Banner
Guest Editorial

California’s impending capacity crunch

By Adam Doss & Sheldon Doss

California’s impending capacity crunch

October 2012 - Capacity is a hot topic for the nation’s trucking industry. From an onslaught of regulations the last two years to a shrinking pool of older drivers, one would think trucking has enough pressure to maintain profits. In addition, California, a state that has been slow to recover from the recession, has made the situation for itself and its neighbors substantially worse. 

The biggest threat to West Coast capacity is a result of the California Air Resources Board’s aim to clean up the air quality through enforcement of emissions from diesel truck engines. The rule passed four years ago, but statewide enforcement did not begin until 2011. In the beginning of the three-year program, the first target was to remove or retrofit year 2000 or earlier engines from the roads. But, according to a November 2011 report from CalHEAT Research, 54 percent of Class 8 trucks on the road in California were older than year 2000 models. Furthermore, through vetting our own carriers, we have found that more than 60 percent of them with less than 10 trucks and single truck owner-operators have no plans to adhere to the rules and don’t have the revenue to meet these deadlines. 

California’s regulations

CARB oversees the enactment and enforcement of Assembly Bill 32, which applies to all privately and federally owned diesel trucks and buses that operate in California. On Dec. 12th , 2008, CARB approved the Truck and Bus Regulation to reduce the levels of particulate matter and nitrous oxides from diesel fueled trucks with a gross vehicle weight rating of 14,000 pounds. 

The regulation requires most operators to repower, replace or retrofit existing diesel engines to meet 0.02 grams per brake horsepower-hour of particulate matter between Jan. 1st, 2011 and Jan. 1st, 2016. Depending on the compliance strategy used, upgrade costs per unit range from $15,000 to $80,000. By Jan. 1st, 2023, all trucks and buses, with few exceptions, must have model year 2010 engines and emissions-compliant systems. 

For carriers not based in California, a three-day pass is a temporary permit that allows a fleet owner to operate one vehicle per calendar year in the state that does not meet the emission reduction requirements of the Truck and Bus Regulation. The fine for carriers in the state who do not meet the requirements is a maximum penalty of $10,000 per day, per truck. The rule also has language to include fining brokers and shippers for not using CARB-compliant carriers.

Owner-operators are not insulated from the regulation. They have 16 months before they are forced to buy or retrofit to cleaner equipment. This will create a capacity issue in California that might expand throughout the entire West Coast. Facing the current economic uncertainty, do the smaller fleets buy new trucks that are more expensive or operate as usual, putting the shipper at risk of fines?

Beyond California, in addition to the engine requirements, other federal regulations will not help the capacity issue. A regulatory measurement system called CSA (compliance, safety and accountability), which was rolled out to better use statistics of violations and crashes, has allowed the DOT to inspect unsafe carriers and owner-operators with greater accuracy. And  mandatory electronic onboard computers for all commercial vehicles are making headwinds in the DOT.

What can you do?

From a shipping standpoint, the future of rate pricing looks unfair, regardless of the economy. In the less-than-truckload shipping sector, we have seen the large common carriers increase rates an average of more than 5 percent, year over year. Our company, Doss Logistics, an LTL flatbed provider based in California, has been able to keep rate increases substantially lower than the national average during that same time period by working closely with our customer base to offset larger increases in exchange for greater volumes of freight and dedicated lanes. With the programs we have created and new services that allow better transit times to truckloads with stops, our LTL and partial freight network sends orders throughout the West Coast and its neighbors.

In the next 16 months, AB 32 will be fully enforced in California. If shippers and distributors take the time to build relationships with West Coast carrier vendors and understand the issues they face, together they will be able to lessen the impact. Shippers on the West Coast need to start vetting their smaller carriers and owner-operators to be sure they are compliant and at least have a plan or face the possibility of much higher pricing when California lowers the hammer. MM

Adam Doss & Sheldon Doss are co-owners of Doss Logistics. They oversee a large asset-based fleet, 3PL, brokerage and logistics company, headquartered in California. The companies specialize in flatbed LTL and truckloads on the West Coast.

Interested in purchasing reprints of this article? Click here

Current Issue

MM-Cover-10-14-current

October 2014

ON THE COVER: 
Gearing up for 2015
Tackling foreign policies, regulations, trade balances and capital plans, here are forecasts for virtually everything.

MM-Digital-button-current1

Subscribe: PRINT/DIGITAL MAGAZINE - eNEWSLETTERS

Midwest-MM-home-ad-5

Advertisement

Modern Metals on Twitter

White Papers

More White Papers >
Banner

Industry Partners

Alloy Bar Products

Custom Rubber Products

Metals Distribution

Service Centers

Sierra Alloys Royal Rubber Co. ThyssenKruppnMaterials NA Heidtman Steel Products

Aluminum

Cutting Software

Perforated & Expanded Metal

North American Steel Alliance
Channel Alloys SigmaTEK Systems McNichols Co. Reliance Steel & Aluminum Company

Bar

Cutting Systems

Plasma Technology

Thickness Gauges

Gerdau Messer Cutting Systems, Inc. ESAB Welding & Cutting Products Compusource Corporation

Bevelers

Drilling

Plate

Enmark Systems, Inc.
Steelmax Hougen Manufacturing, Inc. Allor Manufacturing Inc.

Stainless Steel

CNC Cutting (Plasma, Waterjet, Laser, Router)

Financial Services

Artco Group Stainless Sales Corp.
Multicam Inc. BMO Harris Bank Churchill Steel Plate Ltd Straub Metal International

Coated Coil

GE Capital Finance Ranger Steel

Stainless, Nickel, Aluminum, Pipe, Tube & Bar

American Nickeloid Metals

Investment Banking

Precision Grinding

Prudential Stainless & Alloys, L.P.
Centria Coating Services Brown Gibbons Lang & Company Joco Precision Grinding

Steel

Metal Coaters

Laser Technology

Profiling Software

ArcelorMittal

Coil Processing

AltaMAR, Inc. FastCam Pty Ltd. Central Steel Service, Inc.
Bradbury Group Amada America, Inc.

Rolled and Extruded Aluminum Products

Parker Steel Co.
Braner USA LVD Strippit Aleris Rolled Products SSAB
Burghardt + Schmidt GmbH Mitsubishi Laser-MC Machinery Systems, Inc.

Sawing Technology

Summit Steel Corporation
Butech Bliss

Machining Centers

Behringer Saws, Inc.

Steel Fabrication

Formtek-Maine Handtmann CNC Cosen International, Inc. Voortman Corporation
Herr-Voss Stamco

Material Handling

Cut Technologies Metal

Titanium

IMS Systems, Inc. Canrack Metal Center Systems DoALL Sawing Products TSI Titanium
Leveltek Samuel Strapping Systems HE&M Saw

Tooling

Machine Concepts Steel Storage Systems Inc. Kasto Carlson Tool & Manufacturing Corp.
Red Bud Industries The Caldwell Group, Inc. Metlsaw Systems

Tube & Pipe

Tishken

Metal Alloy Analysis & Verification

Sawblade.com Independence Tube Corp.

Copper & Brass

Thermo Scientific Niton Analyzers Scotchman Industries, Inc. National Tube Supply Company
Christy Metals Inc.

Metal Finishing & Deburring

Wikus Saw Technology Specialty Pipe & Tube
Farmer's Copper Supermax Tools

 

Turnkey Finishing System

 

 

 

Intellifinishing

 

 

 

Waterjet

 

 

 

TECHNI Waterjet

TrendPublishing

twitter facebook linkedin rss

 

MM-10-14-brandingcovers