Panel: California offers challenges, opportunities
Dealing with California Air Resources Board regulations, congestion, limited parking and frequent inspections can make operating in California one big headache. But a panel of fleet executives at the inaugural Great West Fleet Executive Conference in Las Vegas Wednesday told attendees that there are also plenty of opportunities in the Sunshine State.
With a $2 trillion GDP, California has the seventh largest economy in the world — the same as Germany’s. Panelists said smart carriers will capture some of that business by finding ways to turn the state’s obsession with all things green into new ways to market their businesses.
Scott Blevins, president and CEO of Mountain Valley Express, for example, looks for ways to turn regulations into positives. “Why not market it and be eco-green, since we have to do it anyway?” he asked. Blevins, whose company offers overnight and second-day service between California, Arizona and Nevada, has found that his customers are willing to pay more to have his company deal with California so they don’t have to.
He adds a clean air surcharge to every bill of lading, a bridge toll fee and has increased his rates 6.9 percent this year. But he’s also made investments: retrofitting a tractor costs $15,000, putting skirts on a trailer is $1,400, and a new tractor can run $125,000.
UPS has also seen great success in getting its customers to pay for its sustainability platform, said Noel Massie, president of UPS Central California District. “There are a lot of customers that wouldn’t use us if we weren’t a green fleet,” he said. Massey’s company runs 2,500 alternative fuel vehicles and has reduced CO2 by nearly 8,000 metric tons.
The panelists agreed that diesel will play a reduced role in their fleets. “Looking out 20 years I think the fuel for our industry is going to be natural gas,” said Paul Truman, president of Truline Corporation and Estenson Logistics. “The problem is the equipment makers are too slow. They need to build more to gain economies of scale so they can close that price differential, which right now is about $50,000 to 60,000″ over diesel-powered trucks, he said.
For UPS, “it’s going to be some hybrid of electric and natural gas,” Massey said. “We have to be the advocates for it on the ground. We have stopped investing almost totally in diesel and gas.”
The panelists acknowledged the frustration many carriers feel in dealing with California’s regulatory environment. That’s why Massey encourages trucking executives to get involved in discussions of policy. “Politicians need to hear what the infrastructure of transportation is to this nation,” he said. “You shut trucks down and nothing moves.”
The Great West Fleet Executive Conference is sponsored by Bridgestone, Chevron and Freightliner Trucks.