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California Cartage Co. to End Trucking Today

April 05, 1985|JOHN M. BRODER | Times Staff Writer

California Cartage Co. says it will halt its trucking operations today after 40 years in the business, blaming deregulation and fierce competition in the Southern California freight market.

More than 100 employees in the firm's Compton and San Diego terminals will be laid off, cutting its work force in half, President Robert A. Curry said. The company's warehousing and containerized freight operations will continue, he emphasized.

The Compton-based firm is one of hundreds that have succumbed to increased competition and lower freight rates since federal deregulation of trucking that began in 1980. The American Trucking Assn., a trade group, said more than 400 established trucking firms have closed in the past five years, replaced by giant national conglomerates and independent owner-operators charging lower rates.

"It's very difficult," said Curry, 54, whose father started the firm in 1944. "But you have to do the things that economics dictates in today's market."

He said he considered asking his unionized, full-time drivers, freight handlers and dock men to accept wage cuts and other concessions but decided against it.

"We didn't feel there was any possibility they could give us enough to make it viable."

An official of the Teamsters Union, which represents the Cal Cartage drivers, said that there is a surplus of truckers in Southern California and that it may be two years before all of the laid-off workers can find jobs.

"The freight industry is really hurting right now," said Carlos Valdez, business agent for Teamsters Local 208 in Los Angeles. "Cal Cartage's basic problem is profit margin. The union carrier, with his high labor costs, is having difficulty competing." He didn't criticize the firm's decision but said, "Of course, it hurts."

Curry said Cal Cartage lost money on its trucking operations last year, but he wouldn't say how much. Trucking accounted for about two-thirds of the company's 1984 revenue of $30 million.

The company also operates a major foreign trade zone in west Long Beach, which, along with warehousing operations in Compton, Wilmington and Richmond, Calif., will form the core of Cal Cartage's business.

A foreign trade zone is an area where foreign components can be transshipped or assembled with domestic parts without incurring customs duties. The California Trucking Assn. said Cal Cartage's withdrawal from the trucking business is unwelcome but not unexpected.

"Cal Cartage is a longtime local trucking firm in Los Angeles and California, a historic firm that's well-known and respected," said Joel Anderson, an economic development specialist with the association.

'Down Below the Bone'

"It has a lot of harbor business, which was deregulated in 1980, opening that trade to owner-operators. They don't pay any wages to themselves, so how can you run a high-class operation like Curry's against competition like that? Harbor freight rates have been driven down below the bone. Deregulation took away his niche."

Anderson said there's been a "huge shakeout" in the motor carrier industry since deregulation, with a large percentage of the victims being firms like Cal Cartage, which used employee drivers under fixed labor contracts.

"People think deregulation is over and done with," he added. "But in California we're still struggling with it."

For his part, Curry said he is "saddened" by the decision that he said he has been forced to make.

"It's the result of lots of thinking, analyzing the economics and just applying good business principles. There are just too many other non-union truckers on the road underselling us."

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