A Port of Los Angeles incentive program set up in 2008 to lure trucking firms into signing on to the port's clean truck plan appears to have paid out a great deal of money for less than stellar results.
While the port has paid out more than $44 million in incentives to date, port officials have found that approximately 70 percent of the 2,200 incentivized trucks did not meet the minimum number of gate calls required under the terms of the incentive plan. Each of these trucks could trigger a $4,000 payback clause in the incentive agreement.
Port officials also found that nearly 18 percent of these trucks falling short of the minimum trips have made no gate calls at all.
The port surmised that part of the problem is related to the downturn in the general economy, which has in turn led to the closure of a number of gates at the port.
Additional research showed that an upper goal set by the port for incentive program participants of 600 trips port-wide, that would have triggered a further financial reward to trucks attaining the goal, is only being met by less than 22 percent of the incentivized trucks.
The incentive plan began only months before the Oct. 1, 2008 start date for the Southern California ports' truck plan, when the port still had no major trucking firm signaling they would participate in the plan.
Fearing that there would be a serious shortage of drayage vehicles compliant with the truck plan rules when the program kicked off, Port of Los Angeles officials held an invitation-only meeting with representatives of eight large trucking firms in July 2008. Attendees at the meeting said that port officials asked what the port could do to entice these firms to sign up for the truck plan. Several said outright that the answer was money.
Following the meeting, Port of Los Angeles officials worked behind closed doors to negotiate an incentive package with two of the meeting's attendees – Arizona-based trucking firms Knight Transportation and Swift Transportation – to bring in hundreds of their new privately-funded trucks to the Los Angeles drayage fleet.
The finalized package as approved by the port's governing board offered trucking firms up to $30,000 per truck plan-compliant vehicle that firms placed in Port of Los Angeles drayage service.
The first incentive offered a one-time payout of up to $20,000 to those trucking firms that signed up for the truck plan but did not use truck plan funds to buy their trucks.
Applicants for the second incentive were to receive a $10-per-dray payout from the port on all loaded inbound containers moved through the port terminals, limited to a per truck maximum of $10,000. These trucks were required to be truck plan compliant and also not purchased with truck plan funds.
Trucks such as those owned by Knight and Swift were eligible for both incentives, for a total of $30,000 per truck. Another 56 trucking firms signed up for the incentives later, bringing the total incentivized trucks serving Los Angeles to about 2,200.
Part of the incentive plan requirements also set a minimum number of gate calls that each truck was required to make per year to establish it as being in Los Angeles port service.
Under the terms of the incentive plan the trucking firms were required to pay back $4,000 per truck that did not meet the minimum gate calls at year's end.
