Ports in Southern California are trading in the phrase “New Year, New Me” for “New Year, New Fee.” The spring cleaning of the two largest ports in the United States is expanding beyond its bottlenecked port — they aim to clean the air too. By incorporating clean truck fund rate fees, California port authorities are working toward their goal of a zero-emission port by 2035. This article will provide a birds-eye view of the situation and its effect on port drayage this year.
What Are Clean Truck Fund Rate Fees?
The clean truck fund (CTF) rate is a charge that the Port of Long Beach (POLB) and Port of Los Angeles (POLA) will be collecting from cargo owners who are utilizing non-exempt trucks to transport their materials in or out of the port. Natural gas and electric-powered trucks are exempt from the officialized fee rate of $10 per TEU at both ports. While this rate was approved in March 2020, the ports delayed implementing it through the initial shockwaves of the coronavirus pandemic. However, the California ports will begin collecting the fees on April 1, 2022. Also, while the rate is in effect for California ports, that will inevitably mean more shippers will look to eastern U.S. ports to receive imports.
Why Are They Being Implemented and Where Will They Be In Effect?
The Long Beach and Los Angeles ports are implementing CTF rate fees to abide by the Clean Air Action Plan. This action plan aims to eliminate all truck-based emissions at both ports by 2035. Although initially focused on the San Pedro Bay area, this plan aligns with the potential statewide regulations of zero-emission drayage transportation by the same year.
POLB announced, “The clean truck fund rate is expected to generate $90 million in the first year or $45 million per port.” Authorities say they will direct these collected fees to fund zero-emission or low-nitrogen trucks. Because state funding has been directed and will be directed more so at this initiative, California fleet owners have more access than ever to the necessary equipment to make this green change. Steven Neal, President of the POLB Board of Harbor Commissioners, gave further insight to Port Technology: “The rate allows us to balance aggressively pursuing zero-emissions goals with economic vitality and competitiveness.”
Although the two ports of San Pedro Bay are the only ones to institute CFT rate fees thus far, other ports are likely not far behind. Because federal government officials are currently promoting clean energy jobs, CFTs and other green energy initiatives will likely begin impacting drayage to delivery nationwide soon.
Key Impacts Expected of Clean Fund Truck Rates in Drayage That Shippers Need to Consider
Port drayage is a vital part of the supply chain, bringing containerized material from ocean ports to warehouses that get items closer to their final destination. Due to this aspect of the supply chain, the CFT rate fees will likely impact port drayage in 2022 nationwide. Shippers who cannot contract with zero and low-emission trucks in California will likely send their freight to Southeastern ports for shipment.
The Port of Savannah is a solid contender to carry the weight of these displaced shipments after itadded 400,000 TEU capacity. As the state funds the massive but manageable expansion, Savannah has been able to compete with the efficiency of LA. As southeastern ports become more frequented by shippers, many southeastern lanes will also become fuller, increasing trouble finding drayage capacity at an affordable cost.
Stay Vigilant Over Changing Costs of Port Drayage in 2022 by Choosing the Right Partner
This year port drayage is shaping up to be increasingly complex and costly. With this in mind, it’s important for shippers to partner with companies that can provide port drayage, destination transportation, and warehouse availability in a fluctuating market. As Southeastern ports manage more freight routed from California’s backlogged ports and clean energy mandates, find the perfect logistics fit by getting a quote from Port City Logistics today.