Owner-operators Struggle to Keep Business Afloat

Owner-operators Struggle to Keep Business Afloat
Wednesday, March 19, 2008

Trucking’s owner-operators have been hit with high diesel prices, cut loads, and lower shipping rates. The self-employed drivers are almost going bankrupt and seem to be at the risk of losing their jobs.

The housing decline and less consumer spending have cut into loads, and the extra trucking capacity at hand is causing freight rates to spiral downward. In addition, diesel prices, which are always higher in winter, have experienced an astronomical spike, doubling over the past four years.

According to the Department of Labor, nearly 9% of the nation’s 3.4 million truck drivers are independent owner-operators. John Saldanha, who teaches logistics at Ohio State University, said that trucking will be deeply affected if owner-operators ever lose their jobs; the trucking scene will turn into a group of regional and national oligopolies that, once the economy revives, would send shipping prices higher.

On the other hand, business looks far more promising for the large public trucking companies as they have had their stocks climb since January. Big trucking companies, like J.B. Hunt Transport Services Inc. and YRC Worldwide Inc., tend to buy everything from fuel to tractors in bulk; as such, thousands of gallons of diesel are bought at a time on the commodities market to be stored later on.

In the end, owner-operators are left feeling neglected and on the fringe more than ever. In order to survive in the business, truckers call for caps on diesel prices, or tax credits for them and further constraint for intermediaries who broker truck loads.

Annually, rumors of a nationwide truck strike circulate. In January, some truckers kept their trucks off the road for a week in the hope that a week’s strike might be what they need to not ultimately lose their jobs.

Harbor Trucking Capacity in Southern California to be Cut in Half

Harbor Trucking Capacity in Southern California to be Cut in Half
March 19, 2008

The harbor trucking capacity in Southern California could experience a shortage of around 8,350 trucks and owner-operators by October due to conflicting Clean Trucks programs and the federal Transportation Worker Identification Credential program.

Addressing the 8th Annual Trans-Pacific Maritime Conference, John Husing, a Southern California economist who studied the harbor trucking scene in 2007, said that at present nearly 16,800 trucks arrive regularly at the ports, but this capacity is expected to be cut in half by this fall for three reasons: many drivers will fail to qualify for the TWIC biometric identification card, Clean Trucks programs of the ports of Long Beach and Los Angeles are conflicting with one another over the use or non-use of the employee-driver model in the harbor, and all trucks built before 1989 will be banned from the harbor by this fall as they no longer meet the ports’ new emission standards.

Qualifying for the TWIC certification requires drivers to demonstrate proof of legal residency in the United States, a requirement which, according to recent surveys conducted by Husing on behalf on the ports, may drive 15% to 22% of the drivers to not even apply for a TWIC card at all.

Confusion further surrounds the harbor trucking scene. In February, a Clean Trucks program that does not require the use of employee-drivers was approved by the Port of Long Beach. Having paired up with the Teamsters Union and pushing for the unionization of harbor trucking, the Natural Resources Defense Council has threatened to seek legal ramifications against the port over such an issue.

On the other hand, the Port of Los Angeles is expected to release, in the next few weeks, its own version of Clean Trucks program, which is expected to require the use of employee-drivers. Curtis Whalen, executive director of the American Trucking Associations’ Intermodal Motor Carriers Conference, said that thousands of owner-operators will lose their jobs if Los Angeles adopts such an employee-driver model. If the Port of Los Angeles ever releases a Clean Trucks program that requires licensed motor carriers to use only employee-drivers, the trucking industry will take legal action against the port. Whalen stated that ATA could sue the Port of Los Angeles under the federal preemption clause that asserts the federal government’s authority to regulate rates, routes, and services in interstate transportation. ATA could also resort, in its dispute with the Port of Los Angeles, to the Federal Maritime Commission, which holds the responsibility of preventing discrimination in port transportation.

To cope with such an expected shortage, Husing said that more than 1,000 trucks will be added to the harbor later this year. Husing, who previously thought that compromise was within reach, is now no longer optimistic that the ports can work out their differences and agree on a joint Clean Trucks program by the Oct 1st deadline.