Michael Lightman has been president of Great Freight Inc. for six years now, yet he doesn't even know if he will have a job next year.
Lightman fears his 60-rig Long Beach trucking company which operates on thin margins could be put out of business by a plan developed by the Los Angeles and Long Beach ports to clear San Pedro's smoggy skies.
The $1.2 billion proposal, which would retrofit or replace all of the estimated 16,000 short-haul trucks servings the ports, would be partly funded by a trucker entrance fee of perhaps $40.
That, Lightman figures, could just about wipe out his company's profit on many trips.
"We can't very well plan for our future now," he said. "There are so many dynamics in this expected change that there's no knowing where things are going to settle down."
Lightman is not alone in his uncertainty.
Hundreds if not 1,000 or more motor carriers could be shuttered next year as a result of the ports' wide-ranging Clean Trucks Program aimed at reducing diesel emissions by some 80 percent, according to the trucking industry.
At issue, aside from the entrance fee, is that of the 1,300 carriers who serve the ports, virtually all of them contract with independent drivers. Those drivers not only set their own work schedules but pay their own fuel, maintenance, insurance and health care costs.
But under the proposal unveiled in April and set for a July vote by the ports the motor carriers will be required to hire the drivers as regular employees. Port officials say that will make it far easier to ensure the retrofits and other requirements of the program are carried out, while labor activists say it will improve truckers' working conditions and compensation.
However, the carriers contend the program will radically drive up costs, and force many of the smaller trucking companies out of business, essentially consolidating what has largely been a mom and pop industry. They also contend employee status will limit drivers' freedom, reduce pay and make port trucking less efficient.
"You're talking about hundreds of companies out there that don't even know right now whether they'll be allowed to do business," said Kevin Dukesherer, director of Progressive Transportation Services Inc., a Bell-based motor carrier with about 175 trucks in California.
Lightman, who has been president of Great Freight since its founding, said he is unsure how he will be able to continue operating his business if the program goes into effect.
The ports have said that as the program is phased in over a five-year period, trucks that do not meet the strict new emission reduction requirements will be required to pay a fee of about $40 every time they enter the port.
But Lightman said on many trips he already barely makes a profit. For example, when his drivers deliver cargo to Ontario, the company makes between $70 and $80, on top of the several hundred dollars the driver takes home.
If he loses half of his company's profit to a port fee, Lightman said it will no longer be practical to deliver to the Inland Empire city, which is a major warehouse center. And Lightman said the company cannot simply raise its rates because customers will just find another carrier to do it for less money.
"What do they care? They just want the truck moving from A to B," said Lightman, who added he has avoided broaching the subject of rising rates with his customers because "I don't want to spook them."
The ports acknowledged they developed the plan without the input of all stakeholders initially, but since being released have talked to interested parties, including trucking companies, environmentalists and labor unions, such as the International Brotherhood of Teamsters (which has publicly stated it will try to organize employee truckers.)
However, port officials acknowledge that none of the more than 1,000 trucking companies has come forward in support of the plan. "I haven't seen any formal letters or other communication from a single motor carrier," said Paul Johansen, assistant director of environmental management for the Port of Los Angeles.
Indeed, many motor carriers remain skeptical of the plan and contend it was developed without the trucking industry's consultation.
"This whole plan was conceived without any trucking input at all," said Ron Guss, president of Pico Rivera-based Intermodal West Inc. "We have not been privy to anything that the ports have been proposing, the fine details of it. We don't know anything yet.
"And here it is almost the end of June, and they're going to vote on it in July. We'll hear the results at the end of July and then we're going to change the entire business model," he said.
Johansen acknowledged resistance from motor carriers, but said the plan could change from the current version. The ports also note they are kicking in $200 million to help pay for the conversions and new trucks.
"We've made a public commitment to adjust the program as necessary to ensure an adequate supply of trucks," Johansen said. "All the elements here are open for discussion."
Indeed, Lightman said he has talked with other small trucking companies about developing an alternative proposal, though he would not disclose any details. But the extent to which the program's elements could change does not appear to be great.
In a May interview with the Business Journal, Long Beach Harbor Commission President James Hankla said, "We have not locked it up in concrete yet but we've pretty much zeroed in on where we want to go."
Given that kind of attitude, many carriers at this point are simply trying to figure out how to make a go of it.
Looking for real estate
In preparation for the implementation of the program, which would begin in January 2008, Guss said his company, which has 85 trucks in Southern California, has begun to calculate the expected costs.
In order to remain profitable, he said, drayage rates for transporting goods to and from the ports would have to triple. This will hurt small importers disproportionately, Guss said, and whatever the increase may be, it will likely be passed on to the consumer.
"Ultimately, when you go buy a pair of Nikes, you're not going to pay $100, you're going to pay $125. That's what it comes down to," he said. "However it washes out, the consumer will foot the bill."
Progressive Transportation Services, as one of the larger carriers serving the ports, expects to survive the program, but not without taking a severe financial hit itself in the early going.
Like other motor carriers, Dukesherer said additional costs will come as he has to start paying his new employees benefits such as health insurance and workman's compensation, which can run as high as 30 cents on the dollar for truckers.
And then there is the issue of where to store all those new and retrofitted trucks, which his current batch of independent operator drivers take home with them every night.
"I would certainly have to get a facility," he said. "The biggest problem is the availability of those types of facilities in the harbor area are basically nonexistent."
Dukesherer estimated that the cost just to lease the property on which to build the facility could run between $30,000 and $40,000 a month an expense he said is looking increasingly likely. "What's my alternative?" he asked. "My alternative is going out of business."
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