The efforts by the Ports of Los Angeles and Long Beach to find a way to cut emissions from the port trucking fleet while not upsetting the apple cart, so to speak, are growing more interesting. The Clean Trucks Program proposed in April still has not been adopted. Instead, the two Harbor Commissions will have a joint meeting on Friday, October 12 at the Doubletree Hotel in San Pedro, starting at 8:00 a.m., to hear testimony and consider their options.
On September 20th, two consultants presented findings of their economic studies to the Los Angeles Harbor Commission. Economist Dr. John Husing described his analysis of the likely economic impacts of the proposed program. (No matter what program is adopted to reduce emissions, the Transportation Worker Identification Credential, or TWIC, a federal security program, will take effect in the next few months, and that alone will reduce driver numbers as an estimated 15% to 20% would fail criminal background checks.)
The work of Dr. Husing and his team involved interviews with several hundred individual drivers and about 10% of the licensed motor carriers serving the port, along with other analyses. Four key questions emerged from the study:
1) What will be the effect of the proposed Truck Impact Fee? A fee contemplated at $50 per load for “dirty” trucks, the study found, would likely destroy the economic viability of hundreds of smaller carriers.
2) How can the ports finance grant funds to help truck owners retrofit or replace trucks to meet emission standards? With a $50 fee on dirty trucks, the demand for grant funds is likely to be acute within the very first year of the program, but the source of the total funds needed – close to $2 billion – has yet to be found.
3) How can lenders be enticed to loan money to truck owners to cover the upgrade or replacement costs that aren’t met by a grant? Most drivers and trucking companies don’t have the financial strength needed to borrow these amounts – on the order of $20,000.
4) How can the industry transition to a new structure without losing many firms? Smaller firms are likelier to be lost, but some larger firms could also fail.
Both consultants mentioned that the cost of trucking – even when increased by as much as 80% due to the effects of the proposed port program – is a small portion of total transportation costs: less than one percent of the $70,000 value of goods inside the average container. Paul Sorensen of BST Associates presented the results of a study that estimated how much cargo would likely be diverted from Los Angeles and Long Beach if the proposed truck plan were adopted. In case with the most diversion, he said, about 1.2% of San Pedro Bay cargo might find its way to other ports. Moreover, while substantial numbers of jobs could be lost, regional incomes could actually rise as workers earn more in wages and benefits under the new program and this money turns over in the local economy.
Despite the risk of substantial short-term disruption, the apparent eventual benefits of the program seemed to leave Commission President David Freeman confirmed in his commitment to proceed. In early October, a coalition of 34 national trade associations representing retailers and cargo shippers sent a letter to the Mayors of Los Angeles and Long Beach, saying that they hope to avoid litigation and asking that the proposed truck program be dropped in favor of a “more rational” approach. Clearly the argument will continue.
The presentations described here (both slides and video) can be accessed on the Port of Los Angeles web site.