BCG Clean Truck Program Analysis - The Port of Los Angeles

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CTP objectives The Port’s objectives for the CTP span three dimensions: environmental, port operations, and safety/security Environmental • Reduce emissions from drayage (port trucking) to comply with CAAP guidelines • By 2011, CAAP requires an aggregate reduction in pollutants from all Port sources including trucks – 47% DPM – 45% NOx – 52% SOx • Enable continued migration towards newer and cleaner technologies over time Port operations • Improve stability of the port trucking market – establish stable drayage service business – avoid service disruptions during implementation • Ensure long term sustainability – truck fleet and market participants – incomes that attract and retain drivers • Enable green growth – improvements in trucking operational efficiency and reliability Safety and security • Ensure compliance with safety standards – vehicle safety – driver • Ensure that port security objectives are met Source: CTP / CAAP presentations, 2006 CAAP Overview BCG Report 3-13-08 final.ppt 5
Executive summary (II) Approach and options evaluated We analyzed the impact of the CTP on the supply and demand for trucking and labor (truckers) in the SPB drayage market and the extent to which alternative CTP models would meet the CTP objectives. Our approach addresses • The different elements of the CTP: the environmental cargo fee; the truck ban; safety and security; the concession program; and the truck financing program; • How these elements which work together as an interdependent system to mutually reinforce (or undermine) desired outcomes; • How market structure (i.e. the number of market participants, their capabilities and financial structure) contributes to sustainability; • How alternative CTP models would affect the externalized costs; We examined three broad options for the CTP • Under all of these options the proposed truck ban schedule and safety and security requirements remain constant; • The first option we evaluated (Option I, or the “Basic Model”) provides for drayage by both employee truckers and IOOs, sets a minimum level of concession criteria for LMCs, and makes CTP public financing available to both LMCs and IOOs for new trucks. In addition exemptions from the ECF are included that are intended to encourage migration towards cleaner trucks in advance of the ban schedule • The second option (Option II, or the “Enhanced Model with Market Incentives”) also allows for both employee and IOO drivers, tightens LMC concession criteria to further recognize the impact of marginal LMCs on the community and on sustainability, and limits CTP public financing to LMCs. In addition, the fees and exemptions to fine tuned to further favor the ‘greenest’ trucks and private investment. Taken together this interdependent set of elements may have the market effect of encouraging market consolidation and enable a long term sustainable clean truck program. • Finally the third option (Option III, or the “Enhanced Model with Market Incentives and an Employee Commitment”) overlays onto Option II some form of employee commitment that will ensure the phasing in of employees into the drayage market over time. A range of different forms of employee commitment were considered. BCG Report 3-13-08 final.ppt 6
Page 1 and 2: San Pedro Bay Ports Clean Truck Pro
Page 3 and 4: Agenda Executive summary CTP object
Page 5: Executive summary (I) Context and o
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
Page 55 and 56: 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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