ETC INTERNATIONAL FREIGHT SYSTEM
International Shipping, Trucking, Ocean, Air, Freight Forwarders in California
JOC reporting on California Drayage Rates
Why Northern California Drayage Rates Are Poised to Spike
Bill Mongelluzzo, Senior Editor | Feb 22, 2013 10:03AM EST
Drayage rates in Northern California could increase 20 to 30 percent this year, driven by a shortage of capacity and increased costs motor carriers will incur to comply with environmental regulations, according to a trucking company executive.
Harbor trucking companies serving the Port of Oakland face the same challenges drayage operators in Southern California dealt with five years ago when the ports of Los Angeles and Long Beach implemented their clean-trucks programs.
As first movers, Southern California truckers received assistance from the ports and the California Air Resources Board, so they were able to afford costly CARB-compliant trucks, said Andy Garcia, chairman and founder of GSC Logistics.
Motor carriers in Northern California now must have clean trucks of model year 2007 or newer, but financial assistance isn’t as readily available from CARB. “Oakland got what was left,” Garcia told the California Maritime Leadership Symposium in Sacramento.
The Northern California drayage market already is tightening, even though container volumes the next few weeks will trail off as the trans-Pacific trade enters the annual post-Chinese New Year slump, said Ron Cancilla, a partner in Oakland-based trucking and warehouse provider Impact Transportation.
Cancilla said trucking companies are asking their competitors to share any excess capacity they might have in this tight market. Additional capacity will be difficult to find, though, because the harbor drayage industry contracted during the 2008-09 recession, he said.
Equipment problems also could surface as ocean carriers begin to shed their chassis because they no longer want to contend with the cost of maintaining and repairing equipment. “Vessel operators are passing on the chassis costs to service providers. It’s a big problem,” Garcia said.
Oakland, which has always been an export-oriented port serving farmers in the San Joaquin Valley and wineries in Northern California, is experiencing growing exports. At the same time, imports are lagging, creating a container shortage.
Because most carriers in the Pacific Southwest make Los Angeles-Long Beach their first call inbound, it’s becoming increasingly difficult for exporters in Northern California to secure empty containers. That’s creating a challenge for truckers to find empties for their export clients, Garcia said.
If drayage rates in fact increase 20 to 30 percent this year, the Oakland market will become more attractive for motor carriers with newer trucks, so some companies in the Central Valley will find they can make more money working in the harbor, Garcia said.