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 ,theJoint 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 "[ilnstitutionof 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~igtrucks 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~iesproviding 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 companyowned
lots, the Port would not be facing many of the industry-related problems it is now
seeking to address.
17. 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 $100,000-$140,000

18.Truck impacts
Truck emissions are less than 1% of DPM (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 Husingls "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 $160 for a trip to a
distribution center.
Increasi~gthese costs 40% adds a minimum of $26 to the cost of handling a Seattle
container to the rail ramp and $64 to a distributioncenter.
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 owneroperators"
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~nderconsideration.
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 increaseldecreasepercentage 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 = $151day
Truck paymentlyear $12,000 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                 12.00
Insurance                         34.00
Truck payment                     50.00
Maintenance                      15.00
Daily Expense           $111.OO
Revenue to driver 6 days x $50/day         300.00
Net revenuelday                   189.00
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+1day
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          $114.00
Revenue to driverlday 7.6 days x $50/day    $380.00
Net revenuelday                   266.00
Annual.netpay: 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
lnsurance                     34.00
Truck payment                     50.00
Maintenance                     15.00
Daily Expense          $189.00
Revenue @ $143lday                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            $120.00
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





Net Houdy Income*               3.00/hl-- 11.18hr
Net Amlttal Income*                 18.250 - 30.7501yr
Taxes    Hipliway tax         56Sh
Federal taxes (*.IS)      5653 - 4528:'yr
Net Take Home Pa!;                  15,031 - 25,64&'1~
\I-eeklg Ilico~ne= $40icontaineris 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 p dIllore by shrypers.
Fuel = I?.SO/gallon.Mleage mid fuel efficiency vary. T~uckingcompanies 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= Driverspay trucking col~ipanies01- brokers for weekly ~ coyera_= of the containerduring~    ~    c    e
transit. That insurance does not cover "bobtail" ~irheilthe truck is parked or traveling without.a co~ltainer.
Reportedly. some truckille; conlyanieskeep these payments and only illsure part of their fleets at a time.
h h h t e ~ l s ~ ~ c e= Drivers are 1~spomibl2for all repairs, includingreplacement 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 e n p efailures.
Truck payment = The Port of Seattle proposes to charge drive15$200 - .S00per moiltl~to lease a ~'etrofittt-uck
h mCascade Sieira Solutions, a private non-profith.
Palking = Drivers are responsible for parkuig. Some fnlcklng coqames: such as Roadlink,charge driversfor
pahngm their lots. &lost driverelr park along the streets in local ne~ghborhoods
Health Insninuce = Most divers do not luve health innuance and a-enot eligbk for LGLT (wo~ker's
compensatioi~)becat~sethyare 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, ~vllichis  uudwestinlate. Many drivers line up for
assigm~cntsat ltun and end work at 5pm for a total of 65 hotw'week in a 5-day work week.
Ani~ualIncome = Assumes 50 full Wdmg~veeksi';'year.Because of holibaysand other' polt closures this is an
overestimate.
Source: Intei~iemswith port mrck drivers from Pacer Cartage: Westelm Ports, Rondlink and Shippers
Express 011 1,'22109

Revised: 2/5/2009