Posts Tagged “CARB”
California’s Air Resources Board (CARB) issued regulatory guidance last week stating the state is cleared to enforce elements of its emissions regulations requiring truck and trailer owners to install aerodynamic add-on devices and use certain tires.
A ruling by the Environmental Protection Agency gives the go ahead for CARB to enforce areo add-on requirements on 1011-2013 year-model tractors and integrated sleepers, plus with trailer equipment.
CARB’s guidance issuance comes two months after the EPA issued California a waiver allowing it to enforce in full its greenhouse gas regulations.
The rule went into effect in January 2010 and requires the use of SmartWay-verified tires and other SmartWay-verified equipment on all new trucks and trailers.
CARB had only been enforcing the rule for 2010 and earlier model trucks and trailers However, the EPA’s Clean Air Act had preempted state regulations.
In June 2013, CARB asked EPA for a waiver of the preemption, which would allow it to enforce the GHG regs for 2011-2013 year model trucks and 2011 and later trailers.
The equipment required by CARB are verified by the EPA to improve fuel economy and therefore reduce emissions of greenhouse gases.
Both the American Trucking Associations (ATA) and Owner Operator-Independent Drivers Association (OOIDA) had released statements in August stating their opposition to enforcement of the rule, but for different reasons.
Meanwhile, it appears more owner operators and small fleet owners are refusing to truck in California for economic reasons and in some cases in opposition to mounting and intrusive regulations.
It was in early June that truck broker Kenny Lund saw the spot market on produce freight rates hit $10,000 for loads between California and the East Coast. While part of the reason was seasonal volume increases for fresh fruits and vegetables, and truck availability, he saw other factors contributing to the rise in rates.
Lund was speaking at the 2014 convention and exhibition of the United Fresh Produce Association in Chicago June 11th.
The vice president, support operations, for the Allen Lund Co. Inc. of LaCanada, CA cited the recently completed 72-hour U.S. Department of Transportation check points held across the country. This was delaying truck schedules.
Another factor was the CARB (California Air Resources Board) regulations, which Lund said were resulting in more truckers refusing to come to California. It takes a minimum investment by truckers of $8,000 to comply with CARB regulations.
“It is impossible to be compliant and move significant amounts of refrigerated product into and out California,” Lund stated
He noted less than 30 percent of refrigerated carriers are compliant with CARB and truckers simply do not have the money to become compliant.
In an effort to assist produce haulers, he noted Allen Lund Co. provides $1.5 million a week in advances to drivers.
Lund, who has been with company founded by his father and namesake 25 years, said there were over 50,000 carriers in the United States, but the average trucking company has less than six trucks.
“90 percent of the trucking companies have six or less trucks,” he noted. At the same time the percentage is very low of trucks having team drivers.
Getting more specific, Lund said refrigerated carriers are dominated by owner operators and companies with less than five trucks.
As for CARB, Lund said he has “fought tooth and nail with them” (California bureaucrates). Since the CARB rules were implemented in 2004 fines have been extended to brokers, shippers, receivers and specifically to drivers.
“It (CARB rules) has driven a lot of drivers away from California,” Lund stated.
He also was critical of hours-of-service regulations, and particularly the 34-hour restart. While the restart requirement may be okay for local trucking, it is not good for long haul drivers.
During a question and answer session, Lund said the reason more large refrigerated carriers do not haul produce is because “it comes down the driver having a stake in that load. I see a lot of large carriers get in and out of hauling produce. It comes down to not having enough good drivers,” Lund concluded.
Changes in federal hours of service regulations, along with stricter rules by the California Air Resources Board (CARB) are two primary reasons refrigerated produce loads have increased this year by as much as 10 percent, according to DAT Solutions, a load board network based in Beaverton, OR, as reported recently in The Packer, a weekly national trade newspaper.
Over 99 million transactions annually are made and company bases rate estimates on $24 billion of freight bills, according the DAT website.
The hours-of-service changes require drivers to stop for rest breaks more often, meaning it takes longer to reach destinations such as distribution centers, many of which were located years ago based on drive times allowed under the old regulations.
Some (truckers) have gone to a relay system where the first one drives so far, then another driver picks up the trailer and takes it on. The downside, particularly with temperature-sensitive loads like produce, is that you don’t have the continuity of one driver taking care of the load for the whole trip,” Montague said.
Higher rates also are attributed to the tightening rates emissions regulations by CARB, which apply not only to trucks picking up and delivering produce in the state, but those merely driving through California.
Montague said as of early June, many of the highest rates in the nation were for trucks going into California. The data for the week ending May 31 showed per mile rates of $2.44 in California for reefers. “At least 90% of the fleets that haul fresh produce have 10 trucks or less,” Montague said, adding that many produce haulers are individual owner-operators with only one truck. “The changes in regulations really make it hard for the smaller operators because of the costs for upgrades. The overall message is a lot of smaller truckers are having trouble.”
100 years ago the railroads ruled when it came to long haul freight transportation. The advent of the interstate highway system in the 1950s changed all of that and led to a thriving trucking industry. Then in the 1970s there was a renewed interest in rail service, and this involved fresh produce. It was primarily refrigerated intermodal trailers and refrigerated box cars. However, as the trailers and rail cars aged, the companies invested in those ventures too often had problems coming up with the capital to replace the equipment. Additionally, in those days the rails had difficulty understanding perishable produce had to be treated differently than coal or auto parts. There also were too many produce receivers filing claims at the drop of a hat. The rails also were notorious for taking forever to pay claims.
But times have changed. Here are some of the rail related companies that have come on the scene in recent years.
****Railex LLC, Rotterdam, NY. This was perhaps the first one, and it partners with the Union Pacific Railroad, using 64-foot refrigerated railcars transporting produce from the West Coast to an upstate New York distribution center, where trucks take over. It also is establishing a presence in the Southeast.
****Rail Logistics Cold Train, Overland Park, Ks. The Cold Train used containers shipped out Washington and Oregon to the Midwest and East Coast.
****McKay TransCold, Minneapolis. It works with the Burlington Northern Sante Fe Railroad using refrigerated boxcars out of California to Wilmington, IL citing each boxcar is equivalent to 3.5 to 4.2 truckloads of product.
****Tiger Cool Express LLC, Overland Park, Ks. According to its website it “Provides retailers an efficient, cost-effective, safe alternative to all-spot, all-the-time brokered transportation that relies on small, independent owner-operators who supply shippers through intermediaries.”
****C.R. England of Salt Lake City. While it is widely known as the nation’s largest refrigerated carrier with about 4,500 trucks, it also has had an intermodal division for about eight years and uses refrigerated containers.
Ricky Stover is director of business development – intermodal, for C.R. England. The company has 1,150 containers and plans adding 400 more this year.
“The percentage of produce we haul is small. We do a lot of frozen food, dairy, beverages, etc. That type of stuff is really our bread and butter,” he says.
Jason Spafford, McKay’s Vice President of Business Development credits the down turn in the nation’s economy resulting in people being “more open to new ideas.”
Spafford also points to increasing regulations on the trucking industry working in favor of the railroads.
“There’s the restrictions on driving hours that’s making it harder and is pushing it more towards a rail solution,” he states.
Additionally, Spafford says McKay TransCold believes they have to offer rail rates that are eight to 15 percent less than truck rates, depending upon the commodity and specific traffic lane.
“Traditionally rail has had difficulty with box car and intermodal concerns with damage claims. We’ve developed a racking system that creates a rock solid load. It can actually have less shifting than in truck load,” Spafford says.
McKay TransCold took a different approach in that it initially developed westbound rail shipments from the Midwest with commodities like eggs and ice cream. It then developed its eastbound freight, which is the opposite approach from most companies.
While a lot of attention is being paid to rail hauling fresh produce, Kenny Lund, Vice President of Allen Lund Company of LaCanada, CA states, “Owner operators move probably 95 percent of the produce cross country. Owner operators dominate cross country transportation of produce. The carriers that haul for us have 25 trucks at the most. We work with over 9,000 refrigerated carriers and they are mostly guys with 25 trucks or less.”
Continuing, Lund points out it is the rules and regulations that are hurting the owner operators. He adds there is no driver shortage, it is an owner operator shortage. The truck broker has been one of CARB’s (California Air Resources Board) biggest critics, citing such requirements on equipment such as refrigerated units for trailers cannot be over seven years old. Lund also is critical of the new diesel engines calling them a “nightmare. They shut down and you can’at fix them out in the field. You have to tow them in. They are so complicated and these regulations are going to make it worse.”
Paul Kazan, president of Target Interstate Systems Inc., Bronx, NY, is equally critical of excessive regulations on 18 wheelers.
“You don’t see it (increasing regulations) with trains, but at every turn you see it with the trucking industry. There is a very concerted affect out there by the rail industry to restrict trucks and I’m surprised there is not a more concerted effort by the trucking industry to push back against this effect. We’ve never had the power or the clout of the rail industry,” Kazan states.
At the same time, Kazan adds he is having conversations with rail entities and says, “we need a rail component.”
Target is headquartered on the Hunts Point Terminal Wholesale Market. Still, Kazan sees the rails “shying away” from wholesale terminal markets because these facilities hold on to the trailers (TOFC) too long using them as storage.
Kazan concedes, “Rails are here to stay. You have the green (environmental) technology, the carbon footprint.”
*The driver’s shortage is a hoax.
*One of the last concerns of large fleets is the well being of owner operators and small fleet owners.
*Regulations are killing the deregulated trucking industry.
*California produce rates have been lower in recent years and the reason may be different from what you think.
These four statements came to mind following a telephone interview with Kenny Lund, vice president of Allen Lund Co.
Is There a Driver’s Shortage?
When it comes to a driver’s shortage relating to fresh produce, Lund sees the only shortages being at shipping point and at the receiving end These involve short hauls from the field to packing houses and from receiver distribution centers to retail stores, restaurants, etc. But he doesn’t see a driver’s shortage with long haul produce transporation.
Lund concedes there may be a shortage of drivers with the larger trucking companies, stating, “if you have 300 trucks you have to come up with 300 drivers to fill them.” However, produce transportation is dominated by owner operators, who is the driver of his own truck. He doesn’t have to recruit other drivers.
Large Fleets Hurting Owner Operators?
“It seems the larger truck lines are doing everything they can to make it tougher on owner operators,” Lund states.
As examples, LaCanada, CA-based Lund points to big carrier support of everything counter to issues of importance to owner operators. He cites large fleet support of Electronic Onboard Recorders (EOBRs ) that will add costs, and support of California Resources Board (CARB) rules. Why?
Lund points out large carriers tend to rotate their fleets every five years and it is the owner operators who are buying their used trucks. This wouldn’t be so bad except the CARB rules require equipment such as reefer units not to be older than seven years.
“You have to retrofit it for a cost of anywhere from $8,000 to $20,000,” Lunds says. On the plus size, he adds the fleets are starting to realize the CARB rules are not only bad for owner operators, but for the whole trucking industry. Lund believes the damaging CARB rules are a much bigger threat to the industry than a driver’s shortage.
Perhaps the biggest threat to the survival of owner operators are the growing number of federal and state regulations.
“When you produce all these regulations on an one-horse operator, he doesn’t have the resources to comply with everything,” Lund states. “It’s really putting a strain on them.”
Why Have California Rates Been Lower?
Lund notes California produce rates have not been as high in recent years. At the same time he is noticing more truck shortages, but not in California.
“There’s just not as many trucks in California now. What has kept the rates down is there is not as much produce (being grown in California),” Lund contends.
It comes down to California’s intrusive regulations, etc. are also resulting in more produce growers shifting their operations to Mexico where the red tape and costs of operation are less. For example, similar to California, there is less produce being grown in the Lower Rio Grande Valley of Texas, yet more truck shortages are occurring there, as more Mexican grown fruits and vegetables are being shipped into South Texas.
These issues are presented to you following a telephone interview with Kenny Lund. I have known Kenny’s father, the namesake of the company since shortly after his modest beginning in 1976 as a truck broker . Today, the company works with over 20,000 carriers, which are mostly owner operators. ALC arranges about 200,000 loads a year, with food items accounting for over 50 percent of the freight. Refrigerated loads make up about 40 to 45 percent of the loads.
While Allen Lund remains involved in the company, Kenny Lund has assumed a greater role in the continued growth and success of the operation. At the same time, the high ethical standards put in place by Allen nearly four decades ago, remain rooted in the company’s foundation. — Bill Martin
When you are headquartered on the East Coast near much of your customer base, but about one-half of the nation’s fresh fruits and vegetables are grown and shipped from California, the 3,000-mile hauls can present additional challengeover shorter runs. But when one adds the challenges of dealing with federal and state mounting regulations, it just makes doing business more difficult.
Rob Goldstein is president of Genpro Inc. of Newark, NJ and arranges loads of fruit and vegetables from various shipping points around the country, including California. Because of the ever changing and increasing number of rules and regulations, he maintains more team drivers are needed on the road to help meet delivery schedules.
As an example, Goldstein cites the changes in the hours of service rules last July, which in effect reduces the amount of driving time a trucker can legally perform.
“The bottom line is with the new hours of service, and what the truckers can do, if they can’t make more turns in their line hauls, the rates are going to have to go up. Drivers have to drive less hours under the new rules and this results in fewer turns,” Goldstein says. “Drivers get paid for the amount of miles they travel and they are logging fewer miles with these new hours of service.”
On the state level, Goldstein references the California Resources Board (CARB) rules as a hinderance to trucking.
“The average carrier has six or seven units. So we are asking these carriers to comply with the state of California where about 50 percent of the domestic produce production originates,” he notes. “They (California officials) are asking these guys to make significant investments in their equipment, which isn’t easy to do.”
That is a reference to CARB requiring trucking equipment be retrofitted when it reaches seven years old.
As owner operator Henry Lee of Ellenwood, GA says, it will cost him $10,000 to replace the motor on his Thermo King SB-310 reefer unit, to meet the CARB requirements.
Genpro works with a mixture of owner operators, small fleets and carriers. Goldstein says the average size of fleets they work with is about seven units.
One truck owner Henry Lee has pretty much told the state of California they can take their loads and shove ’em. Well, not exactly. But the old Johnny Paycheck country hit (Take This Job and Shove It) seems to apply here.
Henry is a veteran driver who became an owner operator six years ago and has never looked back. He does what is best for his business, and one of those decisions has been to avoid trucking in California. It’s just not worth it to him.
The trucker owns a 2001 Peterbilt, pulling a 2006 refrigerated trailer.
“The California (Air Resources Board) rules are not fair. My reefer unit works fine and I have no problems with it,” he states. However, California certainly does. Under the state’s CARB rules his seven-year-old refrigeration unit has to be replaced no matter how well it is working.
“My trailer and the motor on my SB-310 (Thermo King) reefer unit are still in good condition. This refrigration unit should be good for another three years. My truck also is in good condition,” Henry says. “To replace the motor on my reefer unit would cost $10,000.”
He had recently spent $14,000 for an overhaul on his 500 h.p. Caterpillar C15 diesel.
“I like Cat engines. They have got power and they are dependable. I call it American power,” Henry says.
The resident of Ellenwood, GA has been trucking since 1997, never has pulled a dry van, and he has always hauled refrigerated loads, including plenty of produce.
“I have quit going to California because of the excessive and unfair rules and regulations there. Now, I am running between the northeast and southeast United States,” he says.
Henry says he never regrets becoming an owner operator.
“If I want to take a couple of days off, I can. If the load does not pay well, I can decline it. There is just a lot more freedom as an owner operator,” he states.
Henry is currently leased to a carrier, but is planning to have his own operating authority within the next few weeks.
Truck brokers, freight forwarders, as well produce grower/shippers and receivers could face fines totaling as much as $10,000 per violation and per day if refrigeration equipment on the trucks they hire is not in compliance with new California regulations becoming effective with the New Year. The penalties apply even if the trucks are only passing through California and do not stop in the state. The rules apply under California’s Health and Safey Code.
The regulations stem from the California Air Resources Board (CARB) and covers truck and rail owners and operators, plus any “hiring entity” using their services.
These issues were dicussed during a recent web seminar sponsored by Western Growers, Irvine, Calif., the California Grape and Tree Fruit League, Fresno, and C.H. Robinson Worldwide Inc., Eden Prairie, Minn. Also participating was Rodney Hill, an air pollution specialist from CARB who helped develop the rule.
As an example of rule violations, Hill said a truck loaded in Arizona and traveling through California on its way to a delivery point in Oregon could be fined, even though no deliveries are made in California. The rule applies because the truck is operating within the state. It doesn’t matter where the truck is licensed.
Hill Compliance for hiring entities shouldn’t be too difficult, though, according to Hill and others in the Web seminar.
Matt McInerney, Western Growers executive vice president, said due diligence and documentation are the keys to keeping produce companies out of trouble. Hill agreed with that assessment.
“Begin changing your contracts now so you will be ready Jan. 1,” McInerney said.
“For those of you who have pre-printed pads of bills of lading, I know you want to use up what you have. But you should get new ones printed, or get a stamp made with the right language so you can add it to the forms you have on hand.”
Hiring entities and loading dock personnel, Hill said, will not be expected to inspect refrigeration equipment to see if it is compliant.
However, if the equipment is not compliant and the hiring company’s contracts and other documents don’t have language showing it required the carrier to use compliant equipment, citations and fines will be issued, Hill said.
“However,” he adds, “If you can’t get the financing, the rules and regulations don’t matter.”
The president of Cool Runnings, based in Kenosha, WI, says truckers are facing rising costs with everything from tires to fuel and labor. An engine overhaul that was $13,000 two years ago now costs $20,000 to $21,000. The mechanics who work on those diesel engines have hourly rates that have increased from $60 to $100 per hour.
While the produce rates have gone up in recent weeks, the price of disel fuel remains high as well. For example, Fred says a truck averaging five miles per gallon, running 3,700 miles per week, at today’s diesel prices, that is costing $3,000 a week, which is hard to finance.
While Cool Runnings charges a two percent fee for advances on loads, Fred points out a lot of truck brokers charge three to five percent.
“The broker has to borrow to finance advance loads. The bank is not loaning you that money for free,” Fred states. “Financing is tight. You either pay the bank, or the broker for the cash advance. It is going to cost you more either way.”
It used to be the average cash advance was around $500 to $700 for the fuel to cover a trip from Idaho to Chicago. The advances are around $1,500.
“You are talking two percent of $1,500 when it used to be two percent of $700. The truckers have to find a way to finance this themselves, while the others who do not figure it out fall by the wayside,” Fred says.
Cool Runnings works with a lot of owner operators and small fleet operations. “The guys who used to have 20 trucks now own eight or 10. If he had 10 trucks, now he only has three or four trucks,” Fred says. “They just don’t care anymore. They’ll say, `I’m tired of fighting the rules and regulations and everything else.'”
One example of excessive government interference, Fred notes, are the CARB (California Air Resources Board) rules in California. The requirements, some of which have to do with reducing emissions, increase the costs of operation and is make it very difficult for truckers to comply, much less continue to operate profitably.
He knows one trucker who delivers freight to Utah and runs to Idaho and to pick up potatoes and French fries for delivery to Chicago. That trucker receives a consistent, steady fair rate. The trucker also does not have to comply with California’s CARB rules.
“Now that those rules are stabilized, just don’t keep changing them,” Fred states.
Cool Runnings History
Although it has been nearly 26 years, it seems almost like yesterday when I first met Fred Plotsky. I was riding in a car with a friend and business associate named Gary Robinson in Highland Park, IL during a week I was working in Chicago. Gary had just sold his truck brokerage, Cool Runnings.
How would you like to meet the new owner of Cool Runnings? He’s really a great guy,” Gary asked me. In a moment, Gary had Fred dialed up on his car phone. I met up with Fred later that day and the rest is history. We have been friends ever since.
Fred and I immediately found a few things in common. We both had an interest in produce trucking for starters. Both of us loved to fish. Fred goes after northern pike, especially on fishing expeditions to Canada, while this southern boy prefers the warmer climates and large mouth (you might find Fred reporting to work at the Cool Runnings offices in Kenosha, WI, wearing shorts in January).
Fred also has love for listening to radio, and only a few months earlier in 1986 I had launched the Produce Truckers Network and had two radio stations airing it — WRVA in Richmond, VA with Big John Trimble and WMAQ in Chicago with Fred Sanders.
Both of us are sports fans with Fred a great follower of the Chicago White Sox and the Milwaukee Brewers. He is forgiving of my support of St. Louis Cardinals.
Over the years I’ve learned to respect Fred as a loving husband, great father, little league baseball coach — and a fair and honest businessman.
It has sort of become a tradition with Fred and I to occasionally have lunch together — usually involving chicken wings and root beer. It was during such a recent visit, Fred shared some thoughts on Cool Runnings, which he has owned since July 1986, as well as what is happening with the trucking industry, and what he views as the major concerns and issues with the professionals driving the big rigs. — By Bill Martin