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First Sale of Leased LA-LB Clean Truck to Independent Contractor

Reprinted article from JOC The Journal of Commerce by Bill Mongelluzzo, Senior Editor.

Five years after the ports of Los Angeles and Long Beach launched the industry’s most comprehensive clean-truck program, a father-son team became the first independent contractors to purchase an environmentally compliant trucks off of lease.

The even is significant for other U.S. ports because it confirms a business model in which drayage companies, their customers and independent drivers can collaborate to replace a fleet of old, polluting trucks with new vehicles that are 90 percent cleaner.

Vic La Rosa, president and CEO of TTSI in Rancho Dominguez, Calif., on Wednesday handed over the keys of a truck that Jorge Gomez, and his son, also named Jorge, had been leasing since 2009 as independent contractors.
The truck complies with the standards in the Los Angeles-Long Beach clean-truck program, which the ports implemented on Oct. 1, 2008. The California Air Resources Board drayage truck program, which will take effect state-wide on Jan. 1, 2014, has the same standards.

La Rosa said other independent contractors will soon be reaching the time when they also will be able to purchase the trucks they have been leasing, not only at TTSI, but at other Southern California drayage companies as well.

This development is an important victory for harbor trucking companies in Southern California that have argued since the beginning of the clean-truck program that they could maintain an owner-operated fleet while at the same time giving the drivers an opportunity to eventually purchase the trucks from lease.

Opponents of this business model, led by the Teamsters union, had charged that in the highly-competitive harbor trucking industry, freight rates are too low to allow independent contractor drivers to properly maintain and eventually purchase the new generation of low-emission trucks.

The Teamsters union, which has been attempting to organized drivers at the nation’s container ports, said a successful clean-truck program must be based on the model of financially-sound drayage companies purchasing the trucks and hiring the drivers as direct employees.

La Rosa said the Southern California business model could not have succeeded without the cooperation of cargo interests. Rick Gabrielson, president of the Coalition for Responsible Transportation, described the arrangement as a three-legged stool that includes the trucking company, the customer and the driver.

The Coalition for Responsible Transportation (CRT) is a national organization of retailers and other cargo interests that have agreed to work with trucking companies and drivers at other ports that seek to implement clean-truck programs.

Under this business model, the cargo interest agrees to pay a higher freight rate, which the drayage company combines with its own financial contribution, so that the driver can lease the truck, afford maintenance and repair and other operating costs and eventually purchase the truck.

For many years, the harbor was known as the place where trucks went to die. Over-the-road motor carriers sold their high-mileage trucks to owner-operators for as little as $10,000 to $20,000, and the independent contractors did much of the maintenance work themselves.

Today’s highly sophisticated vehicles cost $100,000 or more, and with their extensive computerization must be maintained and repaired by professional mechanics. Labor unions, environmental groups and community organizations believed the new regime called for a business plan in which large, financially sound companies would purchase the trucks and employ unionized drivers.

CARB board member Hector de la Torre said harbor drayage companies in Los Angeles-Long Beach have confirmed the viability of the owner-operator model, with every one of the 11,000 trucks serving the harbor compliant with local and state requirements.

La Rosa said TTSI’s next goal is to operate trucks that approach zero emissions. “Our mission is far from over,” he said. TTSI is working with a local manufacturer to test trucks with fuel cell and battery technology that one day may be able to withstand the rigors of harbor drayage while emitting virtually no harmful emissions.

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