California Trucking Needs Innovation Not More Regulation

California is in the process of outlawing the use of diesel trucks on California roads by 2042. The program starts in 2024 with phase-in limits. Last week, the Environmental Protection Agency (EPA) approved the legislation.

This follows last year’s legislation banning all diesel vehicles over 14,000 pounds and built before 2010 from operating in California. The state also bans the sale of new cars that run entirely on gasoline by 2035.

The current legislation seeks to regulate without rethinking the current mental model of trucking. Why should we regulate the existing model? Why don’t we use this as an opportunity to question the relationships between truckers and shippers and drive innovation?

Let’s start with the facts. California leads the nation in Greenhouse Gas emissions. The transportation sector accounts for nearly 40 percent of these emissions. Approximately 1.8 million heavy-duty trucks on California’s roads will be affected by the regulation. The goal of the legislation is 510,000 carbon- free medium and heavy-duty vehicles on California’s roads in 2035, increasing to 1.2 million in 2045 and nearly 1.6 million in 2050, according to the air board. The goal is aggressive. Currently there are 1943 zero emission medium and heavy-duty vehicles on the state’s roads with nearly all being public transit. The legislation beginning the phase-in of electric or hydrogen-powered vehicles is targeted to start in 2024.

Is the Answer Innovation? Not Regulation?

Transportation is an essential supply chain component. Goods don’t move without trucks. Today’s supply chain is antiquated and inefficient. The truck driver is an unsung hero. Trucking is an industry of small business: 96% of trucking companies operate less than twenty power units. Today, the truck driver idles or deadheads 50% of the time. The main issue is shipper practices.

Building network infrastructure and changing market incentives could reduce the number of trucks on the road by 30-40% while improving the take-home pay of a truck driver. Fewer trucks on the road not only improves Greenhouse Gas Emissions, but also reduces traffic congestion and wear on roads. Shouldn’t California seek to reduce movement and make trucking more effective versus focusing on regulation of the truck industry?

The Chance to Redefine The Transportation Industry?

California is regulating the power units of trucking companies without rethinking the paradigm of trucking. Current systems, using route guides at the enterprise level, are obsolete and need to be abolished. In the supply chain, the shippers (manufacturers and retailers) hold the cards and wield power, but there is no incentive for a manufacturer to be a good shipper. The right approach requires systems thinking. Trucking is a game of shared assets. Today, it is a team sport with bad actors. California has the opportunity to change trucking and drive systemic improvement.

This is not just a California issue. The state cannot operate in isolation. Produce needs to get to New York. The major ports in the United States are in California. (Within California there are twelve ports processing approximately 40 percent of all containerized imports and 30 percent of all United States exports.) Long haul trucking in and out of California is a requirement for inter-state commerce.

The state needs to aggressively attack the issues that drive the fact that 40% of the time the trucks on Los Angeles freeways are empty. To drive sustained improvement, we need to optimize movement. To accomplish this goal, California needs to lean into the private sector to test the building of outside-in dynamic transportation networks. The work needs to redefine the relationships between shippers and carriers. Regulation of power units is a slow and painful process when the state needs fast action to reduce Greenhouse Gas Emissions. The carrot is always more effective than the stick.

This new approach embraces dynamic network real-time routing while penalizing shippers that operate inefficiently with dock door delays and idle time. In addition, automation of the trucking industry to make it safer and improve the working conditions for truck drivers needs to be the goal.

Considerations:

Before moving forward on power unit regulation, the state should consider:

1. Hyperloop and Port Automation. Most of the California ports are landlocked and dependent on inefficient chassis operations. The state needs to eliminate power units by moving containers from the ports inland through major cities underground and chassis free. Port automation needs to happen. The state needs to wield the power to move past the concerns of the unions and port operators.
2. Changing the Metrics. Reward Good Shipping Behavior. The crux of the issue of idle and dwell time of trucking is rooted in shipper behavior. If networks rated freight costs based on how a shipper moves freight, trucks would move faster and more effectively. Bad shippers should be penalized.
3. Fund a Network of Networks for Trucking. Use real-time data and dynamic routing to enable route design and loading. Put Silicon Valley to work to drive inter-operability between networks to share routes and asset availability.

Summary

Regulation of power units is easy, but less effective than rethinking the paradigm of trucking. The process of regulation will take longer to drive change, than redefining the roles of transportation operators and shippers. Redefining fuel systems of power units in trucking misses the point that 40% of trucking is waste, and that the power to move waste has to come from somewhere.