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A ‘Cash for Clunkers Program’ for Work Trucks

December 1, 2009, by Mike Antich - Also by this author

By Mike Antich

Turnover in diesel fleets happens slowly. The average service life for a medium-duty truck is 5-10 years, while a short-haul owner-operator heavy-duty truck typically has the lifespan of 18-20 years. Despite the 2007 and 2010 diesel emission standards, tens of thousands of older, dirtier trucks will remain on the road into the next decade. Is there a way to accelerate the turnover of pre-2007 diesel trucks? One way to do so would be to create a Cash for Clunkers program specifically for work trucks.

The wildly successful program for light-duty vehicles, Cash for Clunkers - officially known as the Car Allowance Rebate System (CARS) - ended last August. The Cash for Clunkers program was signed into law by President Obama last June with a goal of encouraging consumers to trade in older, less fuel-efficient vehicles for new vehicles that get better fuel economy by providing a credit of either $3,500 or $4,500. Vehicles traded in were destroyed, not resold. Modeled after several programs successfully implemented in Europe, the Cash for Clunkers program was scheduled to end Nov. 1, 2009. However, the program was so successful the government ended it Aug. 24 because it was running out of money. During this two-month period, 690,114 new vehicles were purchased under the program.

Incentivize Accelerated Fleet Turnover

One possible template for a work truck Cash for Clunkers program is the Port of Los Angeles Clean Truck Program. This program banned more than 10 percent of the worst-offending dirty diesel trucks operating at the Port of Los Angeles and replaced them with newer, greener trucks. One flaw to the program is that these trucks were to be destroyed, however, this did not occur in most instances. Many of these banned trucks were remarketed or reassigned elsewhere outside of the port jurisdiction.

Despite this flaw, city officials say this action improved the air quality at the Port of Los Angeles to a level comparable to taking almost 200,000 automobiles off the road each year. On day one of the program's launch in 2008, between 1,500 and 2,000 pre-1989 diesel trucks were banned from drayage (short-distance hauls) operations at the port. Those trucks (and others since then) have since been replaced by more than 5,500 diesel trucks that generate 90-percent fewer emissions. All pre-2007 trucks that operate at the port incur a $35-per-TEU (Twenty Foot Equivalent Unit or 20-foot container) fee paid by the cargo owner.

In 2008, the Port of Los Angeles provided $44 million in payments to licensed motor carriers to incentivize their purchase of 2,200 clean trucks. Another $23 million was approved in May 2009 for incentive payouts on the purchase of alternative-fueled trucks (natural gas and electric). These incentives, coupled with the effect of the truck ban schedule and associated fees, have led to more than $500 million in private investment toward the purchase or lease of almost 3,000 more clean trucks, making a total of more than 5,500 clean trucks currently operating at the Port of Los Angeles. These new-truck sales occurred despite an overall 60-percent drop in new-truck sales nationwide. The requirements imposed on trucks operating at the port will become even more stringent. On Jan. 1 2010, all pre-1993 trucks will be banned from the port, as well as 1994 to 2003 trucks that are not retrofitted to reduce emissions. By Jan. 1, 2012, every truck operating at the port will be required to meet 2007 EPA diesel emissions standards. This achievement will allow the port to meet its 2012 goal of 80 percent emissions reductions from overall drayage operations three years ahead of schedule.

The L.A. Clean Truck Program has created an unprecedented greening of one of the nation's largest port truck fleets. These 5,500 clean trucks, which includes about 300 alternative-fuel vehicles, are making approximately 66 percent of total containerized cargo gate moves at Port of Los Angeles terminals. In addition, operation of 5,500 clean trucks will reduce more than 30 tons of diesel particulate matter emitted by trucks per year at the Port of Los Angeles. At the current rate of new truck replacement, it is possible that by January 2010, more than 90 percent of the cargo gate moves at port terminals will be made by trucks meeting the 2007 diesel emissions standards.

Voluntary versus Mandatory Program

The L.A. Clean Truck Program is one of several similar programs at other ports, such as the Coalition for Clean & Safe Ports in Oakland and Seattle, and the Coalition for Healthy Ports (New York and New Jersey) on the East Coast.

These programs could be the template for a Cash for Clunkers program for work trucks - with one key distinction. The program I envision would be a voluntary program, similar to the Cash for Clunkers program for light-duty vehicles, so as not to be financially onerous on companies that cannot afford to acquire new trucks. One negative aspect of the L.A. Clean Truck Program is the financial burden on independent owner-operators, who can not afford to make the mandated retrofits to their work trucks. However, thousands of other companies would be amendable to acquiring new trucks or retrofitting existing units on a voluntary basis, if properly incentivized. One requirement to be eligible for these voluntary incentives is that the replaced truck must be permanently taken out of service, similar to the light-duty Cash for Clunkers program.

A work truck Cash for Clunkers program doesn't have to be mandatory to be successful - just look at the original Cash for Clunkers program, if you want proof.

Let me know what you think.

[email protected]

 

Comments

  1. 1. Kirk Herniman [ December 01, 2009 @ 12:59PM ]

    I have one question, where did all of the older trucks go that were banned from the port? Were they just sold to operators out of state to be used at the port of Houston for example? If so, then the only area that ended up greener is the L.A. area. I would be all for a program like that if the incentive were enough. Texas has a program but in most cases this incentive is not high enough. We have used it to replace some old diesel equipment and replace it with propane.

  2. 2. NORMAN FINCH [ December 02, 2009 @ 03:57AM ]

    WHO IS GOING TO PAY FOR ALL THIS. WHAT WE NEED TO DO IS DO OUR PART TO KEEP THE AIR CLEAN AND THAT IS UP TO EVERY BUSINESS. WE JUST DON'T HAVE THE MONEY TO DO IT OURSELVES AND I DON'T FEEL ITS UP TO THE GOVERNMENT TO SPEND MORE MONEY FOR THINGS LIKE THIS. LETS SAY IT HAPPENS. IT WILL COST ALL OF US MORE IN THE END. I'M IN IT FOR THE LONG TERM NOT JUST FOR TODAY. LETS DO OUR PART TO CLEAN UP THINGS AND NOT THE GOVERNMENT.

  3. 3. Dan Vogel [ December 22, 2009 @ 03:54PM ]

    Mike,
    We are a Hydrogen on-demand company seeking to enter the California marketplace. We have been very successful in our own area (Montana) in building a Cash for Clunkers alternative program. Who would you recommend to guide us through the exemption and verification process in California?

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Mike Antich

Editor and Associate Publisher

Mike has covered fleet management and remarketing for more than 20 years and entered the Fleet Hall of Fame in 2010.

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