BCG Clean Truck Program Analysis - The Port of Los Angeles

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Agenda Executive summary BCG Report 3-13-08 final.ppt 3
Executive summary (I) Context and objectives The Clean Trucks Program (CTP) is a core component of the San Pedro Bay Ports (‘the Ports’) Clean Air Action Plan (CAAP). Our evaluation of the CTP has as its goal determining what would best serve the Ports as a functioning enterprise to deliver on the following three sets of objectives which are critical to assuring the continued functioning, growth and vitality of these Ports as major transportation enterprises into the long-term future: • Environmental: near term (removal and replacement of older “dirty” trucks) and longer term (a sustainable trucking market with participants who are have the income to properly maintain and update trucks to use new greener technologies) • Operational: ensure continuity of port operations and deliver a sufficient supply of both trucks and drivers while in the longer term assuring addition of drivers needed for projected cargo growth in a manner that enables “green growth” and allows the SPB to retain its important role in the national and regional economy • Safety and security: includes both vehicle safety (in terms of vehicle maintenance, repair and replacement from both environmental and operating condition) and driver safety (in terms of concession/ LMC responsibility for driver safety training and compliance as well as maximizing port security. The drayage market in the Ports of Los Angeles and Long Beach today has the following characteristics: • A large number (appx 16,000) of independent owner operators (IOOs) who contract with a large number (800-1,200) of Licensed Motor Carriers (LMCs) to provide drayage services on a regular basis (more than ~3.5 trips per week) • IOOs, paid by the dray and also providing trucking services in other markets outside the port, provide a reservoir of trucking to accommodate the wide swings (+/-30%) in demand for drayage on a week-by-week basis • Market is highly competitive with rates per dray bid down to low levels. • Many costs are externalized and borne by others. These include: underutilized capacity and inefficiency which are borne by the IOOs; the costs of environmental impacts which are borne by the local communities in the burden of air pollution and serious and expensive impacts on human health and premature death rates; the costs imposed by drayage on the local community in terms of congestion, and neighborhood ingress/egress and parking of trucks; and the costs and complexity of ensuring safety and security in a highly fragmented market of IOOS and LMCs. • As a consequence of this market structure truckers in the drayage market earn incomes below those of truckers in other comparable Southern Californian markets BCG Report 3-13-08 final.ppt 4
Page 1 and 2: San Pedro Bay Ports Clean Truck Pro
Page 3: Agenda Executive summary CTP object
Page 7 and 8: Executive summary (II) Approach and
Page 9 and 10: Executive summary (III) Option I (b
Page 11 and 12: Our overall conclusion: Option III
Page 13 and 14: Agenda CTP objectives BCG Report 3-
Page 15 and 16: CTP objectives The Port’s objecti
Page 17 and 18: Pre-CTP Today: Current state of SPB
Page 19 and 20: SPB has large fluctuations in goods
Page 21 and 22: Even for comparable hauls, non-dray
Page 23 and 24: As a consequence, drayage incomes b
Page 25 and 26: ... And the option of doing so as a
Page 27 and 28: CTP components There are five inter
Page 29 and 30: 2 CTP components Truck ban Definiti
Page 31 and 32: 4 CTP components Concession Definit
Page 33 and 34: Our evaluation carefully considered
Page 35 and 36: If CTP levers not well-defined, man
Page 37 and 38: Analytical approach In evaluating t
Page 39 and 40: Analytical approach We built a rich
Page 41 and 42: Analytical approach Our model is gr
Page 43 and 44: Analytical Approach ... And the mar
Page 45 and 46: Agenda CTP operating model options
Page 47 and 48: Option I Option I: “Basic model
Page 49 and 50: Option I Option I evaluation: Port
Page 51 and 52: Option I Option I: Analytical evalu
Page 53 and 54: Our rationale in Option II is to en
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Option II: Key adjustments to Optio
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One specific element of Options II
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Option II Option II evaluation: Por
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Option II Option II: Analytical eva
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Option II However, Option II carrie
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Option III ... Option III builds on
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Option C - Why link employees to LM
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Option III Option III: “Enhanced
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Option III Option III evaluation: P
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Option III Option III: Analytical e
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Key risk in option III is of BCO di
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Agenda Comparison of options and co
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Our overall conclusion: Option III
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Conclusions 1. Option I will not cr
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BCG Clean Truck Program Analysis - The Port of Los Angeles

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