STB OKs Pooling Arrangement of 10 Calif. Drayage Carriers

This story appears in the Nov. 30 print edition of Transport Topics.

The Surface Transportation Board has approved an application by 10 small drayage carriers serving the ports of Los Angeles and Long Beach, Calif., to pool some of their operations and purchases of fuel, equipment and materials.

The STB’s Nov. 19 decision rejected a protest lodged by the Teamsters union, which claimed the pooling arrangement, called Clean Truck Coalition LLC, would have a “disastrous impact” on other drayage drivers because the companies would be able to “coordinate and set prices” for what they charge and how much they pay drivers.

However, the STB said the joint venture, which attempts to maximize the number of cleaner-burning trucks, would not “unreasonably restrain competition.”

The 10 companies collectively represent less than 10% of the overall truck activity to and from the two ports.

“Competition would be enhanced as the pooling agreement would give these smaller and midsized motor carriers greater access to clean trucks, thus enabling CTC members to compete with larger trucking operations,” the ruling stated.

“Approval of the pooling agreement will enable members to form a coordinated network of information to track clean trucks; coordinate internal invoicing on leases between members; and jointly purchase equipment and materials on a group basis,” the STB said. “In doing so, CTC will be able to provide more efficient service and clean trucks to the ports and further the goals of the program by reducing air pollution caused by truck traffic.”

The decision allows the carriers to begin pooling immediately, but William Taylor, a Sacramento, Calif., attorney representing the drayage operators, said it would take some time to get the new entity up and running.

Taylor said the decision will allow the carriers to utilize their clean trucks better.

“Essentially, their own fleets become a common fleet, so to speak,” Taylor said. “I think the decision has a term that we didn’t use, but is a very appropriate one — a clean truck clearinghouse.”

Transportation consultant Dan Smith, a principal of the Tioga Group Inc., Philadelphia, said the pooling arrangement would be a plus for the drayage industry, which is complex and has a “huge number of problems,” including congestion and peaking.

The pooling arrangement would help the companies involved to achieve economies of scale by leveling out the flow of containers and cutting unnecessary trips, Smith said.

“One of the things that has really plagued the industry is the unevenness of demand for drayage services,” Smith told Transport Topics. “Anything you can do to even out the workday, even out the flow of drayage moves, will help the drayage operators, and it will help the marine terminals.”

The drayage operators in the group are:

• Green Fleet Systems LLC

• California Intermodal Associates Inc.

• Fox Transportation Inc.

• Golden State Express Inc.

• Harbor Division Inc.

• Overseas Freight Inc.

• Pacific 9 Transportation Inc.

• Progressive Transportation Services Inc.

• Southern Counties Express Inc.

• Total Transportation Services Inc.

The pooling agreement calls for each of the operators to have an equal ownership in the new entity. The carriers said that they would combine their information technology, operations, leased equipment, vendor contacts and resources, maintenance facilities, vehicles and training of employees. They also would cross sell and promote each others’ services.

“The member carriers were not interested in becoming a single-source entity,” Taylor said.

Instead, each company wanted to keep its identity and corporate status, he said, and avoid the requirements of a merger or acquisition.

“These companies are independently owned; for the most part they’re family businesses,” Taylor said. “There was no desire to change that structure amongst any of the companies.”