to hear different points of view,” he said. “We’re listening to everybody, but that doesn’t mean we can please everybody.”


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 L.A. 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,”


Julie Sauls, vice president of legislative affairs for the 2,300-member California Trucking Association, agreed that the idea failed to materialize. She said truckers figured the ports would take a lead on asking for an exemption.


“It was brought up as an idea for the ports to ask,” Sauls said.


Max Blecher, an antitrust lawyer in downtown Los Angeles, said it is rare for the government to grant such an exemption but not unprecedented.


After the terrorist attacks of Sept. 11, 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,” he 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

As a result, the best the trucking industry has so far come up with has been a response by several major companies banded together to try to push environmentally friendly goods movement.


Big box retailer 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.


Thus far, the group has purchased a fleet of 100 liquefied natural gas trucks to be used in the local ports.


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 decidedly more costly vehicles.


The coalition has encouraged others to follow suit, and two companies Beaverton, Ore.-based athletic shoe and apparel retailer Nike Inc. and local motor carrier Southern Counties Express Inc. 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.


Both ports set a tentative deadline of Dec. 14 to vote on the program, which in its current form would ban dirty diesel trucking, starting with pre-1989 models in October. However, that vote may be delayed until early next year.

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