Sustainability is very much in the spotlight right now. Part of this focus is a natural extension of the coverage from negotiations at COP26, the recent United Nations Climate Change Conference held in Glasgow. Cuts to greenhouse gas emissions have been a hot topic as government officials, business leaders, and cultural fixtures negotiate a path forward for the planet.
Part of this focus also comes from an increase in natural disasters that are tied to a warming planet. After another year of unprecedented fires, droughts, and tropical storms, more people are taking global warming seriously. As a result, different parts of the economy are undergoing scrutiny as public and private sector leaders search for ways to lower their carbon emissions — and fast.
A zero-emissions supply chain future
Few industries are getting more scrutiny right now than the transportation sector, which accounts for the largest share of greenhouse gas emissions (29%). Some parts of the supply chain are getting ahead of the curve.
For example, the Port of LA and Long Beach have started rolling out the Clean Air Action plan of 2005, with the goal to have zero-emission terminal equipment by 2030 and zero-emission trucks by 2035. They’ve taken the next step by agreeing to start collecting the Clean Truck Fund rate fee starting April 1, 2022. Let’s dive more into what that means for shippers and logistics firms.
What is the Clean Truck Fund rate fee?
Clean truck fund (CTF) rate is a fee that will be charged to all nonexempt cargo owners whose containerized cargo is trucked in or out of the port terminals. The fees are collected for a fund that will be used to decarbonize activities at the port. Starting April 1, 2022, shippers will need to pay a rate of $10 per twenty-foot equivalent unit (TEU) that is hauled by non-exempt trucks.
“Today’s action by the Los Angeles Board of Harbor Commissioners marks the next phase of our transition toward a zero-emissions truck fleet,” says Port Executive Director Gene Seroka.
What cargo is exempt from the CTF rate?
There’s a short list of exemptions, including cargo transported by zero-emission methods. Also exempt from the fees are:
- Loaded containers entering or leaving marine terminals by on-dock rail
- Trucks that meet or exceed California’s low NOx standard (Exempt through Dec. 31st, 2027)
Low NOx standard trucks must be enrolled in Port Drayage Truck Registry and in Port service by the end of 2022 to obtain a short-term exemption. Of course, companies that utilize zero-emission shipping methods are exempt from the fee.
What’s the goal of the CTF rate?
With continued record-breaking cargo through the port, the CTF rate will expedite the transition to zero emissions.
Ultimately, the aim of this fund is to directly fund the adoption of zero-emission trucks. The new CTF rate is expected to bring in about $90 million in total in the first year alone, which offers critical support in the $10 billion transition to a zero-emission fleet. In the short term, the fee is designed to incentivize firms using low NOx options that are more widely available, with the aim of transitioning to zero-emissions technology when widespread adoption is more tenable.
Who will be impacted by the fees?
This fee will be paid by the cargo owners only.
Some shippers have expressed concerns in recent months about expenses being passed to truck drivers, even though this is a violation of the program rules. “That’s something we will have to monitor,” says Heather Tomley, managing director of Planning and environmental affairs for Port of Long Beach.
Big, exciting changes are coming to the Port of LA as more sustainable practices are implemented, and we’re keeping an eye on updates.
For companies looking to improve their ESG standard or streamline their operations at the port, a 3PL provider like GlobeCon can help. We’ll help you scale to meet changes in demand while prioritizing sustainability and visibility throughout the supply chain. We’re your trusted partner at the port.