THE STATE OF THE NORTHERN CALIFORNIA DRAYAGE MARKET

Fwy w Rolling Hills 016Yesterday, three drivers walked into our office, laid their keys on the desk and quit. They cite the lack of productivity at the marine terminals in Oakland as the reason. They can no longer make a living.

A driver used to be able to consistently make two turns between the Central Valley and Oakland. That is no longer the case. Terminal turn times coupled with abbreviated operating hours have significantly cut into driver productivity and, therefore, earnings.

There was a time in the not-so-distant past when there were eight smaller marine terminals in Oakland and volumes were dispersed more evenly among those terminals. If one terminal experienced congestion, motor carriers could more easily adjust their operations to avoid that terminal on that day. Now there are five terminals, with two taking the lion’s share of the volume. There is no way to avoid the congestion…the lines…the loss of income…the frustration.

We understand the rationale for the recent terminal mergers and closures. Small operations lack the density required to be profitable. However, the result is the financial burden has now shifted to the driver. Such a shift is neither sustainable nor acceptable.

Drivers’ incomes are a factor of their base pay and the number of transactions they conduct in a day. In order to make a living, if the number of transactions decrease, the pay per transaction needs to increase.

With the nationwide shortage of truck drivers, these guys and gals have options. National and regional truckload/LTL/flatbed carriers are more than eager to snap up discontented drayage drivers. Why not? These drivers have experience, good driving records and know their way around the geography. It’s a slam-dunk for them. But, a major setback for the logistics community in Northern California.

We cannot afford to lose more drivers. As a result of the California Air Resources Board (CARB) truck retirement schedules, we experienced a reduction in drayage truck capacity in Oakland of 20-25% in January 2013 and another 20-25% in January 2014. Terminal inefficiencies and reduced hours of operation do not allow for the proverbial “doing more with less.” Quite the contrary, we are doing considerably less with less. Drivers are making considerably less and, as we witnessed yesterday, leaving the industry as a result.

Drivers can no longer be expected to shoulder the costs of inefficiencies and inelasticity in the supply chain. The system, as it currently stands, is broken. Clearly, throwing more drivers into the mix is not going to solve the problem. Paying the drivers more is not going to solve the problem. Improving operations with more gates, more hours, more yard equipment, more grey chassis pools, more man-hours and more money is what is needed to solve the problem.

 

OAKLAND WATERFRONT BALLPARK?

A's Waterfront Ball ParkThe Port of Oakland’s Board of Commissioners recently approved a measure to enter into negotiations with a business group to explore building a waterfront stadium for the Oakland A’s. The port previously rejected alternative maritime uses of the property, including a coal facility, thereby paving the way for negotiations with this business alliance.

The business group, Oakland Waterfront Ballpark, LLC (OWB) includes Don Knass, CEO of Clorox; T. Gary Rogers, former CEO of Dryers Ice Cream; Michael Gheilmetti Founder of Signature Development Group; Doug Boxer, former Oakland City Planning Commissioner; and Seth Hamalian, San Francisco developer.

The agreement calls for the port to grant a one-year exclusive negotiation term and OWB to make a down payment of $100,000. During this time, the port and OWB will explore the feasibility of building a 38,000 seat ballpark on what is currently Howard Terminal, former home of Matson Navigation.

While co-owner of the Oakland A’s, Lew Wolff, has his reservations about the site, the project has widespread support from the city, fans and even the state.

Our concern is land designated for port and maritime uses is very limited. Once it’s gone, it’s gone.

 

CALIFORNIA’S DROUGHT CONTINUES

Where Does Your Food Come FromDespite recent “spring showers,” California is in a desperate drought. There are many rivers without adequate flow for young salmon to make their way to the ocean. The state is actually trucking these fish from their birthplaces up river to the delta so they can safely migrate out to sea. It is so despairing, farmers are pulling out trees because there is not enough water to support them…trees that take $1,000’s and $1,000’s to plant and years to grow. When rain does finally return to the state, it will be a long recovery for the entire nation. The attached graphic depicts the dependence on California grown nuts, fruits and vegetables.

REGISTER TODAY!

WIL PMSA Combo LogoWomen in Logistics (WIL) and the Pacific Merchant Shipping Association (PMSA) proudly present luncheon speaker Bill Mongelluzzo, Senior Editor, Journal of Commerce. Mr. Mongelluzzo will discuss the upcoming ILWU negotiations, the state of West Coast waterfront labor, port politics, competitive threats and challenges and chassis ownership. Register today here.

Bill MongelluzzoWhile you’re at it, become a WIL member. You can sign up on-line here, or complete an application here and mail it in.

 

NAME THAT PART

Name That Part Apr 14Do you know what this part is? It is something used in intermodal or truck transportation. Play “Name That Part” by liking us on Facebook. Click here to go to our Facebook page and place your guess. Good luck!

 

 

 

 

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FROM THE DRIVER’S SEAT

Trucking Moves America Forward

Driver 2134 Rinat Yagudin w New Truck 001We recently read an opinion piece in Transport Topics by trucking initiative Trucking Moves America Forward that deserves a verbatim recap:

“The public perception of professional truck drivers is not consistent with reality. Instead of hard-working, family men and women…, professional truck drivers can be seen as dangerous and an unwelcome highway hazard. The truth, however, is that today’s truck driver is a skilled professional who follows stringent safety guidelines and is experienced with the new and improved technologies that make trucks smarter, more fuel-efficient and safer than ever before.

“The trucking industry brings more than $642 billion in revenue into the country, thanks to the nearly 7 million people employed in trucking-related jobs – about 3.1 million of them as drivers. That’s equal to the populations of West Virginia and Maine combined.

“At a time when almost 10% of our country’s workforce is looking for employment, industry experts project the transportation industry will add 30,000 jobs this year alone.”

For the full commentary, click here.