The $5,000 question facing independent owner-operators of refrigerated trucks is whether or not the expenditure of that amount of money is worth it to continue to haul loads from California.
On Jan. 1, new California regulations went into effect that require all refrigerated trailers to be equipped with a filter unit that reduces the emissions of particulate matter from their refrigeration units.
Peter Ellison, western regional sales manager for Rypos Inc., a company based in Massachusetts that sells the filter units, said that the average cost per trailer is about $5,000 installed. He said that fleet carriers can get a volume discount, but the independent owner-operator should expect to pay that amount. Mr. Ellison added that Rypos has sold quite a few units, but he also expects that some truckers will simply decide to avoid California and concentrate their services elsewhere.
Ken Gilliland, director of transportation for the Western Growers Association in Irvine, CA, said that the new TRU requirement on trailers is just one of a number of regulations enacted by the California Air Resource Board to reduce the environmental impact of diesel-powered engines and refrigeration units. As part of the TRU regulations, every carrier licensed in the state must register their compliance with the new regulations and have their filter unit certified. Each of those TRUs will be given a number stamped on the equipment that will allow inspectors to easily identify refrigerated trailers that are in compliance. In addition, every business in the state with 20 or more truck bays must also register to again allow inspectors to easily identify businesses where large volumes of refrigerated trailer units are operating.
Both businesses and carriers were supposed to register in 2009, and CARB has already started issuing fines for non-compliance. In fact, a Sacramento, CA, produce company has already been fined $30,000 for not filing its paperwork in a timely fashion. Mr. Gilliland said that the fines for carriers start at $500 per unit per offense.
Carriers not licensed in California but coming into the state to haul product out of the state do not have to be registered, but they do have to be in compliance. If they are not registered, inspectors will look under the hood of the TRU to make sure it contains the filter unit. Mr. Gilliland said in early January that he did receive a call from one shipper member of Western Growers who said that a truck coming to their facility to pick up a load had been stopped at the border and turned back because of non-compliance with the new regulation.
CARB has also issued new regulations for older diesel engines. In effect, over the next 13 years, California wants to phase all older engines off the road. By 2023, no diesel engine older than 2010 will be allowed on the road unless it has been retrofitted with 2010 or newer engine technology.
Logistics firms in the fresh produce industry are wondering aloud if an artificial truck shortage might occur this spring or summer in California because of the new TRU regulations. Peter Laws of Frontera Fresh Logistics in Edinburg, TX, said that some carriers with which he works have indicated that they will avoid California and its new costly regulations. Others also gave anecdotal evidence that at least some owner-operators are thinking twice about the economic burden of complying with the Golden State's regulation.
Mr. Gilliland said that only time will tell if a significant number of carriers choose not to comply. Of course, in that event, a spike in the market may well justify the addition of a $5,000 expense. It is not unusual for West Coast to East Coast hauls to reach the $7,000 to $8,000 range during the summer months. And, in fact, two years ago, there were claims of five-figure rates during the height of both the oil crisis and the summer shipping period.
(For more on transportation and logistics, see the Feb. 8, 2010, issue of The Produce News.)