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January 20 2020

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20 The Journal of Commerce | Januar y 20 2020 www.joc.com International Maritime to the report. The ports' joint Clean Air Action Plan (CAAP), which was updated in 2017, calls for zero- emission trucks by 2035. "Newer trucks, especially NZE and ZE technology trucks, will only be competitive with the incumbent fleet if their purchase is subsidized," the report stated. In order to encourage manufac - turers to price their trucks compet- itively, the ports are attempting to generate a critical mass of new NZE and ZE trucks by subsidizing drayage operators so they can order larger volumes of trucks. "We want to be a market maker," Gene Seroka, executive director of the Port of Los Angeles, told the Harbor Transporta- tion Club in late December. The ports are requesting that comments from stakeholders on the Clean Truck Rate Draft Economic Study be submitted in writing by Jan. 31, 2020. In the meantime, the ports will hold a series of meetings to solicit comments from BCOs, truckers, and other stakeholders to learn of $35 to $50 per TEU would generate enough revenue to adequately sub - sidize drayage operators so they can afford to purchase NZE trucks and eventually zero-emission (ZE) battery and plug-in electric trucks when they become commercially available. NZE trucks certified by the Cal- ifornia Air Resources Board (CARB) will be exempt from CTF; only BCOs who contract with drayage operators with non-compliant trucks will pay the fee. The ports will receive comments on the fee and its impacts from the industry in January. The respective harbor commissions will decide what the clean truck rate will be later in the year and it would take effect around the end of 2020. "We want to understand what setting the rate will do to our com - petitiveness," Rick Cameron, deputy executive director of planning and development at the Port of Long Beach, told The Journal of Commerce. "We are not taking this lightly. We are taking it very seriously." First-in port Southern California's push for near-zero and, eventually, zero- emission trucks is an important development for North American ports that are being pressured by regulators to reduce harmful diesel emissions from port operations. Just as a fee in 2009–11 charged on "dirty" diesel trucks began a national move by other gateways to transition away from high-polluting diesel fuel, this latest initiative is expected to shift the drayage industry toward alternative fuels and electric-powered trucks. The ports anticipate that truckers looking to replace aging vehicles will be incentivized by a large subsidy to immediately transition to near-zero emission trucks. According to the ports' joint draft report, most truckers would be unable to afford NZE vehicles unless they receive a subsidy. NZE trucks — most likely those that operate on alter- native fuels such as liquefied natural gas (LNG) — cost about $250,000 each, compared with about $125,000 for a diesel truck, according to the report. Zero-emission battery and plug-in electrical trucks capable of perform- ing duty cycles in the harbor environ- ment are currently being tested. They cost about $320,000 each, according THE PORTS OF Los Angeles and Long Beach are weighing the implications of implementing a new fee some- where between $5 and $70 per TEU on loaded containers, the proceeds of which would be used to help subsidize the purchase of near-zero emission trucks by drayage operators. While port officials are sensitive to the added costs to beneficial cargo owners (BCOs), they also want to ensure the fee won't cause significant cargo diversion should shippers shift product to other ports to avoid the new charge. A much-anticipated draft economic analysis released by the ports in December suggested the most prudent approach would be to begin with the lowest possible fee needed to subsidize initial purchases of near-zero emission (NZE) trucks, rather than starting too high, which could cause permanent damage. The new fee would be known as the clean truck fund (CTF) rate. "A low CTF rate that is shown to have no competitive impact on the ports could safely be incrementally raised," the report stated. "Con - versely, it may be impossible to undo the damage of a CTF rate that is initially set too high." According to the analysis, per- formed by Davies Transportation Consulting, a fee of $5 per TEU would cause the ports to lose 17,000 TEU in annual volume, while a $70-per-TEU CTF would cause the cargo diversion to increase to 241,000 TEU per year — 1.4 percent of the Los Angeles and Long Beach complex's total import volume. The analysis concluded that a fee Leading the charge LA–LB ports balance new clean truck fee with cargo diversion threat By Bill Mongelluzzo "Newer trucks, especially NZE and ZE technology trucks, will only be competitive with the incumbent fleet if their purchase is subsidized."

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