New Clean Truck Rule in California Takes Effect Next Year

Experts are forecasting that the drayage fleet in California may shrink by nearly 25 percent in early 2023 when a new clean truck rule goes into place. This will actually compound the effects of the AB5 worker classification law which was already implemented previously.

Truck and Bus Regulation

The new law, “Truck and Bus Regulation”, goes into effect on January 1, 2023 and will make all trucks made in 2009 or earlier banned from use. Due to the current fleet of trucks, it’s expected this new rule will drop drayage capacity in the state by nearly 25 percent, and a large percentage of trucks are older than 2009.

Many drayage business owners are already leaving California due to the implications of the previously passed AB5 law, which banned the independent-contractor model. This model unfortunately dominated most of the harbor drayage industry. While it’s not known exactly how much the AB5 rule will reduce drayage capacity, the compounded effect of this as well as the new “Truck and Bus Regulation” rule are certain to drastically reduce the labor force of drayage workers in the state.

As you might assume, this imbalance in supply and demand of drayage services will undoubtedly raise costs for shippers – something that shippers won’t be all to excited of in the face of severe congestion and record-high freight rates.

Experts are saying that increased congestion is inevitable over the next six months. Ports in Southern California are already bogged down, and the massive reduction in available equipment and trucks will increase congestion on port grounds.

Many trucking sectors in California already operate with employee drivers, however, the major ports of Los Angeles, Long Beach, and Oakland are mostly serviced by owner-operator drivers. Many of these drivers are trying to set up brokerage divisions to remain compliant with the new AB5 law.

Replacing Trucks Proving to Be Difficult

Replacing the near 25 percent of trucks that were made in or before 2009 in California is proving to be a difficult and incredibly costly task. The lead time of a few months until the regulation goes into effect isn’t nearly enough time to purchase and acquire the vehicles necessary to replace all trucks and keep drayage service operating at the same level.

Components and vehicles are incredibly difficult to acquire in the face of global congestion and a micro-chip shortage. This means several businesses will simply have to accept the fact that their operations will temporarily slow down.

It’s unknown for how long the AB5 rule and the new “Truck and Bus Regulation” will affect the drayage industry in California, but shippers should be prepared to see delays in the coming months and possibly some significant changes to drayage pricing in 2023. Drayage companies will almost certainly attempt to cover their losses by hiking costs up significantly – at least in the first several months of the new year.

If you have any questions about the implications of the new truck and bus regulation or AB5 rule, or have general questions about drayage and inland transportation solutions in the new year, please don’t hesitate to reach out to one of our team members! We would love to help your team in any way we can.

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