Trucks: the Rate Mess

Since the mid-1970s the California Public Utilities Commission has bounced from the regulation of trucking rates to deregulation and back again to a modified reregulation. Against the background of national deregulation, the result has been a mess. Even the Public Utilities Commission’s staff has documented the fact that it can cost more to ship a truckload of freight across the Bay Bridge from Oakland to San Francisco than from Reno to San Francisco. Many Los Angeles-based shippers now routinely use warehouses in Las Vegas to escape exorbitant intrastate freight tariffs.

The PUC is taking up the issue again; its rational course is to set a steady path toward economic deregulation. The commission hearings will be a battleground between the Teamsters Union and the shippers, represented by the California Coalition for Trucking Deregulation and the California Trucking Assn. The coalition has produced compelling evidence that state rate-setting does not serve the consumer or the trucking industry as a whole.

The public fulcrum for the battle often is the matter of highway safety. The forces in favor of state controls claim that truckers are more likely to keep their vehicles in good condition and thus less prone to accidents. But the evidence does not support this argument.

A study by the Public Utility Commission’s Transportation Division has found that California Highway Patrol enforcement efforts are more effective than economic regulation in promoting highway safety. Regulated carriers were not found to be any more accident-prone than non-regulated carriers, the division said. In fact, accidents in which trucks were found to be at fault declined during a 10-year study period. The rate was highest in 1977, before federal deregulation and partial state deregulation.

On the basis of economics, there is no real argument. The trucking business is highly competitive, whether it is regulated or not. Regulation, the PUC’s Transportation Division said, “benefits some individual carriers and the Teamsters. These benefits, however, may come at the expense of the carrier industry as a whole, shippers, California consumers and labor in general.”

In particular, state rate-setting makes no sense when interstate carriers can charge whatever they want and can undercut California carriers in spite of the much longer haul involved. The Public Utilities Commission should reverse its U-turn of 1986 and head back down the road toward deregulation.