L.A. Port OKs Plan to Ease Requirements for Minimum Number of Truck Trips

This story appears in the June 21 print edition of Transport Topics.

Harbor commissioners at the Port of Los Angeles late last week approved a proposal that will allow drayage operators — who were provided millions of dollars for the purchase of newer, cleaner trucks — to cut in half a requirement that they make a minimum of 300 annual trips to the port.

The commissioners previously asked the port’s staff to study ways to amend the provisions of the Early Commitment and Efficiency Incentive Program so that most of the drayage operators hurt by the recession would be required to make only 150 annual trips to pick up containers — and allow those trips to be made either at the Port of Los Angeles or neighboring Long Beach.

The proposal also will give carriers an alternative fleet averaging method to avoid paying the port a $3,000 to $4,000 penalty for each truck that did not meet the minimum required number of visits.

“Staff recommends these modifications to address the economic changes that have occurred since commencement of the incentive program and in recognition of the environmental benefits the port has received from having these clean trucks operating in the port since the beginning of the clean truck program,” John Holmes, the port’s deputy executive director, wrote in a memo to commissioners.

A total of 56 drayage operators in 2008 received $44 million in incentives — up to $20,000 per truck — to purchase 2,200 of the 2007 EPA emissions-compliant trucks. Carriers originally were given the $20,000 with the stipulation that they make at least 300 trips a year to pick up containers.

An extra incentive would give carriers an additional $10,000 for each truck that made 600 trips combined to the ports of Los Angeles and Long Beach in a year.

However, after hearing pleas from some of the drayage operators, commissioners said at their March meeting that they would reconsider ways to lessen the requirements.

Drayage operators had complained that the sluggish freight economy had caused the port terminals to close gates and reduce staff, which in turn significantly reduced the carriers’ productivity.

The Port of Los Angeles announced the program in 2008 because they said that the new trucks would help cut diesel emissions and encourage private investment in cleaner trucks. Although many drayage operators serve both the Ports of Los Angeles and Long Beach, Long Beach did not provide funding for the incentive program.

In March, port officials said that only 30% of the trucks purchased with program funds were on pace to meet the required minimum (click here for previous story).

However, port officials estimate that about 80% of the 2,200 trucks will meet the minimum requirement if harbor commissioners approve the amendment.

Officials estimate the remaining 20% that fall short will be required to reimburse the port up to $1.9 million.

Port staff would not comment on the proposal and would not release a list of those companies that have not met the requirements until after commissioners approve the amendment, presumably at their June 17 meeting.

The largest recipient of incentive funding was Swift Transportation, which was awarded $11.8 million to purchase 591 trucks.

Dave Berry, vice president at Swift, said the company could not comment on the program or how many of the nearly 600 trucks it purchased with incentive money would meet the new requirements.

However, at the March meeting Berry predicted many of the trucks purchased by the carrier would fall short of the requirements.

Other large funding recipients included Knight Transportation, $3.4 million for 170 trucks; Harbor Rail Transport, $2.4 million for 120 trucks; Pacific 9 Transportation, $2.2 million for 110 trucks; Total Transportation Services, $1.9 million for 97 trucks; Fargo Trucking Co., $1.7 million for 85 trucks; Duncan & Son Lines, $1.2 million for 62 trucks; Maritech Trucking, $1.2 million for 60 trucks; Southern Counties Express, $1.1 million for 55 trucks; Progressive Transportation Services, $1.2 million for 61 trucks; PDS Trucking, $1.2 million for 60 trucks; Pacer Cartage, $1 million for 50 trucks; and Eco Trucking, $1 million for 50 trucks.

“We’ll definitely meet the 150 requirement on our 97 trucks,” Victor LaRosa, president and co-founder of Total Transportation Services, told Transport Topics. “But it was a challenge for the guys who took money, but didn’t run the port on a regular basis.”

“So for companies that came in thinking this was going to be a nice side business, I think they’re going to wake up and realize it’s not as easy as it looks,” LaRosa added.

Messages left with several drayage operators who received large amounts of incentive funding were not returned.

In March, Cindy Miscikowski, harbor commission president, said she has been told that many carriers awarded the incentive funds hadn’t even put tags on their trucks enabling them to enter port terminals.

“They almost used us as a bank,” Miscikowski said. “We’re not a bank.”