Port of Seattle Clean Truck Prograni
Industry Situation
February
5,
2009
THE
INDUSTRY
1. Industry prefers Southern California as a gateway and the Pacific Northwest's niarket
share has steadily declined.
2. PMSA comment, 1/27/09: Canadian gateways have gained.
'The Panama Canal
expansion is due to be complete in 2014 and there are serious concerns about cargo
diversion then. Mexico is still planning to develop west coast ports to attract cargo for
entry into the U.S. market.
3.
PMSA comment, 1/27/09: 60% to 70% of Seattle and Tacoma's container cargo is
headed inland to the Midwest (combined domestic and international). If segregated by
international and domestic, the discretionary percentage is likely higher.
4. Ships landing Seattle or Tacoma also discharge local cargo; if the ships land elsewhere
our local cargo would require expensive trucking to our region, an economic
disadvantage.
5.
Seattle and Tacoma offer good export opportunities to cargo carriers but requires empty
containers (from the imports) to carry that cargo.
6.
Seattle and Tacoma are a discretionary cargo ports.
7. Ocean Beauty Seafoods comment 1/9/09: Shippers will support the goal of reducing
emissions to improve air quality; however, the shipper community needs a dependable
and cost effective
drayage resource to support continuing volunies through the Port
8.
Seattle, Tacoma and Vancouver Canada established a clean air program for the region
with specific goals and dates for reducing emissions from container trucks; this plan was
adopted in January 2008.
9. Because many of the trucks serving Seattle also serve Tacoma, any program seeking to
clean trucks must be consistent between Seattle and Tacoma; otherwise the dirtier
trucks will be driven to the port not cooperating.
Revised:
2/5/2009
10. Recently 'the Southern California gateway has added several per
-
container fees to cargo
there, with others under consideration, to help pay for their clean truck program, which is
also supported by a large public commitment through bonds. The Ports of Los Angeles
and Long Beach are implementing the Clean Truck Fees in February, per approval by
the FMC.
PMSA comment 1/27/09: POLA is currently offering incentives or a "cargo
bounty" for new cargo coming to the port, reducing fees and Port of
NY/NJ is now
offering a bounty as well.
Ocean Beauty Seafoods comment 1/9/09: Shippers will not support imposition of
user fees as many well managed carriers have already made the capital
investment necessary to meet or exceed existing standards
11.
'Those fees have not yet diverted cargo although they now total nearly $100 per
container. Recently additional fees have been delayed because of the economic
downturn and a feared loss of cargo through Southern California.
PMSA comment 1/27/09: Ports of Los Angeles and Long Beach are far less
discretionary than PNW ports because of population density. Additionally, many
would argue that there has been diversion of cargo already given the reduction
and market share losses and cargo routing looking to avoid the costs and
uncertainties surrounding California gateways particularly
LAJLB.
12. A 2007 Economic Study found that the container cargo sector in Seattle supported over
9,000 direct, indirect and induced jobs (which include 1,600
-
2,000 trucks serving the
ports of Seattle and Tacoma). "FINAL DRAFT 2007 Economic Impacts of the Port of
Seattle, Martin Associates, January 12 2009.
"
13. A diversion study found that raising the cost in Seattle only $30 per full container would
send 30% of Seattle's cargo elsewhere; raising the cost $100 would divert up to 50% of
Seattle's cargo. "Draft Port and Modal Elasticity of Containerized Asian Imports via
,the
Seattle
-
Tacoma Ports" Jan 3, 2008; page 14 Figure S
-
2
"
Final Review of Dr.
Leachman's Port and Modal Elasticity Report", by BST Associates, January 4, 2008;
Memorandum to JTC Staff from Christopher Wornum, Cambridge Systematics, Inc,
January 7,2008
PMSA comment 1/27/09: The Leachman study was unable to measure
diversionary impacts under the $30 per TEU threshold. When results were
submitted to the legislature
,the Joint Transportation Committee decided to not
take a chance on cargo diversion and abandon the container tax.
Coalition for Clean and Safe Ports comment 1/27/09: On page 16 of that study,
Dr. Leach man observes
"[ilnstitution of container fees without offsetting fees at
other West Coast ports seems unwise. However, as fees are instituted at the
California ports, they may be matched at Puget Sound in order to create a
revenue source for infrastructure improvement and environmental impact
mitigation without loss of market share..
.
"
Since Dr. Leachman's study more than
a year ago, the Southern California ports
-
which handled 69% of containers
moving through the West Coast in 2007
-
have instituted fees of up to $236 per
FEU.
Revised:
2/5/2009
14. There are no barriers to entry to the truck fleet
There were 1,600
-
2,000 trucks serving ports of Seattle and Tacoma before the
recent economic downturn
400 of these trucks were pre-1994 based on an August 2008 analysis. PMSA
comment 1/27/09: The reduction of cargo throughput may very well have made this
number lower but another inventory will tell. Also
TWlC implementation at the end of
February will lead to the loss of some drivers though it is uncertain how many of
those will be owners of pre
-
1994 trucks.
Since 2004 the numbers of truckers increased 40% with cargo growth
Today the fleet of trucks has 15% less business available than in 2004
-
2005
because cargo volumes through Seattle have declined 15% (with an additional 10%
decline expected in 2009)
If 400 trucks left the population the
remair~i~ig trucks would have available, per truck,
the business volume they had pre cargo decline
With cargo declines expected further in 2009 (10%) up to 400 trucks may leave the
fleet because of insufficient work
Today we have too
niany trucks chasing declining volumes
PMSA comment 1/27/09:
ILWU shifts have declined 10% from 2007 to 2008.
Shipping sources expect further declines in 2009 and at least part or 2010.
15. Trucker incomes vary
The Washington Trucking Associations reports a median net income after all
expenses for
drayage trucks of
$
50,000 a year, with a range of $25,000
-
$85,000
Proformas based on
tripslday consistent with the driver survey conducted fall 2008
indicate net incomes after all expenses of $45,000
-
$85,000. Source: data from Port
of Seattle trucking companies.
The driver survey conducted fall 2008 (56 answers) reported average net income of
$34,00O/year
-
owner/operators $36,00O/year and employees $23,00O/year
16. Coalition for Clean and Safe Ports comment 1/27/09: The document presents data from
a survey of drivers conducted by port staff and terminal operators last fall.
The results,
though, are unrepresentative. Port staff working on truck parking
issues this fall identified
over twenty
compar~ies providing drayage services in Seattle, including all of the largest.
None provided free parking facilities and only one used employees for a portion of its
drayage business. If, in fact, 44% of drivers were employees or 51
%
parked in company-
owned lots, the Port would not be facing many of the industry-related problems it is now
seeking to address.
1
7.
Truck replacement availability
Newer trucks (post 1994) can be purchased for $20,000
-
25,000.
Some loan programs are available.
It is expected that by 2015 post 2007 trucks will be available for $30,000
-
35,000.
New trucks cost $1 00,000-$140,000
18.
Truck impacts
Truck emissions are less than 1% of
D
P
M
(diesel particulate matter) in Puget Sound.
Drayage trucks represent 3% of DPM portion of maritime emissions and less than
1
%
total DPM emissions in Puget Sound Airshed
Revised:
2/5/2009
Drayage trucks represent 3% of total heavy duty trucks operating in Puget Sound
Airshed
Coalition for Clean and Safe Ports comment 1/27/09: The document minimizes the
impacts of truck emissions by reporting those emissions only within the context of the
very large Puget Sound air shed. Concentrated neighborhood impacts need to be
addressed. The great bulk of truck
traffic servicing the port, however, occurs along
major arteries around
SODO, Georgetown and South Park, a roughly six square mile
area and between the Port and the Green River Valley warehouse district, a roughly
14 square mile area.
Ocean Beauty Seafoods comment 1/9/09: Most carriers engaged in pier
drayage
activities operate company
-
owned equipment that meet higher emission standards
than called for in the plan. Those same carriers also require owner
-
operators to
have equipment that meet or exceed emissions called for in the plan. Shippers insist
that carrier vendors operate in a safe manner and operate equipment that is in full
compliance with State and Federal
reg~~lations.
Ocean Beauty Seafoods comment 1/9/09: Those carriers operating old equipment
(company owned or owner
-
operator) typically handle rail shuttles, shuttles to drop
yards or trans
-
load facilities or local dray to shippers in the adjacent areas to the
port.
19.
Fee impacts
The
concession/employee model imposed at Los Angeles will add at least 40.
percent to the cost of a dray according to Dr. John Husing
l
s "Economic Analysis of
Proposed Clean Truck Program.
"
Other reports ("Daily Breeze" 911 112007) state that
motor carriers would have to increase their prices $75 to $150 per move.
The cost of a dray in Seattle is $65 for a rail transfer and about $1 60 for a trip to a
distribution center.
Increasi~g these costs 40% adds a minimum of $26 to the cost of handling a Seattle
container to the rail ramp and $64 to a distribution center.
These added fees will divert 30 percent of Seattle's containers based on available
studies (Leachman Study)
If there is a direct link between container volume and family wage jobs, the job
impact of cargo diversion will be 30% of the 9,000 container jobs linked to the Port of
Seattle
-
2,700 jobs will be lost.
Coalition for Clean and Safe Ports comment 1/27/09: Husing did predict cost
increases for drays once a trucks program was adopted. But, contrary to the
document's claims, Husing predicted increases under both
"
independent owner-
operators" and employee models. Those projections were, moreover, due to several
factors in addition to a contemplated trucks program, among them
TWlC
requirements, the tight labor market for skilled truckers, and huge projected
increases in cargo volumes. This combination of factors is obviously unique to the
indigenous circumstances of the twin mega
-
ports of Southern California and has only
limited application to the situation in Seattle.
20.
In the opinion of the Port of Seattle Legal team, the Port does not have regulatory
authority to turn back trucks at the gate without state law changes.
Coalition for Clean and Safe Ports comment 1/27/09: The document restates the
staff position that the Port lacks authority to set conditions on the use of Port
property. As has been presented to the commission before, this unconditional
Revised:
2/5/2009
assertion is an inaccurate assessment of the Port's legal rights. Minimally, ,the
Commission and the public need a full assessment of the legal opportunities and
risks presented by the full range of trucks programs
l~nder consideration.
Ocean Beauty Seafoods comment 1/9/09: Pier to rail drayage services are
typically contracted for by ocean carriers, intermodal contractors
(IMC's) or 3PL
operators, not necessarily the cargo owners. Implementation of emission
standards could perhaps be written into the equipment interchange agreements
(UIIA or ocean SIA) thereby avoiding risk of legal action.
Revised:
2/5/2009
Sources:
Economic Impact Study
2007
and Impacts of Jobforce
5,000 direct container jobs
3,000 induced jobs (proportion from table p. 16)
1.000 indirect jobs (proportion from table
p.16)
9,000 jobs
Assumption that container cargo
increaseldecrease percentage causes equal impact on jobs at
the most. To be conservative let's say that jobs decline one half as much as container volume.
Leachman Study $30TrEU charge
=
30% loss of cargo
Assumption: Any per
-
box charge will divert cargo
Job loss compared to cargo diversion if equal 10% 20% 30%
900 jobs
1,800jobs 2,700jobs
Job loss compared to cargo diversion if one
-
half 10% 20% 30%
450 jobs 900 jobs 1,350 jobs
Cargo Diversion Study, Dr. Robert
C.
Leachman, January 3, 2008
p. 64 "Fees in the range of $30
-
$90 per TEU provide incentive to shift to other ports 30%
of imports currently routed via Puget Sound.
"
Moffat
&
Nichol, Container Diversion and Economic Impact Study, p. 4 BST Associates
portion:
"Dr. John
Husivg, Economic Analysis of Proposed Clean Truck Program, recently
estimated that truck routes could increase up to 80% after implementation of the Clean
Truck Program. However, if the effect of
TWIC.. .are excluded, the increase in trucking
costs relative to trucking costs at other ports is actually closer to
40%."
Daily Breeze, Sept 11, 2007:
"
Husing's study suggests that to cover increased business
costs, motor carriers would have to increase their prices by
$
75 to
$
150 per move.
"
Revised:
2/5/2009
Port Drivers Performa Example
Source of data: Port of Seattle Trucking Firms
5 day work week (many work six dayslweek)
9 hour day 48
weekslyear 240 days
Fuel
$2.50/gallon 5 mileslgallon
Maintenance
=
$1 51day
Truck paymentlyear $1 2,000 per workday $50
Truck
insurancelyear
$
8,100 $24
#I Rail Drayage Monday
-
Friday work week
Turnslworkday 6
Mileslturn 4
Mileslday 2415
=
4.8 gallons
Net to
driverlday $50.00
Fuel $2.50 x 4.8 gallons
1 2.00
Insurance 34.00
Truck payment 50.00
Maintenance 15.00
Daily Expense $1 11
.OO
Revenue to driver 6 days x $50/day
300.00
Net
revenuelday 1 89.00
Annual net pay: 240 days x
$189/day $45,360.00
If work 6 dayslweek: 288 days x
$189/day $54,432.00
May be more if no need for truck payment, insurance, fuels
#2
Rail Drayage Friday
-
Tuesday work week
Revised: 2/5/2009
Turnslworkday 7.6 3 days
@
6+1 day; 2 days
@
10+1 day
Mileslturn 4
Mileslday 30.415 6 gallons
Net to
driverlday $50.00
Fuel $2.50 x 6 15.00
Insurance 34.00
Truck payment 50.00
Maintenance 15.00
Daily Expense $1 14.00
Revenue to
driverlday 7.6 days x $50/day
$380.00
Net
revenuelday 266.00
Annual.net pay: 240 days x
$266/day $63,840.00
If work 6
dayslweek: 288 days x $266lday
$76,608.00
May be more if no need for truck payment, insurance although
average
drayslday will drop due to lower average with one more
6 dray day added.
#3 Summer average
@
3 RTlday (3 RT
=
180 miles
=
36 gallons)
Fuel 36 gallons x
$2.50lgallon $90.00
l
nsurance 34.00
Truck payment 50.00
Maintenance 15.00
Daily Expense
$1
89.00
Revenue
@
$1 43lday 428.00
Net
revenuelday 239.00
Annual net pay 240 days x
$239lday $57,360.00
Revised:
2/5/2009
#4 Summer average
4
RTlday (4 RT
=
240 miles
=
48 gallons)
Fuel 48 gallons x
$2.501gallon
$1 20.00
Insurance 34.00
Truck payment 50.00
Maintenance 15.00
Daily Expense $21 9.00
Revenue 4 turns
@
$143/day
$572.00
Net
revenuelday 353.00
Annual net pay: 240 days x
$3531day $84,720.00
Revised:
2/5/2009
Coalition for Clean and Safe Ports comment 1/27/09
Source: Interviews with port truck drivers from Pacer Cartage, Western Ports,
Roadlink and
Shippers Express on 1/22/09
SEATTLZ PORT
TRUCK
DRIVER ESTIRUTED INCOME
\I-eeklg Ilico~ne
=
$40icontainer is the standard rate
for
rail and sho~t &stance hauls;
20
-
30
haulsii\veek
is
an
overestiuiate under
the
elm-eut
ecoiiolrric condrtions. For longer distances, drivers are paicl$50
-
$1
5Okontahier
but make fewer
turns
and
are
paid more
for
fuel. Divers
are
paid
tle same for huliug two
20'
contailax
or
one
40'
codmer. altllough
tn~kifq?
conyanies are pd Illore
by
shrypers.
Taxes
Fuel
=
I?.SO/gallon. Mleage mid fuel efficiency
vary.
T~ucking companies often
keep
most of the he1 sus.clmgrts
charged to
shppers
and do riot pass the nmney on to the
drivels,
who
must
absorb the
h&er
fuel
costs.
Insnra~~ce
=
Drivers
pay trucking col~ipanies
01-
brokers
for
weekly ~~~ce coyera_= of the container during
transit.
That
insurance
does
not
cover
"
bobtail
"
~irheil
the truck
is
parked
or traveling without. a co~ltainer.
Reportedly. some truckille; conlyanies keep these payments
and
only illsure
part
of
their
fleets at a time.
Net
Houdy
Income*
Net Amlttal
Income*
Hipliway
tax
Federal
taxes
(*.
IS)
Net
Take
Home
Pa!;
hhhte~ls~~ce
=
Drivers
are 1~spomibl2 for
all
repairs,
including replacement of cont,Wler chassis, which
;zle
nipplied
by
the
sl~ippers
,md
ofleu break. Many
port
trucks
are
in
disrepair with broken ligllts, bald
tim,
and
frequent
enpe failures.
Truck payment
=
The Port of Seattle proposes to charge
drive15
$200
-
.S00
per
moiltl~
to
lease a ~'etrofit tt-uck
hm Cascade Sieira Solutions,
a
private
non
-
profit
h.
56Sh
5653
-
4528:'yr
Palking
=
Drivers are
responsible
for parkuig. Some
fnlcklng
coqames: such
as
Roadlink, charge drivers for
pahng
m
their lots. &lost driverelr
park
along the streets
in
local ne~ghborhoods
3.00/hl-
-
11.18hr
18.250
-
30.7501yr
15,031
-
25,64&'1~
Health Insninuce
=
Most divers do not luve health innuance
and
a-e
not eligbk for
LGLT
(wo~ker's
compensatioi~) becat~se thy are rnisclassified
as
independent mntracto~x. Drivers are exposed to dangerous
wolkiug conditions whle
moving
heavy co~itainsrs, breathing diesel fumes,
and
divmg
poorly maintained tnicks.
Houi-ly Income
=
Assumes
a
55
horu
work
week, ~vllich is uudwestinlate. Many
drivers
line
up
for
assigm~cnts
at
ltun
and end work at 5pm for
a
total of
65
hotw'week
in
a
5
-
day
work
week.
Ani~ual Income
=
Assumes
50
full
Wdmg
~veeksi';'year.
Because of holibays
and
other'
polt
closures
this
is
an
overestimate.
Source: Intei~iems with port
mrck
drivers from Pacer
Cartage:
Westelm Ports,
Rondlink
and
Shippers
Express
011
1,'22109
Revised:
2/5/2009