Thursday, May 13, 2010

LA City Bars Biz With Arizona, But Port Not Included

While the Los Angeles City Council on Wednesday approved an economic boycott of Arizona over controversial immigration legislation recently passed in that state, the move is unlikely to have any impact on multi-million dollar contracts between the city-operated Port of Los Angeles and three Arizona trucking firms.

In response to the new Arizona immigration law, which takes effect July 23, the Los Angeles City Council voted 13-1 to ban most city government travel to Arizona and future contracts with Arizona-based firms.

However, the council left it up to the non-elected port harbor commission to determine the future of Arizona contracts with the port, including the three trucking firm contracts worth a collective $18 million.

The trucking firm contracts, with Arizona-based Swift Transportation, Knight Transportation, and Duncan and Son Lines, were part of the port's $60 million incentive effort to lure big name trucking firms into the Los Angeles drayage fleet. As part of the port's Clean Truck program, port officials offered $10,000 and $20,000 bounties for each clean truck the trucking firms would pledge to a certain rate of annual service at the port. The $20,000 incentive required 300 moves a year at Los Angeles for five years and the $10,000 incentive required a total of 600 trips per year at Long Beach and/or Los Angeles for one year.

The three firms have brought more than 420 trucks in to the Clean Truck program, roughly 5 percent of the total number of clean trucks now operating in the neighboring Long Beach and Los Angeles ports' drayage service.

All told, the three firms have already received more than $16 million from the city in truck incentives and could reap an additional $9 million if they meet the 600 per-annum trip threshold.

The three firms' contracts represent nearly a third of all the business the City of Los Angeles does with Arizona.

Earlier this month, John Holmes, deputy executive director of the Los Angeles port, offered a status report on the number of incentivized trucks that are meeting the program trip goals. These numbers include the trucks from the three Arizona firms as well as trucks from numerous other trucking firms that applied for the incentives.

Holmes said that as of February, port data indicated that 30 percent of the 1,860 incentivized trucks in the five-year incentive program had made at least 200 trips and were on track to reach the 300-trip minimum to meet the $10,000 incentive threshold level. Another 971 trucks in this group, said Holmes, or 52 percent, had made fewer than 100 trips to date. Within this group 393 incentivized trucks were found to have made no trips at all.

In addition, Holmes said only 22 percent of about 2,080 trucks eligible for the 600 trip incentive option (which includes some trucks from the 300 trip group) were on track to meet the $20,000 incentive threshold. Of this group, Holmes indicated that more than 1,300, or about 63 percent, of the incentivized trucks had made 300 or less trips to date.

The port is considering making adjustments to the incentive thresholds to allow more trucks to meet the goals and keep the incentives.