Private financing covers purchases of most clean trucks
The unpopular clean-truck fees that the ports of Los Angeles and Long Beach began collecting
two weeks ago could be ended within a year if motor carriers continue to finance the purchase of
environmentally-friendly trucks with private money.

Revenue from the $35 per-TEU fee is intended to subsidize motor carriers that purchase 2007
model or newer trucks that comply with the emissions requirements in the ports' clean-truck
program.

Since last fall, however, motor carriers have entered into harbor service about 3,000 trucks that
comply with the ports' diesel emissions regulations. Many of the trucks were purchased with
private capital, while only a fraction of the new trucks were purchased with subsidies through the
ports' clean truck center.

The fees are charged directly to cargo interests that send non-compliant trucks to the harbor. The
Federal Maritime Commission charged that certain exemptions in the fee program are noncompetitive.
The FMC delayed implementation of the fees for several months and has sought a
temporary injunction against the fees in litigation before the U.S. District Court in Washington.

Port officials concede that the fee program has never been popular. "It has been booed and it has
been sued," S. David Freeman, president of the Los Angeles Board of Harbor Commissioners,
told the annual Trans-Pacific Maritime conference sponsored by the Journal of Commerce in Los
Angeles.

When the clean-truck fees were proposed, the ports estimated that they would generate about
$1.5 billion over five years, which would be almost enough money to subsidize up to 80 percent
of the cost of replacing the approximately 16,000 old, non-compliant trucks that called in the
harbor on a regular basis.

Developments since last fall are causing the ports to re-think the need for massive subsidies.
Geraldine Knatz, executive director of the Port of Los Angeles, told a recent meeting of the
Harbor Association of Industry and Commerce that the sharp drop in cargo volume and the ability
of some motor carriers to use their new, clean trucks for more than one shift per day may indicate
that far fewer trucks may be needed in Los Angeles-Long Beach harbor.

Also, the truck subsidies provided by the ports come with burdensome reporting requirements
and strings attached. For example, new trucks purchased with port subsidies are subject to the
$35 per-TEU fee even though they comply with the emission requirements. Compliant trucks
purchased with private money are exempt from the fee.

In order to avoid paying the fee, some cargo interests and retailers agree to pay harbor truckers
that purchase compliant trucks higher freight rates. The motor carriers take out loans to purchase
the compliant trucks and the reportedly $40 to $50 higher rates they charge are used to pay the
truck notes.

Given these developments, Knatz said the clean-truck fees may not be needed for five full years.
Freeman said the demise of the fees could come within a year.