THE STATE OF THE NORTHERN CALIFORNIA DRAYAGE MARKET

April, 2014

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.