Thursday, June 17, 2010

LA Port Board to Lower Truck Incentive Goals

The Board of Harbor Commissioners for the Port of Los Angeles voted Thursday to ease trip criteria required by trucking firms that received $44 million in incentive payments from the port to enter the local drayage market with cleaner burning 2007 or newer trucks.

The motion, approved unanimously by the commission, will modify the terms of the port's incentive program to revise minimum trip requirements, and allow firms that received incentives to reorganize their fleets and meet certain other conditions if they still cannot meet minimum trip requirements.

Port staff recommended these modifications "to address the economic changes that have occurred since the start of the incentive program" in late 2008 and "in recognition of the environmental benefits the port has received from having these clean trucks operating in the port since in the beginning of the Clean Truck Program."

Analysis of trucking moves by port staff have shown that while most of the incentivized trucks are working in the port, their frequencies or operation and weekly trip numbers are below the original criteria demanded under the incentive contracts.

In mid-2008, as the port was gearing up to implement the Clean Truck Program, the number of trucks signing up for port-mandated access license under the CTP were much lower than anticipated. Port officials, looking to bolster the number of trucks participating in the CTP, developed an incentive plan that would pay trucking firms to bring their clean trucks into the local drayage service.

The two truck plan financial incentives were designed to attract members of the trucking industry that did not rely on the port's financial grants to replace or retrofit their trucks.

As part of the port's CTP, 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 fully-loaded moves a year at Los Angeles for five years and the $10,000 incentive required a total of 600 fully-loaded trips per year at Long Beach and/or Los Angeles over a one year period. Incentives were only available to truck firms that had not used port funds to modernize their fleets.

The modifications approved by the port board on Thursday, which will take effect July 1, include: revising the basic minimum number of trips required for incentivized trucks from 300 to 150; allowing trips into neighboring Port of Long Beach terminals to be included in the basic minimum trip counts; allowing fleets to use an average of all their trucks making more than 75 trips to calculate basic minimum trip counts; allowing trucking companies a one-time opportunity to downsize their fleet; and, reducing the minimum trip count for the second incentive option from 600 to 480 trips.

Nearly $44 million in incentive cash payments were made by the port to 56 firms to bring about 2,200 of the 2007 or newer trucks into the local drayage market.

Under the 300 trip and 600 trip criteria, 13 of the 56 incentivized truck firms were facing paybacks for not meeting the incentive program thresholds of between $1.4 million to $1.9 million each, according to port staff.

In May, 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.

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 less 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 just over 1,300, or about 63 percent, of the incentivized trucks had made 300 or less trips to date.

Data for April, presented at Thursday's meeting, showed nearly identical compliance rates as the numbers presented by Holmes.

The Commissioners said that even with the new thresholds, the port is unlikely to pursue collections or legal actions against those trucking firms facing paybacks for insufficient trip numbers and is committed to negotiating with any truck firm as needed.

The Commission will revisit the need for further reductions sometime in July.