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California shippers could soon be fined for non-compliant trucks

A California Air Resource Board regulation that became effective Jan. 1 could soon be used to fine California shippers or receivers that allow non-compliant trucks to load or unload at their facilities.

That was one of the take-home messages of a “2013 Transportation Preview” webinar conducted Feb. 20 by C.H. Robinson officials and hosted by Western Growers Association.

Jason Craig, manager of government affairs for C.H. Robinson, based in Minneapolis, revealed that the regulation is not yet being enforced but the expectation is that it could be within the next 30 to 60 days.

“Shippers, brokers and receivers could be held responsible for using non-compliant carriers and they can be subject to fines if they do not exercise sufficient due diligence,” he said.

Mr. Craig said that the truck regulation involves lowering emissions on reefer units through the installation of better technology. CARB added the regulation several years ago, giving trucks a grace period to comply. He said the state agency achieved very good compliance within the state, but compliance from out-of-state trucks that do business in California has not been at the level that CARB expected.

Subsequently, to improve compliance the regulation holding in-state facilities liable for non-compliant trucks was passed.

The C.H. Robinson executive said that he did not know how the regulation will be enforced because no enforcement has yet occurred. However, he said that CARB has released a guidance document that appears to give cover to shippers as long as they can provide sufficient documentation showing they have engaged in “multi-level” communication, which would include putting language on the bill of lading stating that the truck is in compliance.

He said that shippers should also communicate with the truck broker they use that they only want compliant trucks coming to their facility.

Mr. Craig indicated that multiple levels of communication between the shipper or receiver and the trucker and the trucker’s representative appears to be what CARB will be looking for if it conducts an audit of a shipper’s transportation records.

However, Mr. Craig did offer the caveat that because enforcement hasn’t happened yet, the industry really doesn’t know exactly what will constitute sufficient due diligence.

The Western Grower Transportation Department has developed language for the bill of lading that it believes will help a shipper argue due diligence.

The webinar also included an update on the hours-of- service changes expected to be enacted in July by the Federal Motor Carrier Safety Administration. Lawsuits may delay implementation, but the big change involves the 34-hour restart.

A trucker must have two consecutive nights off (1 a.m. to 5 a.m.) after completing a week of service. In essence, a trucker must get a “weekend equivalent” off between cross-country trips.

Mr. Craig said the best guess is that this new rule would reduce the number of cross-country trips that an individual trucker could make per year by one or two trips, dropping from 100 to 99 or 98.

The regulation has been challenged in court by both the trucking industry and safety advocates, so implementation may well be delayed. The new hours of service does not change the rule allowing 11 hours of drive time in a day.

Gary York, general manager of C.H. Robinson’s Monterey, CA, office, also participated in the webinar and weighed in with a review of market dynamics that could affect the supply and demand of trucks both in the near term and over the next year or year-and-a-half.

Leading indicators are that there will be about a 5 percent increase in overall freight rates this year and a 7 percent increase for 2014.

Because refrigerated freight tends to trade at the high end of a range, Mr. York said that reefer truck rates could increase in the neighborhood of 6-7 percent this year and as much as 10 percent next year.

The increased demand for freight may be exacerbated by a decrease in equipment.

From 2007 though 2011, new Class A trucks were not being sold at even a replacement level. The net result has been an aging and decreasing fleet.

In fact, the average age of a Class A truck on the road today is close to a historic high at about 6.6 years. This is just slightly lower than the 6.7 years reached in 2011.

Mr. York said that 2012 did see new trucks being purchased at a clip of about 20,000 per month, which is the replacement level. But he said that level needs to be exceeded for several years to make up for the deficit.

Another market factor is a potential driver shortage. The indicators are that there will be tight supplies of drivers continuing through 2013 and 2014 as the economy improves.

The transportation industry tends to share labor with the construction and automobile industries, and as those industries rebound, these workers have options and carriers need to improve pay to attract drivers.

Mr. York went through close to a dozen graphics in making his presentation and he said that basically “all the charts are singing the same tune.”

Truck demand and utilization is going up and will continue in that direction as the economy improves, and rates will follow that same trajectory.