Port’s clean-rig program is running on empty
It sounded like a good deal: The Port of Los Angeles offered to pay $20,000 incentives as part of its Clean Trucks Program, launched Oct. 1 in conjunction with the neighboring Long Beach port to reduce pollution from trucking fleets serving the harbor.
That sent Vic La Rosa into overdrive.
The owner of Total Transportation Services Inc. ordered 111 trucks, some powered by cleaner-burning diesel and some by liquefied natural gas, each eligible for the $20,000 because they meet 2007 emissions standards.
Then came the roadblocks.
Port officials were expecting only modest interest in the incentive program -- maybe 1,000 rigs -- because eligibility hinged on far surpassing the requirements of the Clean Trucks Program, which initially bans all trucks built before 1989. Instead, more than 100 large and small trucking companies turned out, with as many as 7,500 trucks requiring grant money over the course of the next year.
On top of that, state officials nixed funding assistance and a federal agency blocked the collection of fees to support the program, forcing the L.A. port to dip into its strained budget for $44 million to cover the first 2,200 trucks.
That’s leaving Total Transportation Services of Rancho Dominguez and other motor carriers short of a full load.
“It’s like no good deed goes unpunished,” said La Rosa, who spent an average of $130,000 on his trucks. “We followed their directions and their plans. We felt it was the port’s responsibility to follow through on this. We’re out over $15 million on these truck purchases.”
Some carriers are worried they could go under if they don’t get all of the help they had anticipated.
Overseas Freight Inc. of Long Beach has committed to overhauling two-thirds of its 80-truck fleet and says it needs the $20,000 it expected for each new vehicle.
“Without the $20,000 promised by the Port of Los Angeles, it will be very difficult for us to get through the tough economic times ahead,” Joseph Wang, president of Overseas Freight, said in a recent letter to S. David Freeman, president of L.A.'s Board of Harbor Commissioners. The family-owned business has ordered 54 clean trucks, Wang said.
Brian Griley, president of Southern Counties Express Inc., a Rancho Dominguez company, has purchased 50 LNG trucks and 55 new diesel trucks. Without the port’s incentives, “my cash flow cannot support these start-up costs, and I fear we many not survive these ugly financial times,” he said.
Experts said that the hiccups in the Clean Trucks Program might be only the first in a series of unanticipated problems that will result from the biggest and most controversial effort any seaport has made to clean the air. Other ports are also pursuing green goals -- such as the Northwest Ports Clean Air Strategy in Vancouver, Canada; Seattle and Tacoma, Wash. -- but nothing on the scale of that in Southern California.
“Everything you are seeing in Los Angeles and Long Beach you will see happening at every other port around the nation as they attempt to clean up their acts,” said John Husing of consulting firm Economics & Politics Inc., an expert on goods movement. “But because they are the biggest, the busiest and most important ports, Los Angeles and Long Beach get to go first. They get to turn over all of the stones and find all the creepy crawly things hiding underneath.”
Los Angeles and Long Beach port officials initially had planned to use an electronic system at terminal gates beginning Oct. 1 to assess a fee of $70 for every 40-foot container. The fees would be used to help finance the purchase of newer, cleaner trucks. Los Angeles came up with the additional incentive of $20,000 for each of the cleanest trucks and exempted them from the $70 container fee.
But the fees were blocked by the Federal Maritime Commission, which also has filed a federal lawsuit against parts of the clean-truck plan and has claimed that the ports have overreached their authority and are interfering with interstate commerce.
The commissioners have repeatedly made requests for more information from the ports, and each request begins a new 45-day period in which the ports are blocked from charging the fees.
In addition, the ports have been told not to count on the state for funding, given the swelling budget deficit.
Growing concern from La Rosa, Wang, Griley and seven other trucking company executives who had, in total, purchased $126.5 million in new trucks convinced port officials that their reputation was on the line. The worst thing they could do was tell the trucking companies that they would have to wait until they were able to collect the fees meant to fund the program.
“The impact on large companies that maintain fleets of several thousand trucks would not have been fatal,” said John Holmes, deputy director of operations for the Port of Los Angeles, “but all some of the smaller companies do is drayage in and out of the ports. They have spent a lot of money procuring new trucks. If they don’t get these incentives, particularly in this economy, they will be exposed.”
Officials at both ports have decided to begin collecting the fees next month and are hoping that federal officials won’t try to thwart them again.
“The fee collection is essential to fully realize the environmental benefits of the program,” said Richard Steinke, executive director of the Port of Long Beach. Port of Los Angeles Executive Director Geraldine Knatz echoed that sentiment, saying: “It’s imperative that we start the program.”
With 2009 shaping up as an even slower year for trade at the ports than 2008 was, port officials are hoping that the Obama administration will fill the two vacancies at the five-member Federal Maritime Commission with appointees who are sympathetic to their efforts. But with so much more on the new administration’s plate than the ports, it’s not clear when or whether that will happen.
“We have to do everything we can to keep the clean-truck program going and everything we can to collect the fees for these incentives,” Holmes said.
La Rosa is happy that some of the money is on the way. But even with the $20,000-a-truck incentive, he says it won’t be easy to pay off and maintain the new fleet.
“Our business is down across the board from between 20% to 30% because of the economy. Our earnings have plummeted,” La Rosa said.
“We are heavily committed to this clean-air program. We want this to work.”