Many Buyers of New Trucks Face Penalties at L.A. Port

This story appears in the March 22 print edition of Transport Topics.

The owners of more than two-thirds of the 2,200 new Class 8 trucks bought with the assistance of $20,000 each in Port of Los Angeles grants face financial penalties because their trucks will not make the required 300 gate moves during their first year of operation, port officials said.

In response, motor carriers said the economic downturn has made it too difficult to reach that goal, and they are seeking a change to the policy.

The port estimates nearly 20% of the low-emissions port-funded trucks have not made a single gate move since the incentive program began on July 1, and only 620 of the 2,200 trucks are on track to meet the minimum requirement.

“We estimate that only 30% of the trucks will meet the 300-trip minimum,” John Holmes, director of operations for the port, told commissioners at a meeting earlier this month. “Therefore, 70% of those that took money from the port will owe money back to the port.”

Under the terms of the carriers’ five-year contracts, the port could require them to return up to $4,000 for each year a truck purchased with port grants does not make the minimum 300 trips to pick up or deliver cargo. The port provided the cash as an incentive to get fleets to operate low-emissions vehicles to reduce air pollution at the busy facility.

The contracts for the funding were signed in December 2008, but the port did not begin counting trips until July 1, after terminal operators ironed out the glitches in setting up the new electric gate system to comply with the clean trucks program.

Since it was implemented on Oct. 1, 2008, the clean trucks program has banned from entering the port all pre-1994 and all 1994-2003 trucks that have not been retrofitted. On Jan. 1, 2012, the port will deny entry to any trucks that do not have 2007 or newer federal emissions complaint engines.

A provision in the clean trucks program calling for a graduated ban on owner-operators — challenged in federal court by American Trucking Associations — has been halted temporarily until a ruling on the issue after a trial now set for April 20 in Los Angeles.

Carriers said that not only has less freight been moving through the ports, but terminals have cut back drastically on their hours of operation. As a result, drayage operators said they have experienced longer wait times and made fewer trips.

Dave Berry, a vice president at truckload carrier Swift Transportation, Phoenix, told port commissioners that his company made a major commitment to the port by purchasing 600 clean trucks for about $60 million using the incentive program.

However, Berry said, the company at the time had no way to know the economy would turn sour. He asked commissioners to modify the contractual agreement “to reflect current realities.”

The world has changed since the company signed a letter of intent to buy the cleaner trucks in August 2008, Berry said, and many of Swift’s trucks will fall short of the 300-trip minimum.

“The stock market has crashed, unemployment has surpassed 10% . . . and we are now in what many are calling ‘the Great Recession,’ ” Berry said. “It looks like, in our enthusiasm to help solve an air quality problem in the Port of Los Angeles, we may have overcommitted.”

Albert Frazier, CEO of Total Transportation Services Inc., Rancho Dominguez, Calif., said his company purchased 97 trucks with incentive funding, but the economy has made it “nearly impossible” for the trucks to each make 300 gate moves by June 30.

Gates have closed at some terminals during Friday and Saturday off-peak hours, reducing the number of gate hours by about 20%, Frazier told port commissioners.

“So we can’t get the kinds of turns off our equipment that we thought we could,” he said.

After hearing from carriers, commissioners asked the port’s staff to present them with several options by April, including possibly cutting the number of required gate moves to 150 annually.

Cindy Miscikowski, commission president, said she has been told that a number of the carriers awarded the incentive funds haven’t even put tags on their trucks to enable them to enter port terminals.

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

The port thus far has awarded $44 million in incentive grants to the 58 companies that purchased the 2,200 trucks equipped with engines that met the U.S. Environmental Protection Agency’s 2007 emissions requirements.

Despite the fewer trips, the port’s clean trucks program is cleaning the air faster than port officials had hoped, officials said. Of the more than 10,000 trucks registered to perform drayage at the port, Holmes said, 6,320 are 2007-compliant and 83% of the gate moves are with 2007 trucks.

The port expects the number of 2007 trucks to total more than 7,300 by the end of April, he said.

The neighboring Port of Long Beach did not offer the $20,000 incentive and is not involved in the Los Angeles port program, said Art Wong, a spokesman for the Port of Long Beach.