Eco-regulations and tough market drive 30-truck carrier to the wall
ENVIRONMENTAL compliance costs combined with tough competition to put 40-year-old Timmerman Starlite Trucking out of business in Ceres, California
ENVIRONMENTAL compliance costs combined with tough competition to put 40-year-old Timmerman Starlite Trucking out of business in Ceres, California.
This results in laying off 30 employees and taking 30 trucks, 150 trailers and 28 drivers off the roads, reported New York's FreightWaves.
'We tried to provide a healthy work environment for our employees and give them the best wages and benefits we could,' said owner Colby Bell. 'But in the end, the rates that were available did not support the cost structure needed to compensate our employees appropriately.'
Mr Bell cited a tough freight market and environmental regulations as primary factors in the company's failure, according to the Ceres Courier.
The company served clients through an 11-state region, spanning from the Rocky Mountains to the Pacific coast.
Long haul trucking spot rates are at their lowest levels in the past few years, down 30 per cent since last year's peak.
Mr Bell said carriers have been forced to buy electronic logging devices, running their trucks with an inflexible clock.
Wage increases for drivers have increased double digits, insurance renewal rates have gone up and equipment is more expensive to maintain.
Fuel expenses, particularly in a tax-and-regulate California have increased from US$2.29/gallon to $3.95/gallon since 2006, equivalent to $0.25 per mile. At $1.49 per mile, this will cost a carrier 17 per cent of operating profits if they aren't on a fuel-surcharge programme.
Big companies can recover most, if not all of this in the form of a fuel surcharge. But Starlite was too small to have such leverage with shippers.
The California Air Resources Board (CARB) has also required carriers to buy and operate trucks that operate under a more stringent set of emissions regulations.
'If you're an interstate carrier that operates in 50 states and you can make money in 49, you can lose a little in California while the pressure's on, and over time you know that things are going to equalise. But smaller carriers are stressed.
'Most of them are family companies,' said Mr Bell. 'They're not capital rich and it's a heavy capital industry to be in. They're pulling $200,000 worth of equipment and that's a lot of money when you think about almost a 40 per cent increase in costs over the last 10 years but no change in the revenue.'