BCG Clean Truck Program Analysis - The Port of Los Angeles

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We evaluated three options for the CTP I: Basic plan II: Enhanced model with market incentives III: Enhanced model with market incentives and employee commitment Approach to achieve CTP objectives Levers designed to minimize disruptions to drayage market Create sustainable and orderly asset based market, incent faster adoption of clean tech. PLUS: Require employees and asset based market to ensure long term sustainability 1 Environmental Cargo Fee $35 / TEU, exemptions based on truck technology, funding source, and timing of purchase $35/TEU, optimized exemptions to encourage cleaner technology and private funding 2 Truck ban Progressive truck ban as outlined 3 Safety and security TWIC criteria as mandated by TSA PLUS: added control, training and compliance among employees (via concession) 4 Concession Basic operational criteria allowing LMCs to use employee and IOO drivers More stringent operational criteria to help maintain oversight (without employee commitment) PLUS: explicit commitment for drivers to become employees over a set period of time 5 Truck financing program Subsidies to IOOs and LMCs to fund upgrade of banned trucks (scrap required) Subsidies given to authorized concessions only (scrap required) PLUS: dirty truck buyback program for IOOs and LMCs PLUS: business outreach program for transition assistance BCG Report 3-13-08 final.ppt 45
Option I Option I: “Basic model” Lever Rationale 1 Environmental Cargo Fee • $35 / TEU fee with some exemptions: – Privately funded (post 10/08): CD with scrap ($17.50 fee), LNG / alt. fuel with scrap ($0 fee), (pre 10/08 same exemptions but scrap not required) – CTP funded: No exemptions • Encourage rapid adoption of cleaner truck technology • Promote the use of private investment 2 Truck ban • Progressive ban on the dirtiest trucks: – Oct 1, 2008: All pre-89 trucks – Jan 1, 2010: All 89-93 and un-retrofitted 94-03 – Jan 1, 2012: All trucks not meeting 07 standards • Ensure heaviest polluters are removed from the Port drayage market 3 Safety & Security • Comply with TWIC criteria as mandated, but full enforcement not active till January, 2009 • Compliance required by law, but the infrastructure required for enforcement may take time to implement 4 Concession • Requirements: TWIC/registered drivers, prove health insur. offered, clean truck compliant, RFID tags, truck maint. schedule, and follow existing on-street parking restrictions • concession for 5 years, fee of $250 plus $100/year/ truck • Allows LMCs to use employee and/or IOO drivers, preference for drivers with previous port drayage work • Provides Ports with greater oversight of trucking operations • Allows opportunity for large portion of current drayage operators (LMCs and IOOs) to continue serving the market 5 Truck financing program • Criteria for financing: scrap old trucks, must be frequent / semi-frequent, priority given to oldest trucks (pre-89) and applicants with previous port drayage work • Financing options: – Lease to own (7 years, $500-700/mo), – Grant for purchase ($60-75K / CD, $90-120K / LNG), – Grant for retrofit (up to $20K, can re-apply for purchase grant in future net of retrofit funds) • Subsidies will provide one time assistance to ensure sufficient truck supply • Most IOOs assumed to need financial assistance to switch to using a clean truck BCG Report 3-13-08 final.ppt 46
Page 1 and 2: San Pedro Bay Ports Clean Truck Pro
Page 3 and 4: Agenda Executive summary CTP object
Page 5 and 6: Executive summary (I) Context and o
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: Agenda CTP operating model options
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
Page 55 and 56: Option II: Key adjustments to Optio
Page 57 and 58: One specific element of Options II
Page 59 and 60: Option II Option II evaluation: Por
Page 61 and 62: Option II Option II: Analytical eva
Page 63 and 64: Option II However, Option II carrie
Page 65 and 66: Option III ... Option III builds on
Page 67 and 68: Option C - Why link employees to LM
Page 69 and 70: Option III Option III: “Enhanced
Page 71 and 72: Option III Option III evaluation: P
Page 73 and 74: Option III Option III: Analytical e
Page 75 and 76: Key risk in option III is of BCO di
Page 77 and 78: Agenda Comparison of options and co
Page 79 and 80: Our overall conclusion: Option III
Page 81: Conclusions 1. Option I will not cr

BCG Clean Truck Program Analysis - The Port of Los Angeles

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