May 27, 2023

California environmental laws could shape trucking


This story is part of a series concerning California’s impending regulations on zero-emissions vehicles, which have the potential to upend the American trucking industry. You can follow along with the stories here.

Electrifying trucks at California’s ports could be the secret to the future. Picture it: We would continue to import and export every imaginable good (Jet fuel! Nintendo Switches! Canned peaches!). Truckers working at fleets would move these containers full of stuff from the terminal yards to railroads or highways or warehouses or all of the above, without spewing toxic emissions into local communities. Charging depots and the power grid and truck manufacturers would have scaled up to meet this demand. And, unlike previous regulations, we wouldn’t have accidentally kicked off a scheme in which trucking companies buy clean trucks (discounted with taxpayer funds) only to force their truck drivers to pay off the extra costs. We can have our cake and eat it too. 

Or it could be a huge mess. Folks like Chris Shimoda, the senior vice president of government affairs at the California Trucking Association, are betting on the latter. “We’re talking about a transition that is on the order of when we traded in the horse and buggies for diesel trucks,” Shimoda said. “It’s that consequential. We just do not have the technology figured out.”

Unfortunately for Shimoda, the first steps toward decarbonization are coming. Fast. And they’ll be legally mandated. The California Air Resources Board, also called CARB, has required drayage fleets — the types of trucking companies that operate in ports — to only buy zero-emissions trucks starting Jan. 1, 2024. By 2035, drayage fleets must be entirely zero emission. 

The public and private sectors involved in enacting this regulation say they’re preparing for this first step to transitioning to electric trucks. The state has furnished beaucoup bucks for fleets to buy their own trucks and build their own charging depots. And utility providers say they’re scaling up too. An estimated 1,000 zero-emissions trucks will come online in 2024, eventually scaling up to 35,000 electric trucks to operate in United States’ largest container ports by 2035.

Still, months before this regulation comes into effect, folks on the ground say key infrastructure and concerns haven’t been furnished. California must prove to the nation (and the world) that an electrified trucking fleet can underpin a major port — without hurting a group of workers that already has the cards stacked against them.   

Why we’re talking about ports

When folks talk about trucking in California, they’re usually concerned about a massive port complex in Southern California: the ports of Los Angeles and Long Beach. 

That’s because every year, more than a third of all containerized trade comes through these two ports, along with trade coming in through bulk or tanker ships. That means hundreds of billions of dollars in T-shirts, steel, cement, Squishmallows, frozen shrimp and basically anything else you can think of. And there’s some $145 billion in exports too — goods like cotton, oranges and the all-important scrap metal. 

It’s hard to picture America’s consumer economy without those Southern California ports. “A lot of the things that people take for granted — they can get clothes delivered to their house, try it on and then return it if they don’t like it or basically get any consumer good within 24 to 48 hours — are not possible without a very efficient modern supply chain,” Shimoda said.

Both ports were established in the early 1900s. Back then, shipping goods like furniture or food was done with crates or boxes that were individually loaded onto a ship. The introduction of container shipping in the 1950s upended that; companies could instead pack standardized steel containers full of stuff and have them loaded more efficiently onto vessels. 

In the years after the invention of container shipping, the ports of Los Angeles and Long Beach introduced terminals that could handle this nascent technology. The humble steel box would quickly come to revolutionize how we consume. It became more feasible then for American and European companies to take advantage of low labor costs overseas to manufacture everyday goods, because the cost of transportation fell rapidly. That meant an explosion in trade — much of which was conducted through Southern California.

The transportation complex has been an economic stalwart for the area. The Port of Los Angeles claims that the complex supports one in nine jobs in its five surrounding counties. 

The Port of Los Angeles, pictured here, and the Port of Long Beach handles more than a third of all containerized imports to the U.S. (Jim Allen/FreightWaves)

However, there are downsides to living near this logistics behemoth. 

Residents of southwestern Los Angeles County, which also holds several oil refineries, chemical plants and a massive oil field, report more frequent asthma attacks and significantly higher cancer rates than other communities, according to state data. The diesel exhaust from trucks, trains and ships, along with carcinogenic air pollutants, are likely the cause of this increased health risk.

As a whole, the concentration of toxic air pollutants has tumbled in recent years, according to government data. However, during the peak of the supply chain crisis in 2020 and 2021, idle ships spewed more nitrogen oxide and particulates into the air. One particularly bad month saw emissions equal to what 100,000 diesel trucks would emit, CARB found.

The residents of Wilmington, California — the town that sees the most truck traffic near the two ports — are largely low- to middle-income Mexicans and Mexican-Americans. Residents have told outlets like the Los Angeles Times in recent years that the never-ending stream of loud, dirty diesel trucks, which started in the spring of 2019 after another road was diverted, has upended their quality of life. 

“The kids go out for maybe half an hour, but they get dirty,” Esmeralda Acosta, a mother of an 8-year-old daughter in Wilmington, told nonprofit news outlet CalMatters. “We have to keep all of the windows closed day and night with all of the noise.” 

Diesel trucks as a whole contribute massively to the United States’ greenhouse gas output. In 2019, transportation as a whole accounted for 28.2% of emissions. Of that, 23% came from medium- and heavy-duty trucks. 

On the other hand, trucking is a massive part of the economy, moving more than 72.2% of all U.S. freight by weight. Even though some may detest trucking, it’s undeniable that they benefit from it — by being able to get money from an ATM, food from a grocery store, modern health care from a hospital and, yes, fuel from a gas station. And of course, there’s one-day shipping.

Options like rail can move containers economically over large distances but it can’t provide the flexibility or precision that a truck can. (Also, we need trucks to get containers to rail yards.)

California has a tricky task then: How can it reform trucking without losing it as a crucial supporter of the supply chain? 

Searching for outlets 

The solution, potentially, is of course: electric big rigs.

“There’s a way for it to be different,” Chanel Parson, director of electrification at Southern California Edison (SCE), said. “Some of our most vulnerable communities are taking the biggest brunt of the impact from greenhouse gas emissions.”

Electric vehicles are not a panacea for the environment. They still produce some emissions. Metals like lithium and cobalt comprise these vehicles’ batteries; mining those metals is environmentally hazardous and has been linked to grave human rights concerns, like child labor, around the world. And the electricity used to charge them may still come from fossil fuels. In 2021, SCE counted natural gas as the biggest part of its electricity, comprising 22.3% of its power mix. (SCE is the leading provider of power in Southern California.)

Even given those drawbacks, according to the Environmental Protection Agency, electric vehicles emit less than a half of the greenhouse gas emissions over their lifetimes than a gasoline car. That makes it a fair, if imperfect, alternative to diesel trucks. 

By Dec. 31, drayage fleets are required to have their trucks registered in an online database. Any new trucks registered on or after Jan. 1, 2024, must be zero emissions. By 2035, the state of California will require all drayage trucks to be zero emissions. 

Drayage fleets typically use a truck for about 13 years before retiring them. Shimoda says through 2024, California drayage fleets will retire some 2,200 trucks. That means they’ll need 2,200 electric trucks to replace them. (For its part, CARB estimates that only 1,000 zero-emissions trucks will come online next year. That could be because fleets that are unable to meet zero-emissions standards due to utility issues are able to delay compliance.)

There’s just one, huge issue. Shimoda has no idea where they’re supposed to be charged.

A CARB spokesperson pointed to a February study conducted by the ports of Los Angeles and Long Beach that stated about half of drayage truck drivers park their vehicles overnight at a trucking company site. That could allow drivers to charge overnight at those lots. 

Public and private players say they are working on this. Paul Griffo, senior adviser for corporate communications at SCE, said the utility provider will furnish charging portals for 8,500 medium- and heavy-duty trucks “over the next few years.” SCE also said it’s part of a program with the state to provide funds to companies looking to open their own charging depots. Trucking companies with at least two vehicles that want to have their own charging stations at their establishments can also access that cash. California Energy Commission, which is the state’s energy policy agency, also has an online portal of grant funding opportunities available.

In an emailed statement, Diana Friedrich, an energy commission specialist at the California Energy Commission, said the agency foresees a timeline of about two to three years for constructing charging depots around the Southern California port district.

The California Energy Commission estimated earlier this year that, throughout the state, there are some 1,000 chargers in use by trucks and buses, Reuters reported on April 17. It’s unclear how many of them are used by Southern California drayage truck drivers.

Gene Seroka, the executive director of the Port of Los Angeles, said increased electric capacity is crucial too. To meet the state of California’s goal of having no additional sales of traditional gas vehicles, the state will need to add some 80 gigawatts of power, SCE said. By 2026, the state will need an additional 11.5 gigawatts, much of which will power medium- and heavy-duty vehicles. 

Anthony Harrison, head of regulatory and government affairs at TeraWatt Infrastructure, a company that builds commercial vehicle charging stations, said the company does not break ground on constructing new depots without assuring that the utilities are secured. 

A truck driver moves boxes in a container yard near the Port of Los Angeles. (Photo: Jim Allen/FreightWaves)

Friedrich of the California Energy Commission stated the agency “anticipate(s) sufficient electricity and grid resources to meet state zero-emission vehicle electrification goals.”

Matt Schrap is the CEO of the Harbor Trucking Association. He said his group’s members, which are port trucking companies down the entire West Coast, aren’t opposed to the transition to zero-emissions trucks. But given the lack of chargers today, he’s unclear how thousands of charging stations will apparate in the next few months. 

“It’s not that the industry has said we can’t do it,” Schrap said. “It’s not that the industry has said that they’re opposed to it, but these timelines do not work. There’s nowhere to charge these vehicles and it’s going to take so long to get the charging infrastructure online that you can’t say with a straight face that the state is remotely near ready for deployment of an all-electric drayage fleet. It’s not gonna happen.”

Harrison of TeraWatt said, “While some of these timelines and deadlines feel very urgent, when you take it from a top down kind of climate and sustainability perspective, we’re very supportive of the urgency and the need. But we also know that this transition is going to be a ramp up. Some of the vehicles coming into the market starting next year. We’re rapidly building the infrastructure for them as quickly as possible.”

Electric big rigs are, of course, far more expensive than traditional diesel operations. The state of California is offering a variety of grants and special loan programs for fleets to purchase one of these vehicles. (Schrap noted that participating in such programs could result in a tax penalty.) 

It costs around $350,000 to $400,000 to buy an electric drayage vehicle. Rebates can greatly lower that cost, Parson said.

Trucking fleets in California have another reason to fear electric big rigs even if there are enough charging stations. It takes far longer for an electric truck to charge than it takes to fuel up a diesel rig. Schrap estimated that getting gas for one’s truck takes 15 minutes a few times a week. Charging a battery electric truck may take an hour — but probably more like several hours. These trucks are also heavier, which means that they can move less freight. 

Overall, Schrap believes that the transition to electric trucks will require companies to double their fleet size in order to haul the same amount of freight. That means higher truck rates and, almost definitely, higher sticker prices for consumers. 

There’s an existential undertone to all of this. The more that it becomes challenging to move containers in California, the more that big retail firms will prefer to move their freight into East Coast ports like Charleston, South Carolina, and Savannah, Georgia — where strict environmental regulations aren’t likely to crop up anytime soon. Labor disputes on the West Coast have already prompted many companies to shift their imports east, despite the added time that it takes to travel through the Panama Canal. 

“The joke has always been, well, the weather is nice,” Schrap said. “That’s why people can suffer through these real strict regulatory policies. But we’re running out of excuses. You can only make things so expensive to an extent.”

A concern more pernicious than finding outlets

Environmental regulations may seem like decidedly left-leaning do-gooderiness. But some critics note that the last major CARB regulation resulted in a labor crisis that sparked comparisons to “indentured servitude.” 

In 2008, CARB required the trucking companies at the ports of Long Beach and Los Angeles to replace their exceptionally polluting trucks with new, clean vehicles. This would have required the companies at the ports to undertake a $2.5 billion bill, according to a 2017 USA Today investigation. As the report continues:

Instead of digging into their own pockets to undo the environmental mess they helped create, the companies found a way to push the cost onto individual drivers, who are paid by the number and kinds of containers they move, not by the hour.

There are 800 companies regularly operating at the LA ports. Almost all of them turned to some form of a lease-to-own model, some without thinking through the consequences, said industry consultant and lobbyist Alex Cherin.

What resulted from that was truck drivers who were paying off their trucks  from their employers, who typically classified them as independent operators. They paid for their truck leases out of their salaries to these employers, with some ultimately ending up with negative salaries despite 100-hour workweeks. But if they left their jobs before paying off the truck, they wouldn’t receive any of that money back.

Most troubling to this is that those clean trucks were purchased by trucking companies using state rebates — indirectly funded by taxpayers. 

In an emailed statement, a CARB spokesperson said CARB’s primary incentive program for its newest regulation, called HVIP, “continues to shift toward meeting the needs of owner-operators and smaller fleets that need incentives the most.” 

HVIP incentives are point-of-sale discounts to those purchasing new vehicles – up to $315,000. They are available currently for fleets of all sizes. However, by Jan. 1, 2024, only fleets with 50 or fewer trucks will be eligible for HVIP. 

The spokesperson pointed to online resources to learn more about these grants and others through HVIP and the state of California’s TruckStop page, both available in English and Spanish.

Eric Tate, the principal officer at Teamsters Local 848, which represents more than 600 truck drivers at the ports of Los Angeles and Long Beach, said the union supports the transition to electric trucks. However, it’s crucial that rebates are accessed by individual truck drivers or fleets — rather than firms that may try to lease trucks back to drivers for profit. 

For the past several years, the California Trucking Association and the state of California have been legally wrestling over a bill that would require companies to employ their workers as formal employees rather than independent contractors, unless they pass a three-prong test. Most trucking fleets that categorized their drivers as independent contractors failed that test. 

However, Tate said there’s a new work-around for drayage companies that want to avoid furnishing truck drivers with benefits. He said some companies are employing a broker model in which they claim to be merely the middlemen for various gigs. 

He said he talked with CARB to ensure that such brokers aren’t able to buy more than one truck. “They seemed to be in agreement with that when we talked about it,” Tate said. 

Some bankruptcies may be inevitable amid the transition to electric fleets, experts warned.  

“We’ve got to be smart about this and that’s why history can teach us a lot,” Seroka said. “I don’t want to overtly disadvantage any segment of the trucking industry, but there may be some corrections that have to take place in order for folks to make this work on a financial basis.”

Southern California’s massive ports co-exist with a huge population center. (Jim Allen/FreightWaves)

The pressure is on for California to, well, not screw this up. And the stakes are high; whatever the state does will likely be copied all over the U.S., starting in states like New York. 

“Its decisions influence much more than just the United States,” Kara Kockelman, a transportation engineer professor at the University of Texas at Austin, said. “A lot of other states will adopt California’s emissions and air quality regulations to do better than what the federal government requires.” 

It marks the end of the gas station and of noisy diesel big rigs. Children in Wilmington may happily be able to play in their backyards again. But familiar issues remain — a troubled workforce that may have to bear the brunt of new regulations, whether those are child laborers in Congo digging up cobalt for electric vehicles or truck drivers in Los Angeles burdened with massive debt. 

As Arizona State University’s Kevin Dooley, a professor of supply chain management, noted, the excess costs of regulations are often “passed onto the weakest in the value chain.”

Correction: Southern California Edison clarified after publication that $350,000 to $400,000 is an accurate range for the cost of an electric drayage vehicle.

Does your work bring you to the ports of Los Angeles or Long Beach? Email [email protected] with your experience. And don’t forget to subscribe to the MODES newsletter for weekly transportation insights.

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