|Rip 'em up! Thousands of overloaded trucks roar over Puerto Rico's highways every day, ripping up the surface and causing the loss of millions in federal highway funds
The effect of 18,000 to 21,000 trucks crisscrossing Puerto Rico almost daily has brought the highways to the brink of disintegration, with potholes and broken pavement causing millions of dollars in damage to smaller vehicles. Ironically, the commonwealth government's inability to control the major culpritoverloaded trucksis resulting in fewer federal dollars for road repair.
For fiscal year 2004, the Puerto Rico Department of Transportation & Public Works (DTOP by its Spanish acronym) stands to lose nearly $8 million in funds allocated by the federal Highway Administration for the construction and rehabilitation of the island's highway network, unless it approves and implements soon a Vehicle Size & Weight Regulation (VSWR) for cargo transportation.
"The federal Highway Administration assigned Puerto Rico $79 million for fiscal year 2003, out of a possible $110 [MM TO VERIFY] million," said DTOP Secretary Jose Izquierdo. "Since 1986, we have incurred annual penalties averaging 10% of total funds due to noncompliance with several sections of the Highway Administration Code, such as Puerto Rico's lack of an over-21 drinking age law. By year's end, however, the proposed VSWR should be approved."
According to DTOP statistics, approximately $250 million was spent between 1993 and 2000 on highway reconstruction efforts that were supposed to last 30 years. During fiscal year 2002, the DTOPs annual $14.3 million budget was directed toward highway and bridge improvement projects.
Despite that investment, industry experts say problems such as overloaded trucks, deficient road designs, and faulty construction have reduced the highways average 30-year lifespan by half, urging major reconstruction endeavors.
Since 1998, three DTOP secretariesCarlos Pesquera, Sergio Gonzalez, and incumbent Jose Izquierdohave struggled to come up with a new VSWR that would apply to authorized drivers whose DTOP-registered vehicles use the islands highways, including cars, trucks, trailer trucks, tractors, and dump trucks. The VSWR will have to comply not only with the federal Highway Administration but also with several of the local industry groups it affects.
The proposed VSWR will be an amendment to Law No. 22 of Jan. 7, 2000, known as the Vehicle & Transit Law of Puerto Rico, which falls under DTOP. The regulation will define how much cargo can be carried and the acceptable length and width of vehicles, plus which security measures must be implemented. The VSWR also proposes a reduction in the amount of cargo a truck would be able to transport without incurring a fine. This would in turn reduce truck drivers incomes, unless tariffs, the amount drivers can charge, are raised.
Higher rates looming
Two government agencies are trying to come to terms with the group of drivers who move the islands goods regarding their demand for a 20% rate hike. Can they reach an agreement?
The main obstacle to the VSWRs approval is truck drivers endorsement of new tariffs. Though it may seem illogical, it is the role of the Puerto Rico Public Service Commission (PSC), not the DTOP, to establish rates for the cargo transport industry.
Since the PSC was created 40 years ago, under Law No. 109 of June 28, 1962, known as the Puerto Rico Public Service Law, there have been four tariff revisions, both permanent and temporary. Truck drivers are now demanding another tariff increase to compensate for the new VSWR.
In 2001 DTOP Secretary Izquierdo began negotiations with several groups on the proposed VSWR and PSC rates. He believed that if truck drivers concerns about the rates were not resolved, his VSWR negotiations would fail.
"The past administration approved a VSWR that would have been effective on March 30, 2001 and which I abolished the day before it was to go into effect," said Izquierdo. "I did so because there are two realities in Puerto Rico: what the regulation demanded and what Puerto Rico was going through at the time."
According to Izquierdo, the previous VSWR required a 40% load reduction that might have cost truck drivers 60% of their income. Yet if the PSC tariffs had increased 50% to compensate for the truck drivers income loss, Puerto Ricos construction industry might have gone into a tailspin.
"My decision was to repeal the regulation and look for other alternatives," said Izquierdo. "The governor created a commission that was composed of representatives from the DTOP, the PSC, several truck drivers organizations, and other industries such as cement and contractors groups."
According to the proposed VSWR, a maximum of 110,000 pounds of cargo will be allowed per vehicle. This includes the net weight, i.e., the weight of a cargo-less vehicle, plus the number of additional pounds it can carry, as determined by the vehicles number of axles.
For example, a vehicle with a single axle should not exceed 22,000 pounds of cargo on top of its net weight, whereas a truck with three axles should be able to carry up to 60,000 pounds on top of its net weight. Neither vehicle, however, should exceed 110,000 pounds. (See accompanying chart.)
"The 110,000-pound maximum came about as a result of a comprehensive, islandwide study conducted last year," said Evelyn Torres, an engineer who is deputy director of the Land Authoritys Planning Area. "Evaluations were made of highways and bridges from primary and secondary systems; pavement samples were taken to estimate their strength, axle load, gross vehicle-weight distribution trends, and load-equivalency factors.
"The result of the study, which also highlighted our lack of alternate modes of transportation such as railroads and waterways to move freight, brought about the U.S. Department of Transportations approval of a 110,000-pound limit for Puerto Rico. On the U.S. mainland, freight regulations limit the total weight of vehicles to 90,000 pounds," said Torres.
According to Torres, each state highway department in the U.S. has its own VSWR regulation for local highway networks. But any interstate systems built with federal funds must follow the uniform load limits of the Highway Administrations Title 23-Highways of the U.S. Code.
"I have also been working on what I feel is a satisfactory solution to the rate increases with new PSC President Jose Hernandez, who took over last month for Waldemar Quiles," said Izquierdo. "We are now proposing a 20% rate increase, which includes the 12% in temporary fuel subsidies that were approved in 1995 and 2001. Some truck drivers insist on a 20% increase on top of the 12% already granted, but I dont think that is possible now."
Conditional support from the PSC
The PSC has commissioned several studies to improve the truck drivers tariff system. Currently, the tariffs are determined using a complex table of rates based on the type of transport a trucker drives and the kind of cargo being hauled. The study commissioned from local consultant Estudios Tecnicos Inc. should improve the system.
The crux of the rate issue now is that truckers are demanding a new 20% increase on top of the prior increasesincreases that were supposed to be temporary fuel subsidies but which were never rescinded.
Copies of the approved resolutions for tariff increases provided to CARIBBEAN BUSINESS clearly indicate that the first and second subsidies were temporary, as were the 1998 rates for debris removal. Yet the PSC never repealed the temporary rates or, for that matter, made them permanent. By 2000, when the VSWR negotiations began, the truck drivers had requested another rate increase and a controversy was born.
Truck drivers worry new VSWR will reduce their wages
Given the DTOPs proposed VSWR regulation, which curtails how much cargo trucks can carry, truck drivers are rightly concerned that the reduced load capacity will have a negative financial impact on them.
For more than 10 years, Luis Falcon has headed the Brotherhood of Truck Drivers, which groups 42 organizations, including five trucking cooperatives. He considers himself and other truck drivers the proud successors of the carreteros, those who initially transported cargo in Puerto Rico on carts pulled by mules or oxen.
"Since 1996, we have encountered problems with the companies that use our services and dont pay us the approved PSC tariffs, which for a truck driver is comparable to a minimum wage," said Falcon. "The reason truck drivers are not given their rightful wages is that the PSC does not investigate our many claims or penalize contractors and construction companies for their noncompliance."
Falcon also disapproves of trucking cooperatives. "By hiding behind Law No. 50 [governing cooperatives], they violate other laws and regulations of Puerto Rico," he said.
"It would be great if the cooperatives complied with established tariff rates, but they have created illegal and unfair competition by not charging the approved PSC rates for the transportation of general, aggregate, or loose cargo," Falcon said. "Once again, we have notified the PSC and the Cooperative Development Administration, but neither has done anything." (See sidebar.)
Construction industry advocates gradual rate increases
Most construction industry members contacted by CARIBBEAN BUSINESS for this story were less concerned about the prospects of a new rate increase than about how it would be implemented. They also admitted that most in the industry are using the PSCs 1995 rate structure, instead of the higher tariff of October 2001, and are doing so with the PSCs knowledge.
Jose Toraño, senior vice president of Betteroads Asphalt Corp. and president of the Puerto Rico Asphalt Manufacturers Association (Prama), said he understands most construction firms are not paying the rates set by the PSC in October 2001.
"Prama met with former PSC President Quiles to let him know that we [asphalt producers] would honor the October 2001 fuel subsidy rate increase only if we were assured that every construction company was complying with the rates," said Toraño. "This subsidy was unnecessary, particularly since there were negotiations in place to come up with a new VSWR, which would require a rate increase."
Desarrollos Metropolitanos President Joe Vizcarrondo also admitted that his sector [general contractors] is using the truck drivers fee schedule from 1995. "If the DTOP and the PSC can come up with a final agreement about the VSWR and the rates, our industry will certainly back it up," he said. "And if the rates go up, we will have no alternative but to pass on the increase to our clients."
Vizcarrondos primary concern, though, is that any rate increase be applied in intervals, so it wont affect long-term contracts that have already been signed and approved for construction. "In our industry, we sign contracts that will begin construction six months or a year from the signing date. If a 20% rate increase is implemented at once, production could be affected; that is something the economy does not need right now," said Vizcarrondo.
Some industry sectors could be more adversely affected by rates increases than others. A 20% increase could add up to 14% to our operational costs on top on the rate hike, said Pramas Toraño. Asphalt producers will be most affected because they will have to pay for transporting raw materials from the gravel pits to the plant and from the plant to the customers.
Chicken or egg: Do bad roads come from bad construction or from too much weight?
Ivan Nicolau, former president of the Puerto Rico College of Engineers & Surveyors, sees great harm in trucks having been allowed to double and triple their cargo loads over the years. He is concerned about the punishment that Puerto Ricos roads and highways are taking from overloaded trucks.
"This is a matter of a concentrated weight on an area that was not designed to hold such a burden," said Nicolau. "We are constantly repairing our roads, having to replace concrete panels [losas de hormigon], which are very expensive. The alternatives are to use reinforced concrete panels that cost prohibitively more or to continue repairing and repaving the roads at taxpayers expense."
Will the trucking and contractor industries happily coexist?
The DTOPs Izquierdo may have best summarized the problems involved in resolving the current land transportation crisis.
"We cant say that truck drivers are the only ones responsible for the state of our broken-down roads," he said. "Overloaded vehicles are one factor, but we also have to consider how poorly designed and badly built some roads are. So we are being proactive in all three areas.
"Reducing trucks cargo loads is a big step in the right direction, one on which both trucking and construction industries agree to some degree," he continued. "Maybe in 10 years we can make even more progress and further reduce the weight requirements, or restrict the import of heavier trucks. But the answer lies in working on all three areas: overload, design, and construction. Solving just one problem will not make a difference," Izquierdo said.
Public Service Commission Tariff Rates*, 1971-Present
(in dollars and cents per kilometer)
*Rates are based on kilometer distances averaging 1 km to 12 km. Additional rates were imposed for distances over 12 km, ranging from $0.5 to $0.10 in 1971 and from $0.15 to $0.32 in 2002.
**Temporary fuel subsidy Increase
***Temporary rate increase due to Hurricane Georges.
||What the rate controversy is all about
BY MARIALBA MARTINEZ
The primary function of the Puerto Rico Public Service Commission (PSC), established under Public Service Law 109 of June 18, 1962, is to set tariff rates for the transport of cargo. In addition, it governs the rates for passenger vehicles such as taxicabs and tour buses.
Over the years, controversies have arisen regarding the rate increases approved by the PSC. It wasnt until 1988, however, that the PSC approved the first and only permanent rate increase of 24% for cargo transportation. Rates which had ranged from $0.81 per kilometer (km) to $2.42/km rose to a range from $1.00/km to $3.00/km.
In 1995 dump truck drivers, complaining about the rising cost of diesel fuel, demanded a second rate increase for transporting heavy aggregates such as asphalt, rocks, sand, and landfill. The PSC agreed to a temporary fuel subsidy for dump trucks, depending on their loads.
According to the temporary rates that year, transportation charges for asphalt increased 4%, from $1.55/km to $1.61/km; the price of hauling rock and sand went up 5%, from $1.34/km to $1.40/km; and landfill transportation costs had the highest gain, at 12%, going from $1.00/km to $1.12/km. A year later, the PSC also approved a 7.4% temporary fuel subsidy for drivers of trailer trucks.
Hurricane Georges in 1998 brought new rates for truck drivers who carried debris. The rates, which were supposed to be temporary, ranged from $1.47/km to $5.81/km. The PSC also switched that year from kilometer-based aggregate rates to fixed rates, intending to accelerate the removal of debris and the reconstruction of the island after the hurricane. These rates, however, were never rescinded.
In October 2001, as the Puerto Rico Department of Transportation & Public Works (DTOP by its Spanish acronym) worked on a proposed Vehicle Size & Weight Regulation, the PSC approved another temporary 5% fuel subsidy increasewithout first repealing the previous temporary fuel subsidies.
Before leaving office on Aug. 28, former PSC President Waldemar Quiles turned all temporary fuel subsidies into permanent rate increases. DTOP Secretary Jose Izquierdo told CARIBBEAN BUSINESS that incoming PSC President Jose Hernandez has agreed to a 20% staggered rate increase that includes the 12% temporary fuel subsidies, leaving a net 8% increase.
Truck drivers alternative work styles on the rise
With more than 30,000 truck drivers in Puerto Rico looking every day for cargo to transport, its no wonder that grievances among various organized groups are common and frequent.
Although organizations such as the Brotherhood of Truck Drivers and the Truck Drivers Trade Union claim to represent a vast majority of the industry, a growing percentage of drivers are choosing to work with cooperatives and private companies.
Two such cases are Camioneros-Cooperativa de Transporte de Carga (Truck Drivers Cargo Transport Cooperative) and Garcia Trucking Service Inc., a private moving, packing, shipping & storage company.
Established in 1965 under Puerto Ricos Law 50, which regulates cooperatives, Bayamon-based Camioneros is one of the most successful trucking companies on the island. In fact, its No. 1 on the 2002 CARIBBEAN BUSINESS list of Puerto Ricos largest trucking companies, with gross sales of $14.3 million in 2000.
"Camioneros currently has 127 members, each a truck owner who complies with the approved guidelines," said General Manager William Santiago. "In addition, there is a group of 108 replacement drivers for special cargo transportation assignments which require 18- and 20-hour shifts and must be shared by two drivers, as required by law. But every driver is fully evaluated by the cooperatives membership."
The company specializes in the transportation of petroleum derivatives, handling approximately 90% of the gasoline and diesel made by companies such as Texaco, Esso, Gulf, Citgo, and Shell. It also has contracts with the U.S. Postal Service, San Juan Cement, Betteroads Asphalt Inc., and all the armed forces on the island. In addition, for the past five months the company has been handling containers for companies such as Pepsi-Cola.
One of Camioneros most vehement opponents is Brotherhood President Luis Falcon, who claims cooperative members do not receive a fair rate for their services. Falcon alleges that Camioneros circumvents the cooperative law when it negotiates contracts for lower rates than those approved by the Puerto Rico Public Service Commission (PSC).
Santiago refutes the assertion, saying that Camioneros follows PSCs tariffs when negotiating its contracts. "The difference between a cooperative and other groups is in the service the former provides its members," he said. "The members sole responsibility is to drive his truck. Camioneros takes care of all his benefits, such as the trucks payments, insurance, maintenance, and repairs. The company can also deposit the drivers earnings, make personal payments, and fill out his tax returns. Each member decides what he wants the cooperative to do, and we make sure it gets done."
According to Santiago, between 78% and 90% of a clients contract goes to the membership, and a truckers annual earnings can be as high as $100,000.
Garcia Trucking Service Inc.
Garcia Trucking Service General Manager Anthony Rodriguez accomplished what few of his peers have ever achieved. On March 19, company truck drivers who were affiliated with Teamsters Union Local 901 went on a four-month strike.
During that time, Carolina-based Garcia Trucking did not lose a single customer, was able to meet all its contracted deadlines, and even negotiated a new labor contract with a substantially lower wage increase than the 35% the union had demanded. By the end of the strike, the unions initial 65 members were down to 25.
"The union was irresponsible in how it began its negotiation, and our employees knew it," said Rodriguez, who claims to have lost approximately $15,000 to vandalized trucks. "On the strikes third day, the unions delegate crossed the picket line and returned to work. He was followed by most of the employees, who understood that the unions demands had been unreasonable."
As a result of the labor strike, Garcia Trucking reduced the number of unionized truck drivers it directly employs. Now the majority of its drivers are subcontracted.
"Unions are forcing employees to strike without making a reasonable attempt to settle on a contract that is fair to both the employer and the employees. Companies such as Pan American Grain are being financially drained by these work stoppages, and some have even been forced to close. Someone has to put an end to this," said Rodriguez.
Fixing up the mess
To resolve other concerns about the successful implementation of the Vehicle Size & Weight Regulation (VSWR), Department of Transportation & Public Works (DTOP) Secretary Jose Izquierdo has brought in several of the agencys divisions, including the Land Authoritys School of Inspectors and the Traffic Order Corps.
Public Service Commission (PSC) inspectors as well as state and municipal police officers are authorized to fine citizens driving unsafe vehicles, whether they are cars, trucks, or dump trucks. However, there arent enough personnel to verify trucks maintenance and security records, or even to periodically examine truck drivers records.
As part of the VSWR initiative, the DTOPs Traffic Order Corps (COT by its Spanish acronym) invested $569,340 to create a special Truck VSWR Unit. With 30 COT employees and another 40 from the Land Authority (LA), registration centers are being established in various municipalities around the island.
COT and LA employees at each center weigh trucks on mobile scales and verify their vehicle identification numbers (VINs) against DTOP records. Already some 5,000 vehicles have been registered and certified in the program, which began in August and will run through the end of the year.
The DTOP will also build three permanent and three semipermanent weighing stations around the island, at a cost of $19.6 million. The first permanent station should be operational in Salinas by September, where 18 LA and six COT personnel will inspect trucks for weight, size, and safety violations.
When the Salinas truck-weighing station opens, all trucks passing through that area will have to enter the stations fast-track lane to be weighed. If a truck does not exceed its weight and size limitations, it should be able to continue within a few minutes. Trucks violating the VSWR will be inspected at a different station and fined.
Two additional permanent stations should be built in Vega Alta and Santa Isabel by 2004 and 2005, respectively, along with the semipermanent stations in Caguas, Gurabo, and Vega Alta. The same procedure will take place at all weighing stations.
This year, the LA also opened a School of Inspectors to recertify designers, inspectors, and contractors in the public works construction industry. The objective is to make sure that engineers who are hired to inspect public works will go by the DTOP building code. By 2004, all inspection engineers will need to be certified by the school.