Jackie Mattare has been in the trucking industry for nearly two decades at the giant San Pedro port complex, and he? never been through such tough times.
Mattare? Desert Express specializes in transporting extra-heavy cargo for importers such as the Dutch brewer Heineken ?a great business before imports shrunk this year.
Then there? the ports?Clean Truck Program, which is forcing him to replace his old trucks with new ones at a cost to his company of $2.5 million or more.
?he Clean Trucks Program seemed to be a good deal for us and the environment,?said Mattare, 62, whose Long Beach firm employs 28 truckers. ?ow, their guidelines are forcing me into early retirement.?p>It looks like Mattare could have lots of company. The once eye-popping numbers of trucks and trucking companies appear to be shrinking at the ports.
The irony is that Desert Express is the type of firm expected to fare better than many in the ports?crackdown on diesel pollution. That? because the company is one of the relatively few that employs truck drivers instead of contracting with independent owner-operators.
The L.A. port has sought to ban owner-operators on the grounds they would be harder to regulate and unable to properly service their new rigs. That upends the business models of most trucking firms, which heavily use such independent operators.
The trucking industry has won a temporary injunction against the regulation, which it calls a backdoor way of allowing the Teamsters to unionize truckers. But as it turns out, the stresses of the recession are causing even trucking firms that employ drivers to struggle.
In addition to the considerable expense of buying new trucks, there? been the swoon in business. The Port of Long Beach last week reported April traffic that was 27 percent below the same month last year. Also, trucking companies are facing the strains of making payroll amid rising health insurance and workers?compensation costs.
?t is obvious that they are facing a double whammy here,?said John Husing, an economist at consulting firm Economics & Politics Inc., an expert on goods movement. ?hey likely could have dealt much easier with the downturn or the truck purchases separately, but not together.?p>
Shrinking numbers
So far it? hard to exactly determine how the port trucking industry is faring.
The two ports estimated last year that about 1,000 licensed motor carriers and 17,000 trucks driven either by owner-operators or employee drivers service the harbor.
Now, the ports are reporting that number has shrunk, but offer different figures because each port now has its own trucking registry. Currently, L.A. port officials say 847 motor carriers and about 12,000 trucks service their port, while Long Beach reports 904 companies and 15,000 trucks. Most overlap.
Many of those companies are just trying to hold on ?avoiding layoffs or closing altogether ?by cutting hours for drivers and office staff. Kathleen Dodd, owner of Atlas Marine Inc., a small Long Beach carrier, counts her firm among the struggling.
?e?e trying to do the right thing and keep our drivers so they have health insurance and benefits,?said Dodd, who employs 12 drivers. ?e small guys who are trying to do right by everyone seem to be at risk of getting lost in all this mess.?p>Exacerbating the strain is the still-tight credit market, which has made it difficult to qualify for truck loans, and the fact that the vehicle ban itself gets progressively stiffer.
Currently, the only trucks affected are those manufactured prior to 1989. Starting Jan. 1, trucks made before 1993 or equipped with engines manufactured before 2004 will be banned. In January 2012, the ban will be extended to all trucks manufactured prior to 2007.
But trucking firms said that they are facing pressure to buy the latest trucks immediately, because the ports are charging cargo owners a fee of $35 per 20-foot container if cargo is transported in rigs that do not meet 2007 emission standards.
?ven before the ban gets here, I? having to convert over (or else) I? going to lose business because clients want the lowest cost in transporting,?said Dodd. ?hile it all seems great to use the clean trucks, I? left trying to figure out how I? going to buy these trucks smartly and quickly.?p>Atlas Marine applied to Long Beach? lease-to-own program for liquefied natural gas trucks, one of the few programs available there to help finance truck purchases.
It was lucky. Earlier this month, the company received 10 new LNG trucks that cost $300 per truck per month for the first 24 months on a seven-year lease. That is just a fraction of the $1,700 monthly lease costs it was quoted by private dealers.
?t? just been so hard on us,?Dodd said. ?ut I love this industry so I? going to find a way to stay in, if I can.?p>
Limited funding
The problem is the subsidies received by Atlas Marine are only available to a minority of truckers.
So far at the Long Beach port, truck owners have received subsidies to lease just 44 clean diesel and 73 LNG trucks, with only 18 more subsidized LNG truck leases in the works, said port spokesman Lee Peterson.
Meanwhile, the L.A. port last year offered $20,000 per truck in a subsidy program so companies could buy clean new trucks that cost more than $100,000. Applications came in for 7,000 trucks, but the funding could only stretch to fund 2,200.
Earlier this month, the port again offered $44 million in $20,000 incentives, with applications to be taken within the next month. The port hopes to get at least an additional 1,000 clean trucks on the road with the funds. So far, L.A. port officials said that there are 4,500 new trucks at the port, while the smaller Long Beach port has counted 3,250.
John Holmes, the L.A. port? director of operations, said trucking companies shouldn? expect any more help given the recession and the severe budget crisis, which may force the city of Los Angeles to lay off thousands of workers.
?ny funding right now is difficult to get so we understand the smaller companies?concerns,?Holmes said. ?etting $44 million through the city of L.A. is quite an undertaking with the current climate, so it? a challenge for all of us.?p>Desert Express has the particular problem of being a specialty trucking firm. The extra-heavy loads its rigs carry require the trucks to have four axles, not the three of most big rigs. The trucks cost about $115,000 new and don? qualify for any subsidies.
? don? know if it? worth the risk of taking out the millions to get the new four-axle trucks to keep rolling,?Mattare said. ?ther trucking companies with more trucks and lower fees may swoop in anyway to take away my business. But I hate the idea of leaving the industry, and my drivers without jobs, like this.?p>Mike Ravenstahl, manager of G & D; Transportation, said his Long Beach company, which employs 18 drivers, decided to finance privately 10 new clean diesel trucks that were put in service a few weeks ago.
The company went ahead with the purchase figuring that it was inevitable he would need to get the new trucks, given that the California Air Resources Board voted last year to start imposing its own statewide ban on older trucks.
?e had no other choice,?Ravenstahl said. ?ut now having those trucks puts us at an advantage again.?p>Still, that advantage has come at a time when there is barely enough work to keep his drivers employed. It? even had to lay off an office worker.
?t? so different from just two years ago, when we didn? have enough employees for all the work. Now we have to turn down our employees from coming to work,?he said.
