Create Financial and Operational Incentives
Given the limited financial resources of the Ports, it is clear that sufficient public funding is not available to subsidize the costs of replacing older trucks, and that private-sector investment and financial support for dirty truck retirement would be an absolutely critical component to the success of clean truck program around the country. However, as many drayage owner-operators do not have the means to purchase newer, less-polluting, and often more efficient trucks, it is also clear that the burden of financing the transition to cleaner equipment could not simply fall on the individual owner-operator.
The CRT/EDF National Clean Trucks Initiative has responded to this challenge by creating a “best practice” financial model to get privately financed clean trucks deployed into port service through partnerships between shippers, trucking companies, and their drivers. This private investment can then be used to leverage any public grants or incentives that might be available in a particular port region.
This financial model is based on the premise that the cost of purchasing a new clean truck must be spread across the shipper, trucking company and individual driver in order for the clean truck program to be economically sustainable. In this model, the shipper agrees to pay an increased rate to their trucking company to support the purchase of clean trucks that will move their cargo. The trucking company combines the increased rate paid by the shipper with their own financial contribution to provide financial support to ensure that their drivers are moving cargo with a clean truck. We often compare this model to a three-legged stool, where all three legs must work together, and the failure of any single leg will cause the stool to topple. In this case, the three legs providing the support for clean truck deployment are the shipper, the trucking company and the driver, and these three legs must work together to support the financial burden of the new truck in order for that truck to be economically sustainable.
CRT’s member companies have instituted a variety of innovative practices based on this financial model that have provided the financial assistance needed to support truck replacement for their drivers. Depending upon the relationship that the trucking company has with their driver, the financial support offered to the driver can include down payment assistance, monthly payment assistance, and lease-to-own programs. Trucking companies can also help guarantee loans for their drivers to provide them with a lower interest rate and lower truck payment than they would have been able to find on their own. With the help of our members, CRT was a pioneer among shipping industry groups in creating a financial model to support the efforts of trucking companies to finance and deploy clean equipment in partnership with shippers and their service providers, and is very proud of our accomplishment in this regard.
This financial model is designed to ensure that clean truck programs are economically sustainable over the long-term by providing commitments from leading shippers and their providers to privately fund the replacement and retirement of older, more polluting trucks at our nation’s ports with clean trucks. This financial model is also designed to reduce the economic burden on the individual driver by providing them with the financial support they need to afford new, clean trucks while ensuring that the cost of new equipment is shared by the trucking company and the cargo owner. These newer trucks can also help reduce driver expenses compared to the older trucks they are replacing. New trucks are more fuel efficient than the older models they are replacing, which can save a driver thousands of dollars per year in fuel costs. New trucks are also safer and more reliable, reducing maintenance and repair costs, and many of these trucks are operating under manufacturer’s warranty.
The CRT/EDF Clean Trucks Initiative has also developed a variety of operational incentives that can be utilized by ports to further propel the transition to newer cleaner equipment. These incentives are based on creating recognition for shippers and carriers who are demonstrating environmental excellence, and providing rewards for that excellence. For example, the Initiative helps ports create programs to designate certain shippers and carriers who have deployed the cleanest drayage trucks into port service as “Green Operators” to provide them with environmental recognition. Ports can then provide special incentives to Green Operators, such as special “green lanes” at port terminals that reduce waiting times for operators of low-emissions equipment. Similarly, CRT and EDF also work to create extended gate hours for operators of cleaner equipment, so that Green Operators have the ability to complete additional trips to and from the port, which provides them with extra revenue to support the cost of newer, cleaner equipment.