Long Beach port approves $35 container tax, L.A. port votes Thursday

Long Beach port approves $35 container tax, L.A. port votes Thursday Port of Long Beach officials Monday approved a $35-per-TEU container tax, a second step towards implementing a truck re-regulation plan at the Southern California ports.
   Port of Los Angeles commissioners are expected to vote Thursday on an identical measure, as the two ports hope to raise more than $1.6 billion over five years to replace or retrofit the fleet of drayage trucks serving the port complex.
   The Long Beach Harbor Commission said that while the precedent-setting tax will increase the cost to move goods, it is essential to help cut port-generated emissions.
   “Today’s vote will ensure that, in a short time, only the cleanest trucks will operate at the ports,” Long Beach Harbor Commission President Mario Cordero told the audience. “We've got to grow green.”
   The $35-per-TEU tax, scheduled take effect June 1, 2008 and last through 2012, will be applied to all loaded import and export containers drayed by truck into or out of Long Beach port terminals. Containers being moved by on-dock rail are exempted from the tax.
   The tax, to be assessed on the beneficial cargo owner, or end user, would affect about 60 percent of the two ports' annual TEU volume. The two ports move about 40 percent of the nation's containerized cargo. Thus, the tax would affect roughly 25 percent of the nation's containerized cargo.
   The Long Beach Harbor Commission's 5-0 vote Monday also makes Long Beach terminal operators responsible for collecting the $35-per-TEU tax from cargo owners after June 1. The terminal operators will then turn the funds over to the ports, where they will be held in a ports-controlled fund. The ports will draw on the fund, supplemented with minor contributions by the ports and state government, to pay for the replacement and retrofit of the nearly 17,000 trucks in the ports' drayage fleet.
   In early November, Long Beach and Los Angeles port officials adopted the first step in implementing the entire truck plan. Changes to the ports' tariffs — the ports governing bylaws — require terminal operators to ban certain model year trucks in a three-phase schedule over the next four years. The first ban would see terminal operators forced to bar all pre-1989 model year trucks starting Oct. 1, 2008. The second ban would take effect on Jan. 1, 2010 and see terminal operators forced to ban all pre-2003 trucks. An exemption would be made for 1993 to 2003 trucks that are retrofit with an emission control device. The final ban would take effect on Jan. 1, 2012, when terminal operators would be forced to bar all pre-2007 model year trucks. Drivers wishing to remain working in the ports must replace or retrofit their trucks to meet the emission standards for 2007 models.
   Last month's tariff changes also require all ports-servicing trucks to be registered by June 30, 2008 with a ports-maintained data registry. In addition, truck owners must also maintain a radio frequency identification device on their vehicles and terminal operators are required to install and maintain RFID readers at all facility entry points.
   Ostensibly starting life several years ago as a simple program to replace old drayage fleet trucks, the full plan has morphed under political pressure over the past year to become an effort to reshape the very nature of the local drayage industry. Publicly introduced in April, the ports had planned to enact the entire plan, but delays due to criticisms from the industry and threatened litigation forced the ports to separate out individual components for approval one at a time.
   A truck-licensing component of the full plan, which will see the ports' issue licenses to truck owners who meet certain port-defined criteria, is yet to be voted on by the ports. Also still up in the air is a component of the ports' original plan which called for an employee-only criteria to obtain a drayage license. The employee-only provision seeks to force drayage-trucking firms to hire drivers as per hour workers instead of as independent contractors on a per-load basis. Currently, the vast majority of port drayage drivers are independent owner-operators, and surveys have shown that most wish do not wish to be employees.
   The truck plan, especially the employee-only component, has drawn heavy criticism from the transportation industry and the wide support of labor and social-justice groups.
   While the port's tariff rule passed Monday will impose the tax on all trucks, even those that already meet the port-defined emission standards, members of the commission indicated that future changes to the rule would be likely.
   'This is not the end,' said Commissioner James Hankla. 'I believe we will have to come up with some program that will recognize those drayers who serve the port with clean trucks.'
   Industry representatives speaking at the meeting prior to the vote offered support for the environmental efforts of the ports, but tempered this with criticism of the container tax.
   'Any kind of per container fee has a greater detrimental impact on an agricultural export box,' said Brian McGuire of the Agriculture Transportation Coalition.
   McGuire said that while the ports claim that the tax will represent a less than 2.6 percent increase to the cost of shipping each TEU, the actual impact is four to five times higher for agricultural exporters.
   'It is closer to 10 percent for an agricultural export box,' McGuire said.
   He noted that the impacts could be far reaching as the two ports are    main export location for California agriculture products, including 40 percent of the nation's exported cotton.
   In response to McGuire, Cordero suggested that a port-sponsored driver training program supported financial by the ports would help the agricultural shippers.
   'This is going to be very paramount to ease the transition,' Cordero said.
   Home improvement retailer Home Depot, which recently announced a major voluntary program to replace its fleet of drayage trucks with new cleaner models within the next year, raised concerns that the port's container tax would essential make the retailer pay twice for clean drayage trucks. A representative for the retailer asked the commissioners to reconsider implementation of the tax until Jan. 1, 2009, to give retailers an opportunity to bring their trucks up to the cleaner standards. The firm also asked that the tax be applied only to those trucks that do not meet the port-defined emission standards and be waived for cleaner models.
   'There are going to be tweaks, there are going to be comments and things that we have to work out,' said Commissioner Doris-Topsy Elvord of details such as who the tax will actually apply to.
   Based on the ports' schedule of the plan, it is also unclear if the $35 tax can raise money quickly enough to prevent wide scale job loss among ports-servicing truck drivers.
   Based on a rough cost for a new truck of $180,000, the fee would raise enough to replace just over 90 trucks a month. This would amount to just under 1,100 trucks a year. The ports' first round of truck bans, set for Oct. 1, will eliminate more than 3,000 trucks but will have collected enough tax monies to replace just over 360 trucks. This will leave thousands of truck drivers banned from working in the ports with no funds to replace their vehicles.
   The commissioners also indicated that additional taxes may be imposed, including a proposed gate tax to raise funds to improve port infrastructure including an $850 million bridge replacement regarded as critical in allowing the ports to grow over the next decade.
   Monday's vote was the first successful passage of a container tax after years of efforts by port and government officials.
   In September, Sen. Alan Lowenthal, D-Long Beach shelved his third attempt to pass a container tax bill through the state legislature. The bill, threatened with a veto by Gov. Arnold Schwarzenegger, was to raise $500 million for port infrastructure and air quality projects by imposing a $30-per-TEU tax on containers moving through the ports of Long Beach, Los Angeles and Oakland. Lowenthal's first attempt stalled in the legislature an his second effort was vetoed by Schwarzenegger.
   Lowenthal has said he plans to reintroduce the bill next year.
   Trucks moving into the ports already face a day-time gate fee, implemented several years ago to encourage the use of night-time gates and relieve truck congestion on local highways. ' Keith Higginbotham