It's not unusual for shippers and carriers to oppose laws and regulations they believe will be harmful to their businesses. In fact, it happens regularly in California, where municipal and state legislators often target the transportation industry with environmental initiatives.
But now a different scenario is playing out around the Southern California ports of Los Angeles and Long Beach. Instead of simply opposing a costly anti-pollution program that could leave the ports without enough drayage drivers, some shippers and carriers have decided to become part of the solution.
At issue is the proposed Clean Truck Program (CTP), which is included in the San Pedro Bay Ports Clean Air Action Plan (CAAP). CTP aims to reduce truck-generated pollution at the ports by 80 percent over five years by phasing out all "dirty" diesel trucks and replacing them with 2007 low-emissions tractors or post-1994 retrofitted vehicles. The program, which would cost an estimated $1.8 billion, would be funded partly by government- and port-financed grants and state-issued bonds. The shortfall would be made up by a carrierpaid "truck impact fee" that could run as high as $54 per inbound gate move. The ports are also proposing a $26 "infrastructure and environmental cargo fee" per 20-foot container, to be paid by the beneficial owner of the cargo.
Much of that money would go to help motor carriers and owner-operators pay for new equipment. But the offer comes with strings—actually, tags—attached: Trucks purchased or retrofitted with those grants must be used only for port drayage for five years. The ports plan to rely on RFID tags and vehicle locator technology to monitor compliance.
The truck-replacement program also mandates that all drayage drivers must be employees of port-approved motor carriers and that all vehicles must be owned, maintained, and operated by those carriers. Some observers predict that, if approved, the mandate will wreak economic havoc on Southern California's drayage industry.
Critics take aim
Critics of the proposal say it has at least two serious flaws. For starters, the vast majority of the drayage drivers in LA/Long Beach are owneroperators who pick up and deliver containers either as independents or as contractors for local trucking companies. Few can afford to pay or borrow $50,000-plus for a new tractor or $15,000 to retrofit their current vehicle. Many of the motor carriers that employ them, moreover, are small family-owned businesses and are unlikely to have enough cash or credit to replace or retrofit the 16,000 trucks that serve the two ports.
Another problem is that drayage drivers are likely to balk at giving up their independence. At the recent Coalition of New England Companies for Trade (CONECT) Northeast Cargo Symposium, Dr. John Husing, an economist hired by the ports to assess the plan's impact, said that the number of drivers who told researchers they would go elsewhere if forced to become full-time employees is "enough to cause a supply chain disruption."
The proposed grant system won't cover the cost of all those vehicle purchases and upgrades, and the potential loss of drayage drivers at ports that handle 40 percent of the nation's containerized trade could be economically devastating, said panelist Peter Keller, president and CEO of NYK Line North America. Instead, Keller outlined an alternative approach to reducing air pollution that wouldn't put drivers in financial jeopardy or force a change in the drayage system.
What Keller is pushing is a plan developed by the Coalition for Responsible Transportation, a grassroots group launched by NYK, Target Corp., and trucking company Total Transportation Services Inc. The group wants to help owner-operators upgrade their vehicles by creating a "lease to buy" program for independent drivers who contract with port-approved motor carriers. Carriers would make the down payment on new or retrofitted trucks, treating it as a loan to the driver. The loan would be reduced by a certain percentage each year that the driver remains under contract and could eventually be forgiven entirely.
The coalition's plan would be funded by public grants and by contributions from shippers, ocean carriers, and trucking companies. Fees paid by shippers would also go toward raising drivers' pay.Why would shippers and carriers want to pay into the pot? Not only is it in their interest to prevent work-force disruptions, said Keller, but it also is an opportunity to take responsibility for reducing the dangerously high pollution levels caused by their own operations. That argument clearly has resonated: At press time, Nike had signed on to the program, and Keller said he expected most of the top 10 U.S. importers and their carriers to follow Nike's lead before the end of November.
The California truck-replacement program has sparked some interesting side dramas. One is the unexpected alliance between the Teamsters Union and groups like the National Resources Defense Council. According to Husing, these strange bedfellows have agreed to push each other's agendas in exchange for support of the clean air program, which explains how labor issues found their way into an anti-pollution initiative.He also charged that the union and the environmentalists are looking to gain more control over the import supply chain so they can pressure big retailers on their respective concerns.
Meanwhile, the American Trucking Associations (ATA) contends that the Clean Truck Program is illegal on two counts. First, the plan violates a federal law prohibiting state laws from governing motor carriers' prices, routes, or services, said Curtis Whalen, executive director of the ATA's Intermodal Motor Carriers Conference, who spoke on the same panel. It also violates a provision in the Shipping Act of 1984 that prohibits unreasonable or discriminatory practices by a marine terminal operator, said Whalen. "If the ports actually implement this plan," he added, "ATA will litigate."
Whether the truck-replacement program moves ahead in some form or is struck down on legal grounds, Keller said, the international trade community needs to take action sooner rather than later—and not just on the West Coast. "This is an issue that will move from Southern California to Northern California to New Jersey and Massachusetts very, very quickly," he warned. "This is an issue that is going to bother everyone very soon."