August 6, 2020 — A new rate to support the transition of the drayage fleet serving the San Pedro Bay ports to 100% zero-emission trucks will be delayed until 2021. Originally due to start this fall, the $10-per-TEU (twenty-foot-equivalent unit) surcharge is being postponed until sometime next year due to the ongoing economic impacts of the U.S.-China trade war and the global pandemic.
Meanwhile, the ports are continuing to work with their industry and regulatory partners to develop the new Clean Truck Program, including the Clean Truck Rate approved by both ports in early March. Currently, only zero-emissions trucks are identified as exempt from paying the rate; however, other potential exemptions are under consideration.
“We need to add the near-zero trucks to the exemption category as another incentive to get people to buy them,” said Long Beach Board of Harbor Commissioners President Bonnie Lowenthal. “If we want to reduce emissions sooner than later, we really need to do that. My hope for the future is that near-zero-emissions trucks are included.”
Lowenthal made her recommendation at the July 27 Long Beach Board of Harbor Commissioners meeting following a staff update on the status of the new Clean Truck Program.
Port Executive Director Mario Cordero kicked off the presentation with an overview of current economic realities, marked by an overall 6.9% decline in cargo volume for Long Beach for the first six months of 2020 compared with the first half of 2019. While the downward trend has reduced the complex’s nationwide market share to 30.7%, the L.A.-Long Beach gateway is faring better than other U.S. ports, Cordero said.
Amid the ongoing economic uncertainties, the work of updating the Clean Truck Program continues, Cordero said. The focus is currently on how to structure exemptions to the pending $10-per-TEU rate and craft financial incentives for trucking companies to invest in the cleanest available models going forward. Cordero said options such as electric trucks and fuel-cell models are expected to be available in the coming years, but near-zero-emissions trucks may be the bridge to continue reducing emissions in the interim. “We expect to have a maximum effect on how to transition to the available technology and immediately proceed to reduce emissions as much as we can.”
The presentation was the Long Beach board’s first update since adoption of the Clean Truck Rate in early March. Heather Tomley, Managing Director of the Port’s Planning and Environmental Affairs Bureau, confirmed that staff from both ports are working with industry partners, regulatory agencies, truck dealers, and original equipment manufacturers on how to structure the incentive program. The ports are also evaluating the time frame for an exemption for near-zero-emissions trucks, if included.
GOAL IS ZERO EMISSIONS
The ports of Long Beach and Los Angeles are developing a comprehensive joint strategy for accelerating the transition of the entire fleet to zero-emissions trucks by 2035 — a long-term goal established in the 2017 Clean Air Action Plan Update. The exemption question is one of many issues under consideration to determine how to meet the goal. The strategy will also address technology, the cost and commercial availability of clean trucks, financing, funding for incentives, infrastructure, workforce development, regulations, and legislative advocacy. A draft of the plan is expected to be released for public comment later this summer.
The Clean Truck Rate was established to create a pool of incentive funds to help the trucking industry purchase near-zero- and zero-emissions drayage trucks. The cost will be paid by cargo owners on loaded containers moved by truck. Collecting the rate, managing the pool of money, and allocating it in the form of incentives are other key elements the ports are working on, Tomley said.
Based on today’s commercial availability, a new near-zero-emissions natural gas truck averages $188,000 including taxes and fees. By comparison, a new diesel truck costs about $128,000 with taxes and fees. Typically, large trucking companies offering a range of services in multiple markets tend to buy new trucks, while smaller companies and independent owner operators usually purchase their drayage trucks from the used market where the cost averages around $50,000 to $60,000, Tomley said. “Covering that cost differential — either down to the cost of a new diesel or coming up with some kind of financing mechanism so that the drayage operators can meet the financial obligations of the new truck — is an ongoing challenge for us and something that we’ll need to continue to address through the development of creative financing mechanisms and through the availability of incentives to help support the drayage truck industry.”
As part of the process, the ports have already completed related feasibility and economic studies. They anticipate bringing forward a contract to the Harbor Commission in the coming months to develop the rate collection mechanism. At the state level, the California Air Resources Board is poised to consider phased-in near-zero-emission, ultra-low NOx engine standards in August. In June, the state regulatory agency adopted a landmark rule requiring truck manufacturers to transition from diesel trucks and vans to zero-emission trucks beginning in 2024. The state’s goal is for every new truck sold in California to be zero-emissions models by 2045.
Prior to initiating the rate collection, harbor commissioners from both ports will consider a tariff amendment to finalize the program and set a starting collection date. Additionally, the ports are expected to consider an agreement with an independent third party to administer the incentives. When implemented, the Clean Truck Rate could generate approximately $90 million per year, based on estimates of expected cargo volumes made in March.
The same fleet of drayage trucks serves both ports. Since the start of the Clean Truck Program in 2008, emissions of diesel particulate matter from heavy-duty trucks have plummeted 97% at the Port of Long Beach and 96% at the Port of Los Angeles. Still, trucks remain the largest source of greenhouse gas emissions and the second-highest source of smog-forming nitrogen oxides from port-related operations.
Statistics for June show more than 18,000 trucks are registered to work in the San Pedro Bay port complex. Nearly 74% of the total visited a Port of Long Beach terminal during the month. As required by the ports, any new trucks entering the Port Drayage Truck Registry after Oct. 1, 2018, must be model year 2014 or newer, the cleanest models widely available in today’s market. The June numbers show 3,841 new trucks – more than 21% of the total in the San Pedro Bay registry – in service at the Port of Long Beach are model year 2014 or newer. However, the number of near-zero- and zero emissions trucks calling at the Port in June totaled 98 – about half of 1% of the total fleet registered to operate at the ports.
Public comments on pending changes to the Clean Truck Program also favor exempting near-zero-emissions trucks from the Clean Truck Rate. Eric Mathis of the Harbor Trucking Association said companies need to know they can invest in near-zero-emissions trucks and use them for the life of the vehicle. He also urged the commission not to use the funds raised by the Clean Truck Rate for research and development. “Funds collected by the Clean Truck Program should go directly back to the trucking community to purchase commercially proven and ready-to-operate clean trucks.”