We will finish this week on transportation public policy by staying with rail and road transport policy and this includes the fact that these several years of soaring mergers and acquisitions consolidating all industries in the US included our freight rail corporations. If one plays MONOPOLY we know that landing on a RAILROAD with a single owner is not so bad a financial penalty but land on a RAILROAD with an owner having all 4 RAILROADS on the board and you are paying quite the financial penalty. That was the lesson of MONOPOLY. As in the days of 1800s ROBBER BARONS the railroad tycoons then have become the same today this time being Warren Buffett and ICAHN. Buffett we are told by national media and NPR is the GOOD BILLIONAIRE-----pushing hard to totally deregulate the freight rail industry and the motives of capture are tied to making the US a colonial entity free to fleece all natural resources for enrichment RIGHT NOW-----rather than conserve natural resources for future citizens.....WHAT CITIZENS SAYS GOOD BILLIONAIRE BUFFETT? This is no longer America---this is a Foreign Economic Zone and we will remove every single natural asset just as we do in Africa----in Asia----in Latin America.
The issue for Buffett was transport of FRACKED NATURAL GAS, OIL FROM OUR NATIONAL PARKS, AND TAR SAND OIL. The train barons are heading for EXPORT TERMINALS until pipelines are constructed under US cities deemed Foreign Economic Zones----Ports like Baltimore.
Obama and Clinton neo-liberals in Congress all pushed to allow for more crude oil by rail and killed public safety laws surrounding transit in densely populated areas----fresh water concerns---seafood industry contamination concerns.
US FREIGHT RAILS OWNED BY GLOBAL HEDGE FUND BUFFETT ALSO MOVES OUR FOOD PRODUCTS----THERE GOES MORE HIGHER PRICED FOOD.
Warren Buffett and Carl Icahn Are The New Rail Barons And Both Have Made Big Bets On Crude Rail Transport
By Kathleen Caulderwood @kcaulderwood On 01/09/14 AT 10:46 AM
The United States will produce more oil than it ever has this year, and it all has to go somewhere.
Pipelines that can handle the new high demands are still being built, but in the meantime millions of barrels of crude are being sent around the continent by rail.
Every year, nearly 150 million tons of hazardous materials are carried over thousands of miles by tank cars – specially designed freight carriers that can handle volatile liquid crude.
Billionaire Warren Buffett has invested heavily in Union Tank Car Company, which makes rail cars designed to carry crude oil. Photo: Wikipedia Commons There were roughly 9,500 carloads of crude oil running the rails in the U.S. in 2008. By 2013, there were more than 400,000, according to the Association of American Railroads.
There are just a few companies that manufacture them, and they’ve been reaping the benefits. Record revenues and backlogs mean investors are interested, but billionaires like Warren Buffett and Carl Icahn have already made their bets.
“The boom for building tank cars for crude oil started in 2011,” said Toby Kolstad of Rail Theory Forecasts, who added that some of the oldest companies in the country have had high stakes in the industry for a long time.
The privately owned Union Tank Car Company was formed in the late 1800s. Originally part of John D. Rockefeller’s Standard Oil Co. Inc., it was divested in the early 1900s.
In 2007, Warren Buffet’s Berkshire Hathaway Inc. (NYSE:BRK.A) purchased 60 percent of Union Tank’s parent company, Marmon Holdings Inc.
Today, Berkshire owns 90 percent of the company, according to an annual report for investors, where Buffett implored them to look for the company’s UTLX logo on any tank cars they see passing by.
“As a Berkshire shareholder, you own the cars with that insignia,” he writes.
“When you spot a UTLX car, puff out your chest a bit and enjoy the same satisfaction that John D. Rockefeller undoubtedly experienced when he viewed his fleet a century ago.”
In 1994, activist investor Carl Icahn was voted chairman of American Railcar Industries Inc. (NASDAQ:ARII).
The company was founded in the late 1980s, and in 2011 expanded into leasing tank cars just as the boom began.
As of September 2013, the company’s backlog reached 6,300 railcars worth about $814.5 million.
American Railcar saw a 9.8 percent increase in gross sales last year, with a double-digit increase in operating income. In the fourth quarter, the company leased a total of 3,780 railcars, up from just 2,190 in the same quarter of 2012.
Greenbrier Companies Inc. (NYSE:GBX) is relatively new to making tank cars, but it has always adapted to changes in the market. Greenbrier started making the specialized cars between 2004 and 2008, when ethanol had its peak popularity.
As of August 2013, the company had a backlog of 14,400 units worth an estimated $1.52 billion, up from about 11,000 units in the same period last year.
“As an industry, we’re pretty good at putting our foot on the brakes and then putting our foot on the accelerator when we need to respond to increased demand,” said the company’s chief commercial officer, William Glenn, to the Financial Times.
In the first quarter of 2014, Greenbrier saw revenue of $490 million, with $0.56 earnings per share. Stock jumped almost 30 percent in the past two years.
Trinity Industries Inc. (TRN: NYSE) is the country’s biggest rail car manufacturer. Since 2010, revenues for its rail car sector grew from $522 million to nearly $2.6 billion. In the past 12 months, the company received orders for 30,735 railcars. Besides, it has an order backlog of more than 40,000 units worth roughly $5.1 billion.
In a presentation to investors, executives attribute the growth to “strong demand from the oil, gas and chemical industries.”
In October 2013, Trinity announced quarterly earnings per share of $1.26 – up 58 percent since the year before. In the past four weeks, Trinity stock has jumped nearly 11 percent.
The U.S. Energy Information Administration said on Tuesday that American oil output will rise by 9 percent next year, to reach 9.3 million barrels per day – the highest in 43 years.
Despite the fact that there have been five crude oil train derailments in the last several months, the crude-by-rail industry is still chugging along and will probably pick up speed in 2014.
Of course since today's media is global Wall Street here is the requisite article saying how good deregulated freight rail is for ALL THE WORLD. They are telling us deregulation created all those 400,000 rail cars of crude oil. US freight rail died because US CORPORATIONS AND GLOBAL BIG AG AND BIG MEAT moved much production overseas during CLINTON/BUSH/OBAMA.....that is it. It had nothing to do with regulations-----and this is why PEANUT FARMER CARTER led in deregulating transportation---he wanted to super-size his profits from getting peanuts to market while growing his global peanut markets. He sent tens of millions of Americans into poverty, unemployment, CAUSED FOOD PRICES TO SOAR---- and created extreme wealth inequity but he gave back by giving us HABITAT FOR HUMANITY.
Buffett and Icahn bought freight rail now because MOVING FORWARD US cities deemed Foreign Economic Zones will have massive global factories and exporting needing rail to move across continent to ports. When we allow a global hedge fund Buffett create that monopoly right away WE THE PEOPLE have no control over how these rails run----how much is charged to move products-----and products will see prices rise ALL BECAUSE OF DEREGULATED FREIGHT RAIL. Watch as our national parks are sold to global mining----global timber ------this is why we see these freight rail monopolies today.
DOES BUFFETT, OBAMA, CLINTON NEO-LIBERALS CARE ABOUT OUR LAND BEING FLEECED OF ALL NATURAL RESOURCES AS MALAYSIA-----NO WAY. WHO SUPPORTS CLINTON NEO-LIBERALS EVERY ELECTION? LEAGUE OF CONSERVATION VOTERS---SIERRA CLUB------and they both will be out leading protests once all the national parks are sold and timber is felled.
How deregulation saved the freight rail industry
Content from AAR
Published on June 4
More Content From Association of American Railroads
On an otherwise uneventful Sunday in June, leaders in Washington, D.C. began to panic. The sixth-largest company in the nation had slipped into bankruptcy. Its collapse threatened the stability of an entire industry and the health of the nation’s economy.
Looking back to the financial crisis of 2008, such a scenario sounds eerily familiar. Yet the events described above refer to another crisis almost 50 years prior: the bankruptcy of Penn Central railroad.
Penn Central’s declaration of bankruptcy on June 21, 1970 was the largest in the nation’s history. For government officials, it was also a wake-up call about the dangers of unchecked government regulation. As the government scrambled to keep trains running, lawmakers began to realize the harm that a century of crippling regulations had caused.
The origins of railroad regulation
Railroad regulation began in the late 19th century, when the rail industry faced virtually no competition from other modes of transportation. Over time, the regulations became far-reaching and greatly limited the ability of railroads to determine services, set prices and even build new rail lines.
As technology improved, competition increased and the economic landscape changed, the regulations became overly stringent and outdated. Railroads and shippers alike began to feel the pain.
A downward spiral
By the mid-20th century, the construction of the interstate highway system and heavy subsidization of trucks and barges led to increased competition for railroads. In a balanced regulatory environment, railroads would have had freedom to respond to this changing landscape, but strict government oversight prevented commonsense changes to pricing and services.
In one telling example, the construction of new and bigger hoppers (rail cars designed to carry grain) provided Southern Railway with the opportunity to lower shipping rates. Yet for five years, federal regulators prevented the company from doing just that.
As a result of this inflexible system, railroads continued to lose market share. Because railroads could not easily adjust the price or nature of their services, they were forced to forego or delay investments, knowing that such an approach would prove disastrous in the long run.
Maintenance and infrastructure suffered, too, under this draconian regulatory environment. Railroads were often forced to defer maintenance and extend the life of equipment and infrastructure until it simply fell apart. The consequences of this approach became glaringly obvious by the 1970s when, during a single month, one railroad experienced 649 derailments. In some cases, stationary freight cars simply fell off worn-out tracks.
As America’s freight rail network crumbled, Washington finally decided to act.
An unsung story of success
“America has the greatest economic system in the world. Let’s reduce government interference and give it a chance to work.” President Jimmy Carter used this line during his 1979 State of the Union address to demand that Congress deregulate the freight rail industry.
Through a series of legislative changes culminating in the passage of the Staggers Rail Act of 1980, Congress did just that.
In the 35 years since, freight railroads have roared back to life. Free from artificial controls, railroads are once again profitable and investing billions of dollars each year into growing and modernizing America’s privately owned rail network. At the same time, shippers have seen a dramatic decrease in rates. Between 1981 and 2013, average rail rates fell 43 percent, adjusted for inflation.
Today, railroads haul approximately one-third of all U.S. exports, employ about 185,000 workers and sustain millions of jobs in industries that are more competitive in today’s global economy thanks to the efficiency of freight railroads. Together, railroads now account for approximately 40 percent of intercity freight and operate the most efficient and reliable freight rail system in the world.
By any measure, the regulatory reforms passed in 1980 have benefited railroads, shippers and the greater economy.
History lessons like these are useful, especially if they keep us from repeating the painful mistakes of our past.
CLINTON/BUSH/OBAMA have already made it legal to harvest US timber and export as whole product largely to Asian markets. The difference is between being a first world nation that conserves timber and creates jobs in the US processing whole timber and being a third world nation that sends whole timber overseas where timber is processed and profits made. It is our freight rail taking much of this raw timber -----freight trucks do as well. Obama and Congress opened our national parks to MINING bringing foreign mining corporations to do so----we can expect the same in logging our beautiful national parks to the point of extinction---just as Foreign Economic Zone Malaysia did. Here we see how global trade laws allow global corporations to come in and simply ignore a sovereign nations' laws with no recourse. New Zealand was an environmental paradise -----now heading towards being a HAITI.
The deregulation of freight rail is tied to the intention of bringing these kinds of environmental practices to the US -----so Buffett wants to corner what will be the fleecing of our American natural resources and Obama/Clinton neo-liberals are passing all the laws, deregulating everything in sight to make this all happen just as in all Foreign Economic Zones globally.
'Samling operates a 25,000 hectare forest farm planted with North American Pinus radiata trees in the Gisborne region. During the 2013-2014 harvesting period, it cut 780,000 tonnes of timber, of which 97% were exported as unprocessed logs. The plantation has been FSC-certified since 2005 and was recertified last year by the Rainforest Alliance'.
Malaysian timber giant may lose FSC certification in NZ
Tuesday, 15 March 2016, 9:43 am
Press Release: Bruno Manser Fund
Malaysian timber giant Samling may lose FSC certification in New Zealand
Malaysian timber group accused of boycotting local sawmill industry - Complaint lodged against Samling’s Hikurangi Forest Farms over alleged breaches of FSC (Forest Stewardship Council) standards
GISBORNE, NEW ZEALAND. Local stakeholders in the East Coast region of New Zealand’s North Island have lodged a complaint against the Malaysian Samling Group with the Forest Stewardship Council (FSC), an international body that issues sustainability certificates to timber operators. Samling is accused of boycotting local efforts to build up a wood-processing industry and failing to provide sufficient economic opportunities to one of New Zealand’s economically weakest regions.
Samling is being criticized for exporting the bulk of timber harvested in New Zealand as unprocessed logs. Despite being a key player in the local timber business, the Malaysian group has consistently refused to provide timber at market rates to a new wood-processing facility built up by the Gisborne District Council, the Eastland Community Trust and Activate Tairawhiti in a joint effort to revive the local economy.
According to FSC principles, a timber operator is required to enhance local communities’ social and economic well-being and should maintain and enhance long term economic, social and environmental benefits from the forest.
Samling operates a 25,000 hectare forest farm planted with North American Pinus radiata trees in the Gisborne region. During the 2013-2014 harvesting period, it cut 780,000 tonnes of timber, of which 97% were exported as unprocessed logs. The plantation has been FSC-certified since 2005 and was recertified last year by the Rainforest Alliance.
According to Carrick Graham, spokesperson for the complainants, FSC have acknowledged the receipt of the complaint. Samling’s Hikurangi Forest Farms Ltd are currently expected to reply to the complainants, according to the FSC Dispute Resolutions system.
In case of non-compliance with the FSC principles, Samling may face a loss of its certification. In 2007, Samling lost the FSC certification for its operations in Guyana. Later on, the company was fined for illegal logging and blacklisted by the Norwegian Government Pension Fund.
What does the deregulation of our US timber export industry have to do with transportation? It creates the needs for growing deregulation in getting that raw timber to export ports. If we are processing timber in US -----near where timber is cut----no need to deregulate the entire trucking and rail industries.
We can expect this to soar as national parks and protected timber laws disappear MOVING FORWARD to America being that colonial entity as Africa to take all natural resources as exports. The idea that any Oregon Clinton global Wall Street neo-liberal embracing Oregon as a Foreign Economic Zone would really be trying to stop this or to help local workers is SOCIAL PROGRESSIVE POSING-----
'the U.S. has instead expanded exportation of logs to Chinese sawmills and plywood manufacturers'.
So a global monopoly of our freight rails combined with total deregulation able to move through our US cities with PORTS anyway they want to---these are the policies being passed these several years of Obama ----and yes, TRUMP will continue.
Want to create timber jobs? Stop the export of raw logs
By Guest Columnist
on June 13, 2011 at 7:45 AM
By Roy Keene
In a flier titled "DeFazio Fights to Save Timber Jobs," our congressman states his resistance to an Obama administration budget cut with "a devastating impact on BLM's ability to offer timber projects." DeFazio says,"Reducing the amount of marketable timber the agency is able to offer in fiscal year 2011 by 45 million board feet will cost 500 to 600 timber jobs."
Well, drive the Columbia River from Longview into Portland, and you can see big log ships lined up. At least 500 timber jobs leave the Northwest weekly as boatload after boatload of raw logs are exported to Asian mills. The Business Insider website reports, "While Canada has drastically raised lumber shipments to China in recent years, the U.S. has instead expanded exportation of logs to Chinese sawmills and plywood manufacturers.
With exports up 150 percent," the Insider says, "the U.S. is now the third largest softwood log supplier to China."Updated U.S. Forest Service data show 1,100 million board feet of logs shipped out of the Northwest in 2010, compared to 700 million feet in 2009.This year's first quarter exports, at 390 million board feet, are double the 191 million shipped in 2010's first quarter.
Extending 2011's accelerated export rate to year's end and applying DeFazio's 12 timber jobs multiplier to every million board feet, the Northwest could lose 26,400 family wage jobs to Asia in 2011. Add these jobs to the 8,400 lost to exports in 2009, and the 13,200 timber jobs sent overseas in 2010.
Since 2009, Oregon's politicians have collaborated with the timber industry, its scientists and token environmental groups to ratchet up federal logging supposedly to "restore" forests and increase jobs. At year's end, we'll have lost potentially 48,000 timber jobs to log exports during this three-year period. Not to mention 4 billion feet of timber ignominiously shipped out of our forests at a loss to soil stability, water quality, wildlife habitat,fish runs and quality of human life.
Ignoring the log export elephant in their midst, Oregon's delegation is using jobs, unproven "science" and a perceived timber famine to justify non-sustainable increases in public timber harvesting. Before stuffing sale programs with more historically cheap timber, our delegation should address not only log exports, but the huge uncut volume of federal timber already sold and held under contract.
Timber Data's tallies show 500 million board feet of Oregon's Bureau of Land Management timber sold but uncut in 2010. Add this to nearly 400 million feet of uncut state timber and 1,200 million feet of sold and uncut Forest Service timber. That's more than 2 billion board feet of uncut public timber held under contract in the Northwest!
Three hundred million board feet are in eastside national forests, where Sen. Ron Wyden proposes to triple federal logging. With 500,000 log-truckloads of public timber sold but uncut within hauling distance of Oregon's mills, how is it they're "starved for timber"?
BLM' s latest proposal to "restore" the Willamette Valley's forests with more logging -- the Long Tom Landscape Plan -- will log 160 million board feet (40,000 log-truck loads) from 9,200 acres. This sale is near Seneca Sawmill, which already holds 87 million feet of uncut federal timber under contract. Poised as "thinning," this insidious plan will log more old and blemished trees to be sold as "culls." Many will be chipped and their remains cremated in Seneca's biomass generator to haunt the air we breathe.
Today's political ploys to increase logging on public lands are little different than what they've always been -- well rewarded resource plundering.The reality is that global timber corporations are being allowed to exploit the Northwest like a Third World resource center. To honestly restore our jobs and forests, this inequity needs to be resolved by stopping the largest loss first -- the unrestricted export of raw logs.
In 1990, DeFazio implored the first Bush administration to resolve domestic timber shortages by invoking the Export Administration Act. This would have eliminated log exports from all public and private lands. Instead of attempting to increase federal timber harvesting, Oregon's congressional delegation should ask President Obama to do what Bush wouldn't -- invoke this act.
Keep the huge volume of Northwest timber already harvested or sold here at home. Stop raw log exports, and Oregon's timber workers can significantly swell their ranks to meet the world's increasing need for high-quality finished wood products. It's a win-win for the people and forests of the Northwest.
The designation of US cities as Foreign Economic Zones occurred late Clinton/early Bush---around 1999 and all public policy centered on DEREGULATING PORT POLICIES around global cargo ships vs our port trucking NOW FREIGHT RAIL tied to bringing US law down to Foreign Economic Zone law overseas. Here comes BUFFETT with his deregulated rail bringing crude oil-----natural gas-----and our whole raw timber to these ports----and freight truckers have for these few decades understood the mess all this creates. Remember, we do not need or want to be global ports of call----all we need is to rebuild our US domestic economies with communities having economies-----our local city economies growing AND VOILA---WE HAVE A SMALL MANUFACTURING RENAISSANCE. Just that creates jobs for trucking and rail----completely regulated earning millions in profits.....NOT BILLIONS BUT MILLIONS.
'The report described port pollution as “a classic externality problem.” Haveman told me at the time. “An externality occurs any time there is an economic activity which impacts people who aren’t directly involved in that transaction.” Premature deaths from diesel pollution—numbering in the hundreds annually at the time—were an extreme example of such externalities.
But there was a related problem, as I reported then: “Those at the heart of the market, the truckers, are powerless to express their strong preference for increased efficiency.”'
This is a long article---please just glance through to see what the real problems are around deregulation of transport industry.
Sunday, Feb 15, 2015 09:00 AM EST
Port truckers have gained two key victories, but the pain of deregulation persists
To see what's wrong with deregulatory, neoliberal economics, look no further than the struggling port truckers
(Credit: AP/Elaine Thompson)In Mitt Romney and George Will’s America, hard work is the key to success, and those who don’t make it—the 47 percent of “takers”—are simply people who, for whatever reason, just don’t work hard enough. But try telling that to the roughly 100,000 truckers servicing the nations ports, who typically work 50- or 60-hour weeks, yet make so little as so-called independent owner-operators that their families commonly rely on some forms of public assistance—particularly for healthcare—and they sometimes even receive negative paychecks. There’s a chronic shortage of truckers nationwide, with turnover rates as high as 97 percent reported in one quarter last year—and port truckers make significantly less than their long-haul counterparts. But there’s been no increase in pay to attract more truckers, as economic textbooks might have you expect. To the contrary, as Neil Irwin wrote in the New York Times:
Even as trucking companies and their trade association bemoan the driver shortage, truckers — or as the Bureau of Labor Statistics calls them, heavy and tractor-trailer truck drivers — were paid 6 percent less, on average, in 2013 than a decade earlier, adjusted for inflation. It takes a peculiar form of logic to cut pay steadily and then be shocked that fewer people want to do the job.
In short, the atomized world of struggling port truckers provides an excellent microcosm of what’s wrong with deregulatory, neoliberal economics. Which is why we should pay more attention to two key victories port truckers in Southern California won in January, both of which are rooted in the frayed, but still enduring framework of New Deal social democratic labor policy, which, in the spirit of John Locke’s social contract, recognizes workers’ rights as part of the fabric of civilization, not reducible to the totally commodified logic of the neoliberal marketplace, which too many mistakenly identify with Adam Smith. These two recent victories, small though they may seem, are deeply embedded in a long history of struggle to determine which vision shall prevail of how to create a good and just society.
The first victory, on Jan. 9, was the unionization of Shippers Transport Express, the first fruits of a series of mostly one- and two-day strikes last year, initially focused on just three companies until expanding dramatically at the end of the year. Shippers is only the second port trucking firm to unionize, following the Toll Group in 2012, but confidential negotiations continue with eight other companies that were struck last year, so it’s clearly a harbinger of more change to come. “This has been a long struggle and we are grateful that Shippers agreed to remain neutral during our campaign to become Teamsters,” said Mike Acosta, a port trucker employed by Shippers.
But Shippers was only neutral toward the end, and because it needed a graceful way to surrender after losing a key pretrial decision in federal court in late September that went in the truckers’ favor. That’s the perfect lead-in for the second victory of the month, on Jan. 28: a court case upholding a $2 million wage theft ruling by the California labor commissioner against Pacer Cartage, on behalf of seven employees who were found to be improperly classified as “independent owner-operators,” which was also the key issue that brought Shippers to the table. It’s taken quite some time, but rulings from all sorts of venues are inexorably starting to converge—state labor boards, the IRS, the National Labor Relations Board, state trial courts and courts of appeal, and now federal appeals courts as well.
In the Pacer Cartage trial, the fantasy world of neoliberal economics, with every man a Donald Trump in the making, collided head on with reality, which was much closer to the old sharecropper model of capitalism, as San Diego Superior Court Judge Jay Bloom recognized in his ruling. “Pacer presented testimony through its witnesses and experts that painted a rosy scenario of [truck drivers as] venture capitalists who could profit through this lease arrangement as independent contractors. However, this scenario was not supported by the evidence,” Bloom wrote. Trucker drivers’ capital stake was utterly illusory, he noted: “[T]he day the truck left the dealer, it had a negative equity situation. Moreover, when the drivers left Pacer there was no evidence they had any equity built up that was returned to them. In most cases, they just turned over the keys.”
The roots of the problem go back to the Carter-era deregulation of the trucking industry, as Rutgers labor studies professor David Bensman explained in his 2009 report for Demos, “Port Trucking Down the Low Road: A Sad Story of Deregulation.” In that report, Bensman wrote:
Deregulation has created an unsustainable freight moving industry in the United States. All the hallmarks of deficient public policy can be found along America’s logistics chain—bad jobs, environmental degradation and injustice, wasted energy, economic inefficiency, public health problems, blighted real estate, inadequate infrastructure and holes in the domestic security net. The port trucking sector… is the most obviously broken sector in the industry.
At its most basic, the deregulated market system simply ignored all costs, all impacts that didn’t show up in market interactions—a practice that inevitably favored those who did the most to pass their costs along to others. Deregulation was pushed by industry, but had progressive (not just neoliberal) support initially as well, Bensman noted:
The Motor Carrier Act of 1980, was hailed by liberals and the business community alike as a triumph of policy reform. Senator Kennedy and Ralph Nader led the reformers who charged that trucking regulation meant high rates for consumers, and monopoly profits for businesses…. Civil Rights organizations argued that deregulation would lower barriers that impeded African Americans from gaining a just share of decent trucking jobs.
But that’s not the way things played out, as deregulation brought about a widespread race to the bottom, supercharged by high profits based on externalizing unpaid costs, including public health and safety, and the environment. Negative impacts Bensman cited, and expanded on, included:
- Making highway travel more hazardous
- Triggering an environmental crisis
- Degrading the quality of port truck driver jobs
- Externalizing enormous costs onto the public
- Creating an inefficient logistics and goods movement system
- Diesel emissions cause significant harmful health impacts, estimated by one study to cost the state of California $20 billion annually.
- More than a quarter of port truck drivers surveyed in New Jersey rely on public clinics or emergency rooms for healthcare because they lack health insurance.
- Drivers’ family members often forgo routine preventive care that leads to serious health problems, putting additional and avoidable strains the health care system.
“We want change now. We want it yesterday,” port trucker Luis Ceja told the rally of several hundred truckers and community supporters in March 2007. “I hate that my truck pollutes and there is nothing I can do. We need to change,” he said. “We’re getting sick, we’re dying, little by little.” Later, in a press teleconference, he spoke of the truckers’ economic desperation: “We can’t afford a new one [truck] and it’s impossible to fix.”
Responding to this reality, following a long process of consultation, the L.A. plan originally called for all truckers to be treated as employees, with companies taking on both the costs and benefits of adopting new technology—though with a massive multi-agency clean truck subsidy worth hundreds of millions of dollars overall. It was designed to benefit everyone, and making truckers into direct employees was a key part of the plan’s whole architecture, which two methodologically different economic studies said was important for the plan’s long-term success.
One study, specifically commissioned by the Port of L.A., came from Boston Consulting Group, where Mitt Romney worked before starting Bain Capital. But the more insightful study was done by Jon Haveman of Beacon Economics. “The employment relationship is an essential element in creating incentives to use trucks efficiently and keep them well maintained,” Beacon explained in a press statement. The report described port pollution as “a classic externality problem.” Haveman told me at the time. “An externality occurs any time there is an economic activity which impacts people who aren’t directly involved in that transaction.” Premature deaths from diesel pollution—numbering in the hundreds annually at the time—were an extreme example of such externalities.
But there was a related problem, as I reported then: “Those at the heart of the market, the truckers, are powerless to express their strong preference for increased efficiency.” That powerlessness “is part and parcel of the pollution problem,” Haveman added. “Solving the efficiency problem is one important step for solving the pollution problem. If the pollution problem were internalized, there would be a much stronger movement toward reducing those inefficiencies.”
Shifting to a company/employee model could significantly reduce the size of the port trucking fleet, since each truck could be used by multiple drivers, just one of five key efficiency gains the report cited:
- Increased matching of inbound and outbound loads.
- Increased pressure on terminal operators to reduce wait times.
- Higher safety standards, both in maintenance and operation.
- More slip-seating (trucks driven more than one shift by more than one driver).
- Better use of off-peak pickup and drop-off opportunities.
Haveman was a strong believer in markets—but not a market fundamentalist. Markets weren’t magic in his eyes. They had to be properly designed to work properly, just like any human invention. He cited the hyper-efficiency of UPS and FedEx delivering millions of packages to millions of locations as a successful example of a trucking market working properly, with port trucking representing the opposite dysfunctional extreme, simply moving single containers from one point to another, but with no efficiency whatsoever. “Only 12 percent of the trucks flowing into ports carry loaded containers for export, even though exports make up a full third of overall traffic by weight,” his report noted, for example.
The movement of empties highlighted the inefficiencies involved. “Over 40 percent of the arriving trucks carry nothing (‘bobtail in’) and over 40 percent leave the port with nothing (‘bobtail out’), presumably en route to pick up an export, an empty container, or a chassis,” Beacon noted. As a result, “many container trips to and from the port require four turns—two to deliver the container out and return bobtailing, and two to bobtail out and return with an empty container.” As “independent” contractors, individual truck drivers were the only ones suffering directly as a result of this, but without any power to do anything about it. So everyone else suffered indirectly, instead, including everyone slowed down to a crawl by needless excess congestion—commuters as well as port truckers and other commercial vehicles. LA’s total cost of congestion was estimated at $23 billion in 2013, and the twin ports are the single biggest source of highway traffic.
Thus, while opponents argued against the port plan as an intrusion into the market, Beacon viewed it as a way to make markets work as they should—giving trucking companies both the incentive and the power to increase efficiencies that would thereby increase truckers’ pay. That’s just what the Port of L.A. argued in court—that it needed to make the trucking market work properly in order to compete successfully with other ports.
But the plan was killed by the American Truck Associations. ATA litigation against the Port of L.A. resulted in that provision being tossed out by the 9th Circuit Court in September 2011, and Long Beach scuttled that key part of its plan in advance, in order to avoid litigation. As a result, truck drivers ended up being forced into sham long-term lease-purchase arrangements for low-polluting trucks, which in reality they would never own, and—as Judge Bloom noted—rarely even gain any equity in.
The basis for the ATA prevailing goes back to the deregulatory framework first put into place in 1980, as Bensman describes, but its roots go back to an even earlier law, the 1978 Airline Deregulation Act, and the contemporary legal foundation is the 1994 Federal Aviation Administration Authorization Act, which “preempts” regulations by state or local entities regarding the “price, route, or service of any motor carrier,” with a few relatively narrow exceptions, none of which anticipated the magnitude and kind of harm that port trucking has caused. This sort of provision is typical of the neoliberal mind-set, which sees the unimpeded functioning of large corporations as the only thing worth prioritizing, and doesn’t want any local jurisdictions getting in their way.
To overcome these objections, which were anticipated from the beginning, the Port of L.A. adopted an approach first proposed by the NRDC, drawing a distinction between itself as a government/regulatory body (a self-funding department within the City of L.A.) and the financial reality that it is a “market participant” in the commerce it was seeking to reorganize under the Clean Trucks Program. Indeed, the NRDC lawyer arguing the case, David Pettit, pointed out that NRDC had sued the port to force it in this direction, and would sue it again if such a plan weren’t in place—a clear indication that the Port of L.A.’s actions were guided by a desire to have its business run smoothly, free from legal challenges, as well as compete with other ports. Furthermore, the Port consciously modeled its truck plan on similar plans regulating airport taxi and limousine service, with a similar system of licensing and documentation, which clearly was allowable under the FAAAA.
But this line of argument was rejected by a 9th Circuit Court panel in 2011, and other aspects of the plan were further disallowed when the Supreme Court ruled on the case in June 2013. The language used was, typically, heavy on legal precedent, and very light on the side of the actual real-world implications of what was being argued. The comprehensive protections of the Clean Trucks Program were simply too far outside the mind-set that had been created by three decades of neoliberal lawmaking and regulation to be seriously considered.
What has changed since then has been the resurrection of traditional workers’ rights protections, first established federally during the New Deal. Key to that resurrection has been the detailed refutation of the myth that port truckers are independent business owners, and key to that refutation was a December 2010 report, “Big Rig: Poverty, Pollution, and the Misclassification of Truck Drivers at America’s Ports,” which Bensman co-authored with Rebecca Smith of the National Employment Law Project and Paul Alexander Marvy of Change to Win. That report first consolidated the results of a number of studies done in the previous three years examining the conditions of port truckers on the East, West and Gulf coasts. Altogether, this reanalysis covered 2,183 workers at seven major ports. In each of these studies, the same picture had emerged—that of an exploited, underpaid workforce, in a badly broken system that also polluted the air and impaired the health of surrounding communities. Despite being designated “independent owner-operators,” they function just like employees, but without the protections of labor law.
But even consolidated into one national report, that extensive survey-based evidence, compelling enough for news stories, was not strong enough and sufficiently detailed to prove a case in court. Which is why the report also included a totally new investigation, to add specific detailed proof of the broad picture drawn by the mass surveys. It was based on IRS employment law, and extensive two-hour interviews, plus reviews of employment documents, with more than 50 workers from six ports. The report left no doubt that port drivers were clearly being misclassified as “independent owner-operators,” At the time, I reported that it cited three key points in the law:
- Port drivers are subject to strict behavioral controls. Trucking companies determine how, when, where, and in what sequence drivers work. They impose truck inspections, drug tests, and stringent reporting requirements. Drivers’ behavior is regularly monitored, evaluated, and disciplined.
- Port drivers are financially dependent on trucking companies that unilaterally control the rates that drivers are paid. Drivers work for one trucking company at a time, do not offer services to the general public, and are entirely dependent on that company for work. Like other low-wage employees, drivers’ only means for increasing their earnings is to work longer hours.
- Port drivers and their companies are tightly tied to each other. Drivers perform the essential (and most often sole) services of the trucking companies they work for. Drivers work for years for the same company; use company signs and permits; represent themselves to others as being from the company; and rarely offer their work independently of the company.
The report featured a foreword from economist Jared Bernstein, formerly Vice President Joe Biden’s top economic adviser. Setting the stage, he wrote, “What you’re about to read is a microcosm of one of the foremost challengs facing the American economy and the workers who keep it running: the fight for a decent pay in return for hard work,” adding that, “For port truck drivers and many others in related occupations, proper classification can mean the difference between a decent, family-supporting job, and working in poverty.” But he also added a significant note of hope: “With this update, we begin to see something you don’t see nearly enough of these days: a beginning of a story about economic justice, as cases against misclassifying employers are being brought and being won.”
Cases reviewed included state labor law enforcement actions in California, Washington state and New Jersey, with some cases appealed to higher jurisdictions, along with federal enforcement actions by the Internal Revenue Service, the Department of Labor and the National Labor Relations Board. But it wasn’t just encouraging anecdotally. “Given the positive findings from already-adjudicated complaints and the growing number of pending driver complaints, these filings have the potential to be transformative,” the report stated. “The industry’s potential liability for the labor and tax law violations these complaints address runs in the billions of dollars.”
In California alone, the report noted, “Some 400 port drivers have filed labor law complaints with the California Division of Labor Standards Enforcement (DLSE), the most in an state,” with decisions in 19 cases, averaging $66,240 per driver and $4,266 per driver per month, and pending claims even higher than that. Based on those claims, the report conservatively estimated that port trucking companies were liable for wage and hour violations of $787 million to $998 million each year in California, with a most likely mid-range total of $850 million. The report also estimated the industry’s total state and federal liability for unemployment insurance, workers’ compensation and income tax at about $563 million annually, for an overall total of $1.4 billion annually, “with non-quantified costs likely exceeding the figure significantly.”
“We counted the cost of wage theft just for California,” co-author Smith explained to me at the time. “We did not look at the wage theft that may be happening in other states and we didn’t look closely at the laws of other states and how they might deal with deductions, because one of the huge costs in California is that California law says that employers cannot deduct things like the cost of trucks. So, that was one of the reasons that the wage theft that you have is so high in California. Because not the same amount of enforcement is going on elsewhere, we couldn’t really quantify that.”
Reporting at the time, I noted, “Attorneys bringing the most recent class-action lawsuits cited the Clean Trucks Program as causing the illegal conditions in California, but the report indicates that severe worsening would be a more accurate description.” As Smith explained, “It created this condition where businesses could both require that a worker buy a truck from them—with finance conditions, which made it almost impossible for the worker to ever own the truck—and sign an independent contract or agreement.” This situation was richly illustrated by one Southern California case cited in the report, involving the company Seacon Logix. In that case, Smith said the judge “easily understood it. He said these are two contracts that are totally intertwined. You can’t just buy truck and you can’t just work, you have to do both. And when you lose the job, you lose the truck.”
But the story was not just about port truckers, Smith insisted. Their struggle is part of a much bigger struggle, challenging a business model that “really contributes to inequality… in a number of industries: misclassifying workers as independent contractors, engaging in sham franchise agreements and other illegal practices,” she said. Fields like landscaping, janitorial services and construction typically involve a “whole chain of contractors… and at the bottom of that chain, you will find workers who are often misclassified. There is starting to be a fair amount of resistance to those business models across industries and the recognition that those business models are a large part of growing inequality in our country, the deterioration and degradation of work in our country.”
That was just under a year ago. And the port trucking industry’s best hope then was that they might be able to use the FAAAA to preempt all the state and federal laws and regulations they were violating to the tune of more than a billion dollars a year. But it hasn’t turned out that way. Quite the opposite, in fact.
Last July, in Harris v. Pac Anchor, the California Supreme Court unanimously held that the FAAAA did not preempt California’s unfair competition law [UCL] in a case involving misclassification of drivers as independent contractors. The main thrust of the argument was that (a) preemption was not intended to casually sweep aside traditional state powers—only specifically relevant ones, [“we ‘start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress’”]; (b) there was no evidence that Congress specifically intended to preempt this power; and (c) the regulation of unfair competition applied to all business in generally, not specifically to trucking companies [“The UCL does not mention motor carriers, or any other industry for that matter; it is a law of general application”].
That same month, a three-judge panel of the federal 9th Circuit reached a similar conclusion in the case Dilts v. Penske Logistics. As the summary of that decision explained:
The panel reversed the district court’s dismissal, based on federal preemption, of claims brought by a certified class of drivers alleging violations of California’s meal and rest break laws. The panel held that California’s meal and rest break laws as applied to the motor carrier defendants were not “related to” defendants’ prices, routes, or services, and therefore they were not preempted by the Federal Aviation Administration Authorization Act of 1994.
The Dilts decision directly led to Shippers’ decision to not fight unionization. On Sept. 30, U.S. District Court Judge Beverly Reid O’Connell ruled on motions for summary judgment from both sides. First, she found in favor of the truckers’ key argument, affirming that “Plaintiffs have satisfied their burden of establishing an employment relationship with STE.” O’Connell then built on Dilts in denying Shippers’ motion to dismiss the suit based on FAAAA preemption.
With the neoliberal shield of the FAAAA removed, Shippers wisely chose to stop fighting the change and embrace it instead. Rather than continue to fight a losing battle in court, they announced a transition to an all-employee workforce in November, to begin on Jan. 1, and they subsequently agreed to stay neutral as the workers organized.
“Shippers’ transition to an employee-based business model is a crucial step in the drayage industry’s efforts to modernize, make the ports more efficient, and reduce congestion at the ports and on our freeways,” said STE general manager Kevin Baddeley, betraying no hint of the bitter struggle that had preceded the decision. “On unionization, we took a neutral position because we respect our drivers’ right to form a union,” he said. “Finally, through our productive dialogue with the Teamsters, we anticipate we will be able to improve operational efficiencies and stabilize our driver workforce.”
“This historic agreement represents an important step in drivers’ efforts to reform the drayage industry, and demonstrates clearly that labor and management can work together constructively to find solutions to challenges facing the industry and to the injustices facing the drivers,” said Fred Potter, director, International Brotherhood of Teamsters Port Division. “As Teamsters, Shippers drivers will now begin the hard work of negotiating a first contract to assure that they earn a fair day’s pay for a hard day’s work.”
A month later, the first negotiated contract was announced, with hourly pay increased 17 percent from $18 to $21 per hour, time-and-a-half overtime after 40 hours per week, full medical insurance, including vision and dental, covering individuals and their families – 100 percent of premiums paid by the employer, retirement security via a defined benefit pension plan, eight paid holidays and four paid sick days, and employment protections via a grievance procedure or conflict resolution process, plus a “just cause” requirement before drivers can be disciplined or fired. In short, it guarantees a secure lower-middle-class job, given the local cost of living.
In light of all the above, the Pacer Cartage ruling is just what might be expected. It’s in line with both the California State Supreme Court, and with the 9th Circuit, the top federal court, aside from the Supreme Court itself. But Pacer’s corporate parent, XPO Logistics, still says that it plans to appeal the decision. “We believe the drivers in question are properly classified as contractors, and that this case is without merit,” XPO’s chief operating officer Troy Cooper said.
It’s a bizarre claim, given that virtually no court in the last few years has agreed with that position. The few decisions that have favored trucking companies—such as the lower court decision overturned in Dilts—have favored them based on preemption, the now-rejected idea that the FAAAA flatly overrules general labor laws and other workplace and business regulations. They have not held that drivers are contractors, as nothing in the evidentiary record supports this now-discredited claim. But it continues to be good sound-bite material, and for now—unless the lawless Roberts Court chooses to intervene—that’s all that the trucking companies have left.
Truckers, on the other hand, have the battered but enduring protections of labor laws that past generations of workers struggled and died for. What they’ve won is a protection against commodification, against being reduced to nothing but things in the marketplace. Neoliberal ideologues may be horrified at this prospect. But economists like Haveman continue to argue that markets actually work better when we internalize all the costs incurred to all involved in the social contract. And their even more basic argument for equity is neither new nor subversive. In “The Wealth of Nations,” Adam Smith himself wrote:
Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.
If the ghost of Adam Smith smiles down at anyone at the ports of L.A. and Long Beach today, it’s newly organized truckers at Shippers Transport Express. The more others who join their ranks in the days and year ahead, the more broadly he will smile.
Of course we all know a Warren Buffett in ordering new rail cars for his freight train empire WILL BE INSTALLING self-driving trains------you can bet they will try to make them high-speed to save money-----so this is not simply an issue for passenger trains----our freight trains with crude oil---natural gas----whole timber will demand the right to profit from moving as fast as they can.
Remember, in all Foreign Economic Zones global corporations are given rights to operate as they want with no sovereign laws able to hinder profit so these freight trains will insist on going as fast as they can regardless of human capital safety.
It’s Not a Lack of Technology That’s Keeping Trains From Going Driverless
Airplanes have long been capable of flying on their own, Google’s self-driving car has racked up more than 300,000 miles on public roads and trains… well, trains still rely upon a guy in the cab to keep them going.
It turns out we have all the tech needed to make autonomous trains, and we’ve seen robotrains running in limited capacity since the late 1960s. The problem isn’t technology. It’s line of sight, and the massive distances trains need to identify and react to obstacles and bring a few hundred tons of steel and cargo to a stop safely.
“The stopping distance of a train is much longer than a car,” says Dr. David Clarke, director of the University of Tennessee Center for Transportation Research Center. “It could be close to a mile.”
Unlike a car, where friction between the tires and road is much higher, metal wheels on metal track makes stopping a whole lot harder. The radar-based adaptive cruise-control systems fitted to most luxury cars these days could conceivably be adapted to trains, but the massive time and distance needed to slow the train means there’s no effective way such a system could see far enough ahead to react in time. And there are just too many things that can obstruct the track.
“You don’t have rights-of-way that are completely sealed,” Dr. Clarke says. “There are no grade crossings, there’s no pedestrian access. It’s hard to detect a car stuck on the rails or a pedestrian on the tracks. You really need a human operator to deal with those systems.”
Safety aside, the humans keeping those trains running are none to eager to give up their gigs.
“Organized labor doesn’t like the idea of losing the jobs of its members to driverless trains,” says Clark. “There has been push back with the allegation of safety issues. Politically, that makes it hard to implement.”
There have been a few autonomous train systems deployed in recent years, including one in Ohio that carried coal from a mine to a powerplant. But that was in a relatively secluded area with a minimum of hazards.
Autonomous underground people movers or monorails have been around for a little more than four decades. London’s Underground uses a system called Automatic Train Operation, which runs from station to station with a human operator to handle avoiding obstacles, closing doors and dealing with emergencies. Unattended Train Operation systems are common at airports and amusement parks, but they’re limited to closed systems with little risk of people or obstructions on the rails.
“If you raised it off the ground, you could easily have an autonomous system,” Clarks says. “You just have to insulate the railroad.” That’s why most high-speed rail systems – including California’s proposed system — are required to be isolated from road crossings and built in less populated areas.
But the biggest hurdle to autonomous rail is the idea that if it ain’t broke, don’t fix it.
“There hasn’t been a particular interest in these systems,” says Dr. Clark. “And that means it’s going to be hard to get a driverless system in the cab.”
Warren Buffett knew XL would be built so this is simply hogwash. Buffett will be busy bringing plenty of oil, natural gas, and raw timber to these ports. One could see his rail cars backing up to XL to discharge into this pipeline.
Does anyone think it odd no one is talking about the fact that our native treaties will mean nothing with Foreign Economic Zone and Trans Pacific Trade Pact---there will be no native lands. Our native citizens around the world are always the first to be trapped in global labor pools----
'It is just day two of his presidency, and already Trump is taking a sledgehammer to the Obama legacy: in his latest move reported moments ago by Bloomberg, president Trump intends to sign two executive actions today that would advance construction of the controversial Keystone XL and Dakota Access pipelines, putting a spoke, so to say, in the train wheels of Warren Buffett's train-based oil transportation quasi-monopoly'.
Trump Angers Buffett – To Sign Executive Orders On Keystone, Dakota Pipelines
By ZeroHedge - Jan 24, 2017, 9:44 AM CST
It is just day two of his presidency, and already Trump is taking a sledgehammer to the Obama legacy: in his latest move reported moments ago by Bloomberg, president Trump intends to sign two executive actions today that would advance construction of the controversial Keystone XL and Dakota Access pipelines, putting a spoke, so to say, in the train wheels of Warren Buffett's train-based oil transportation quasi-monopoly.
The orders would fulfill campaign promises Trump made to approve both pipelines, which face strong opposition from Democrats and environmentalists, but ardent support from the oil industry and the GOP. The White House said Trump plans to sign executive orders at 11 a.m. Tuesday morning, but did not provide more details, nor did it respond to the Bloomberg report.
It’s unclear what exactly the orders would do and whether they would fully approve the pipelines or take some other steps in that direction.
If fully built by developer TransCanada Corp., Keystone would run from Alberta, Canada’s oil sands to the Gulf Coast in Texas, bringing heavy oil sands petroleum to refineries. Last month, the Obama administration ordered a comprehensive environmental impact statement to be conducted on the Dakota Access Pipeline before any decision could be made on building its final section below Lake Oahe in North Dakota.
Dakota Access has been the subject of internationally recognized protests that have fired up environmentalists and indigenous rights activists. They say that the pipeline threatens the water supply of the Standing Rock Sioux tribe, and further development of oil infrastructure threatens the climate.
Keystone was rejected under former President Barack Obama. Trump’s move on Energy Transfer Partners LP’s 1,172-mile Dakota Access project aims to end a standoff that has stalled the $3.8 billion project since September, when the Obama administration halted work on land near Lake Oahe in North
The moves, taken on Trump’s fourth full day in office, mark a major departure from the Obama administration’s handling of the controversial oil pipelines. The steps vividly illustrate Trump’s plan to give the oil industry more freedom to expand infrastructure and ease transportation bottlenecks.
The two projects require different approvals. Keystone needs a presidential permit to build across the Canadian border, while Dakota Access, developed by Energy Transfer Partners, needs an Army Corps of Engineers easement to build under Lake Oahe.
Expect an angry reaction from Buffett, which will promptly flow through to funded environmental protest groups, who will double down in their defense of the two pipelines, of which the Dakota Access was the prominent center of media attention in the waning days of Obama's presidency.