Los Angeles Transportation Club
May 12, 2008
International Warehouse Logistics Association
California Government Affairs
Goods Movement Southern California:
• Largest port complex in North America – San Pedro Bay Port Complex
with deep water
• Largest intermodal rail facility in North American – BNSF Hobart /710 Fwy.
•Air Cargo from LAX and Ontario
•FedEx Oakland hub, UPS Ontario hub
•Strong capacity for intra and interstate trucks
•Intermodal trucks 14,500 LA/LB ports, 3,000 Oakland
•Warehousing: - Southern California is the largest industrial sector in the U.s.
with 1.5 billion sq.ft. of warehouse distribution in our 5 county region (LA,
Orange, Riverside, San Bernardino, Ventura). In the next 6 months in the
same 5 county region there is another 40 million sq.ft. of inventory empty
building and /or finished product coming on-line. Based on historical
absorption rate of 5 million sq.ft. a year this means we could have an 8 year
inventory of space.
•Population growth and 8th largest GDP
California Global Warming Solutions Act of 2006
Greenhouse Gases (GHG) AB 32 (Nunez and Pavley)
• California is 12th largest emitter of carbon in the world despite leading the nation in
energy efficiency standards and lead role in protecting its environment.
• AB 32 Established first-in-world regulatory and market mechanisms to achieve ―real,
quantifiable, cost-effective reductions of GHG‖
• California is FIRST state to formally approve a comprehensive GHG plan that is
required under statue and involves every sector of the economy
•AB 32 requires California Air Resources Board (CARB) to:
•Develop regulations to reduce Statewide GHG emissions to
•2000 levels by 2010
•1990 levels by 2020 – 25% reduction
•80 percent by 2050
No discrimination – goods movement, construction, agricultural, cities, school, public
The proposed ‗scoping plan‘ was released on October 15, 2008 and
approved at the CARB Board hearing on December 12, 2008
•The scoping plan contains the main strategies California will use to reduce the
greenhouse gases (GHG):
•Reduce vehicle miles traveled (land use)
•Vehicle fuel efficiency (Pavley regulations)
•Fuel GHG intensity (LCFS) (gasoline & diesel)
•Directs CARB to consider initiating a regulatory proceedings to establish and
implement the LCFS. In response, ARB identified the LCFS as an early action
item with a regulation to be adopted and implemented by 2010.
•CARB adopted on April 24, 2009
•The scoping plan has a range of GHG reduction actions which include direct
regulations, alternative compliance mechanisms, monetary and non-monetary
incentives, voluntary actions, market-based mechanisms such as a cap-and-trade
system, and an AB 32 cost of implementation fee regulation to fund the program.
•85% of states emissions are covered in cap-and-trade
•Program developed in conjunction with the Western Climate Initiative
•Clean car standards, increase in cleaner/renewable energy, solar, low carbon fuel
•Under development detailed strategies to implement by 2012
•Cost impacts of the AB 32 scoping plan which CARB‟s own analysis concluded
Scoping Plan- Key Elements
> Expanding and strengthening existing energy efficiency
programs as well as building and appliance standards
> Achieving a statewide 33% renewable fuel mix
> Develop cap/trade that links with western states
> Establish regional targets for transportation related GHG
emissions and pursue policies and incentives to achieve targets
> Adopt measures pursuant to existing state laws:
Clean Car standards
Goods movement measures
Low carbon fuel standard
Aerodynamic truck retrofits
> Create targeted fees to fund the program
Source: California Air Resource Board
Aggressive Cap & Trade System
GHG emissions charged to polluter
Technologies would have to meet:
Rigors of the market
CO2 engine standards
Ratcheted down caps imposed annually
The amount of allowances (permission/permit to pollute a
tonne) issued will decrease every year.
100% auction will generate billions of dollars that we can invest in
solar, wind, geothermal and biodiesel
Revenue is produced through an auction where there are more
polluters than allowances/permits available
Logistics in a carbon
As climate change gathers momentum, the responses of governments and the
markets will all converge to fundamentally reshape logistics operations
Emissions from freight:
• The direct emissions of logistics are generated by the use of fuel in trucks, light
commercial vehicles, rail, costal shipping, international ships and airplanes.
Another source of direct freight emissions are from air conditioning and
refrigeration units used in vehicles, warehouses, and distribution centers.
• Indirect freight emissions include those associated with electricity use in
warehouses, distribution centers and corporate facilities such as office buildings.
• For warehouses, distribution centers, and corporate offices this will involve
maximizing the energy and water efficiency of individual facilities.
• For freight transport this will involve modal switching where possible, fuel
switching where possible, and maximizing the fuel efficiency of vehicle fleets
• Primary production industries will experience challenges in the future as a result
of climate change, water supply and other environmental impacts that may lead
to changes in production.
CA CARB ON-ROAD HEAVY-DUTY DIESEL VEHICLES (IN-USE) REGULATION
Bus and Truck Rule (private fleet rule)
•December 12, 2008, CARB approved a new regulation to significantly reduce emissions from
existing on-road diesel vehicles operating in California.
•The regulation requires affected trucks and buses to meet performance requirements between
2011 and 2023.
•By 12/31/2010 pre 1994 engines must be retrofitted with highest PM controls
•By 1/31/2014 pre 1994 engines must be retrofitted with NOx BACT standard
•By January 1, 2023 all vehicles must have a 2010 model year engine or equivalent.
•Affected vehicles include on-road heavy-duty diesel fueled vehicles with a gross vehicle weight
rating (GVWR) greater than 14,000 pounds, yard trucks with off-road certified engines, and diesel
fueled shuttle vehicles of any GVWR.
•Out-of-state trucks and buses that operate in California are also subject to the regulation.
Who must comply with the regulation?
Any person, business, school district, or federal government agency that owns, operates, leases or rents affected
vehicles. The regulation also establishes requirements for any in-state or out-of-state motor carrier, California-
based broker, or any California resident who hires or dispatches vehicles subject to the regulation. In addition,
California sellers of a vehicle subject to the regulation would have to disclose the regulation‟s potential applicability
to buyers of the vehicles.
When does the regulation take effect?
•For most fleets, the first performance requirements for PM do not begin until
January 1, 2011,followed by engine replacement requirements to reduce NOx
emissions starting January 1, 2013.
•For fleets with three or fewer affected vehicles, none of the performance requirements
begin until January 1, 2014.
•The regulation is phased in such that by January 1, 2023, all vehicles must have a
2010 model year engine or equivalent.
The calculator is an Excel file designed to assist fleet owners in determining the yearly
compliance and to help fleet owners plan for the coming years utilizing various
compliance options available in the regulation. The updated version includes the
changes approved by the Board on December 12, 2008 and additional proposed
CA CARB Drayage Truck Program (port & rail):
Approved 12 -24-2008
•This regulation applies to owners and operators of on-road diesel-fueled
heavy-duty drayage trucks operated at California ports and intermodal rail
•This regulation also applies to “motor carriers,” “marine or port terminals,”
“intermodal rail yards,” and “rail yard and port authorities“.
•Intermodal Rail Yard” is any rail facility owned or operated by a Class I
railroad where cargo is transferred from drayage truck to train or vice versa
that: is within 80 miles of a port; or, is located more than 80 miles from the
nearest port and having, on or after January 2008, 100 or more average
daily drayage truck visits in any one calendar month.
•Intermodal rail yards include, but are not limited to, the following facilities:
Union Pacific (UP) Oakland, Burlington Northern Santa Fe (BNSF) Hobart,
LATC Union Pacific, Commerce UP, Richmond BNSF, Commerce Eastern
BNSF, ICTF UP, San Bernardino, Stockton Intermodal BNSF, Lathrop
Intermodal UP, and BNSF Oakland.
Drayage Truck Program Requirements and
•Drayage trucks subject to this regulation must meet the following requirements by
the compliance deadlines detailed in both Phase 1 and Phase 2.
Phase 1: By December 31, 2009, trucks must be equipped with:
(A) 1994 – 2003 model year engine certified to California or
federal emission standards and a level 3 VDECS for PM emissions;
(B) 2004 or newer model year engine certified to California or
federal emission standards;
(C) a 1994 or newer model year engine that meets or exceeds
2007 model year California or federal emission standards.
Phase 2: After December 31, 2013, all drayage trucks must be equipped
with a 1994 or newer model year engine that meets or exceeds 2007 model year
California or federal emission standards.
All drayage trucks must be registered with the DTR by the end of September
2009. Additionally, both the DTR registration and truck labels are free of charge
(labels are optional). http://www.arb.ca.gov/msprog/onroad/porttruck/porttruck.htm
2007 Ports of Los Angeles and Long Beach
Clean Truck Program (CTP)
Clean Truck Program (CTP) vs. CARB Port Drayage Rule:
•January 1, 2010
•CARB bans pre-1994; retrofit 1994-2002
•CTP bans pre-1996; no retrofit requirements for 1996-2002
•CARB replace 2003-2006 with 2010 trucks
•CTP no similar requirement
Post 2011 LA/LB port requirements – CARB private fleet rule?
Litigation from American Trucking Association is about the Concession Contract;
not the rolling truck bans or truck fees.
CA CARB GREENHOUSE GAS EMISSIONS FROM
HEAVY-DUTY VEHICLES REGULATION:
http://www.arb.ca.gov/regact/2008/ghghdv08/ghghdv08.htm STAFF REPORT:
INITIAL STATEMENT OF REASONS FOR
CARB Board approved in December 2008
• Long-haul tractors pulling 53‟ or longer box-type
trailers 53‟ or longer
• Box-type trailers (dry-van and refrigerated-van
trailers) pulled by long haul tractors
PUBLIC HEARING TO CONSIDER ADOPTION OF THE REGULATION
• Responsible for compliance – owner, driver, TO REDUCE GREENHOUSE GAS EMISSIONS FROM HEAVY-DUTY
motor carrier, California-based broker, and
California-based shipper Mobile Source Control Division
Emission Research and
Regulatory Development Branch
• Implementation begins in 2010 October 2008
Short-haul tractors & trailers
100 mile radius
50,000 miles per year or less (tractors only)
Drayage tractors & trailers
Operate 100 mile radius of port or intermodal
Drop frame vans
Curtain side vans
Authorized emergency vehicles
GREENHOUSE GAS EMISSIONS FROM HEAVY-DUTY VEHICLES REGULATION:
Reduce GHG emissions from long-haul tractors by reducing Tractor & trailer
aerodynamic drag and Tire rolling resistance
Tractor aerodynamics Streamlined hood, sleeper cab roof fairings, gap fairings, fuel
tank fairings, aerodynamic bumper and mirrors
Trailer aerodynamics Side skirts, front gap fairings, rear trailer fairings
Low rolling resistance tires Both tractors & trailers
Integrated roof fairing
Aero profile tractor Cab side gap
Front Trailer Gap Fairings
2011+ model year sleeper-cab tractors that are SmartWay certified January 1, 2010
2011+ model year day-cab tractors that have SmartWay verified low rolling resistance
January 1, 2010 All pre-2011 MY sleeper-cab and day-cab tractors have SmartWay
verified low rolling resistance tires
2011+ model year 53-foot or longer box-type SmartWay certified or
Retrofitted with SmartWay technologies:
• Low rolling resistance tires
• Minimum of 1.5% fuel efficiency improvement
• Aerodynamic devices
• Minimum of 5% fuel efficiency improvement for a dry van, and
• Minimum of 4% fuel efficiency improvement for a refrigerated van
Refrigerated Van and Dry Van
Optional Phase-In Compliance Schedules
- 2010 and Older MY Trailers - Refrigerated van – 2003-2008 model year
Phase-in: 2017 – 2019
Other Refrigerated and Dry vans
Small fleet – 20 or less trailers
Phase-in: 2013 - 2016
Large fleet – 21 or more trailers
Phase-in: 2010 - 2015
Early compliance credit
GREENHOUSE GAS EMISSIONS FROM HEAVY-DUTY VEHICLES
CARB Enforcement Strategy for California Shippers and Brokers
California shippers and brokers notified when a notice of violation (NOV) has
been issued to a non-compliant truck transporting their goods
Notice Of Violation (NOV) will be issued to owner, driver, and motor carrier
found in violation – NOT TO THE SHIPPER OR BROKER
If NOV not settled, and shipper or broker continues to use delinquent owner or
motor carrier, shipper or broker may be subject to NOV if:
• Shipper or broker has not taken proactive steps working with ARB,
owners, and/or motor carriers to ensure goods are shipped in compliant
tractors and trailers, and
• Shipper continues to load freight onto non-compliant trailers
owned/dispatched by delinquent owners/motor carriers
CA CARB Large Spark Ignition (LSI) –Off Road
(gasoline and liquefied petroleum gas)
Large Spark Ignition (LSI) –Off Road Rule:
•The regulation established more stringent hydrocarbon and
oxides of nitrogen emission certification standards for engine
•Individual persons, business and government agencies that
own or operate LSI engine-powered fleets in California are
subject to the fleet requirement
•The LIS engines include forklifts, portable generators, sweeper
/scrubbers, and an array of agricultural, construction and
general industrial equipment. The regulation requires engine
and retrofit emission control systems.
•Regulation established feet average emission level
requirements for medium and large fleets that start January 1,
2009 and become more stringent with time to January 1, 2010.
New Engine Standards and Test Procedures
– 2.0 g/bhp-hr in 2007; 0.6 g/bhp-hr in 2010
– 95 percent emission reduction vs. uncontrolled
Retrofit Kit Verification Procedures
Fleet Average Requirements Applicability
– 4 or more forklifts, tow tractors, sweeper/scrubbers, or
pieces of airport ground support equipment
(Fleet Average Emission Level in Grams HC+NOx)
LSI Fleet Type Number of units By 1/1/2009 By 1/1/2011 By 1/1/2013
Large fleet – forklift
26 + 2.4 1.7 1.1
Mid-size fleet – forklift
4-25 2.6 2.0 1.4
Non-forklift fleet N/A 3.0 2.7 2.5
Third-party fleet average calculators
– Pape Material Handling: http://www.papemh.com/carb.aspx
– Raymond Handling Solutions:
– Construction and farm equipment greater than 175 hp
– Small fleets
– Uncontrolled 2003 & 2004 LSI engines through 2010
– Limited hours of use (250 or less)
– Rented 30 or fewer calendar days per year
– Rental or lease less than one year, provided:
• no more than 20 percent of fleet, and
• meets standards (3.0 in „09; 2.0 in ‟11)
Recordkeeping and Reporting Requirements:
•The LSI regulation has no reporting requirement.
•Operators must maintain records
• A baseline inventory due November 12, 2007
• Contents: equipment/engine make, model, SN, certification or verification
level as demonstrated by a label
• Propane fuel quality receipts if available
•Records retained through December 31, 2015; fuel quality records retained for
Enforcement: Performed by ARB and local air districts ARB recently hired
additional enforcement staff and conducted in conjunction with other inspections
In-use off-road diesel regulation
Cargo handling equipment regulation
Other mobile and stationary source regulations
Penalty Maximum of $500 per day per piece of equipment
Low Carbon Fuel Standard for California
April 23, 2009 CARB Board adopts regulation to implement the LCFS. The LCFS is intended to
reduce, on a full-fuel, life-cycle basis, the carbon intensity of transportation fuels (gasoline &
diesel) used in California. Reformulation starts 2011 – finished by 2020
Low Carbon Fuel is complicated – ‗life cycle analysis‘
CARBOB (CA gasoline blend stock), CARFG (CA reformulated gasoline, ULSD (CA ultra low sulfur
diesel), corn ethanol, sugarcane ethanol from Brazil, Cellulosic ethanol (farmed trees), cellulosic
ethanol (forest waste), biodiesel (soybean), renewable diesel (soybean), compressed natural gas
(CNG from North America natural gas), landfill gas to CNG, electricity(CA mix), hydrogen (gaseous
hydrogen from North American natural gas)
Facility Fabrication Manufacturing
Resource Initial Transport Fuel Distribution Operation
Extractio Processin Productio & Marketing
n g n
Facility Vehicle Recycling
Western States Petroleum Association
Supply and Demand - California
California consumes 44 to 45 million gallons of gasoline
and 10 million gallons of diesel fuel per day
Demand for transportation fuels increased
nearly 50% in last 20 years
Number of refineries producing gasoline in
California dropped from 32 in mid-1980s to
California imports 3.5+ million gallons of
gasoline and components per day
Transportation fuel infrastructure is at capacity and not keeping
up with rapidly growing population and demand
Source: California Energy Commission
CARB – next phase!
May 21, 2009
CARB public workshop to discuss T-6 Goods Movement
Efficiency Measures (also referred to as Freight Transport Efficiency
The purpose of the workshop is to discuss the development of
measures to reduce the carbon footprint of freight transport.
Intersection of supply chain efficiency and carbon footprint
• Sustainability and green supply chain initiatives are rapidly moving to top priority positions at
many companies…. Lack of credit in today economy.
• Market research firm eyefortransport (www.eyefortransport.com) has conducted surveys on
the greening of transportation and determined that this is definitely an area growing in
• 75% of a company's carbon footprint is related to transportation and logistics
• Eyefortransport found that 69% of companies feel that green issues will be
increasing over the next three years, and that 9% of companies feel it will be
their top priority. Of these companies, 42% plan to use vehicle routing and
optimization tools to help drive green supply chain initiatives. This number is sure to
grow as the issue of greening grows.
• Does Green – Green? Intersection of supply chain efficiency to reduce costs and make a
company more agile and demand driven, it will also help green your supply chain. Will
operational efficiencies safeguard existing margins against rising costs but will also reduce
the emissions intensity of operations.
MeTrIS: Maps, Analyses, Models
• Components of MeTrIS for freight congestion mitigation are being developed in a
project funded by the U.S. Department of Transportation—Research and
Innovative Technology Administration, at the University of California, Santa
• Research MeTrIS envisages extensive tracking of transportation assets using Global
Positioning Systems (GPS) and Vehicle-Infrastructure Integration (VII) technologies.
Vehicles report their location and attributes in real time. Sensors in infrastructure
simultaneously report environmental conditions such as bridge ice or fog. The rich data
stream from these sensors enables a variety of synoptic information products, both real-
time and longitudinal. http://www.metris.us/
• The system extends beyond what is currently deployed by private logistics-
oriented tracking firms, and focuses on analyses and models that employ the data
for broad public benefit—in particular, strategic transportation planning, tactical
operational efficiencies such as intermodal synchronization and identification of
avoidable trips, and security.
• MeTrIS technologies promise a future where policy and operational decisions are based
on reliable information and verifiable forecasts, and therefore provide solutions that are
financially sound, logistically efficient, environmentally beneficial, and equitable to the
communities and motor carriers affected.
MeTrIS: Maps, Analyses, Models
• First snapshots of drayage in LA
• Origins, destinations, routes, stops, time of day
• Congestion hot spots by time of day
• Terminal turn time by time of day
• Highway speed by time of day
• Highway ―drainage‖ (useful to planners)
• Drivers‘ working hours, idle time Models
• Deadhead reduction
• Strategically placed container depots
• Different operating scenarios
• Up to 25% reduction in traffic
• Give terminals precise information on truck arrival
• 25-50% reduction in stack rehandling
Interface of „smart truck‟ to real-time road
San Pedro Bay Port Complex way and distribution center
Logistics in a carbon
. Federal / Waxman legislation: Mitigation of global warming and protection of
individual House members who want to protect their own backyard industries.
• The challenges of managing strong population growth, supporting a changing
economic base, making the shift to a low carbon economy and managing the growing
freight task itself.
• Goods Movement / transport companies are simultaneously exposed to demand risk,
regulatory risk, increasing cost structures, operational disruptions risk, and broader
• The exposure of all freight transport and warehousing to increases in both fuel and
electricity costs will profit margins be eroded? More companies or less?
• The freight business is highly competitive with tight margins and a mix of small
operators and large vertically integrated enterprises. These businesses will naturally
tend to focus on the commercial implications for their own operations on particular
parts of the network. How can the Future of Freight move beyond individual interests
and provide a balanced plan of action in the interests of the freight network and the
state as a whole?
Cap and Trade 101:
Source: January 16, 2008 Center for American Progress
The goal: To steadily reduce carbon dioxide and other greenhouse gas
emissions economy-wide in a cost-effective manner.
The cap: Each large-scale emitter, or company, will have a limit on the
amount of greenhouse gas that it can emit. The firm must have an
“emissions permit” for every ton of carbon dioxide it releases into the
atmosphere. These permits set an enforceable limit, or cap, on the amount
of greenhouse gas pollution that the company is allowed to emit.
Over time, the limits become stricter, allowing less and less pollution, until
the ultimate reduction goal is met. This is similar to the cap and trade
program enacted by the Clean Air Act of 1990, which reduced the sulfur
emissions that cause acid rain, and it met the goals at a much lower cost
than industry or government predicted.
The trade: It will be relatively cheaper or easier for some companies to
reduce their emissions below their required limit than others. These more
efficient companies, who emit less than their allowance, can sell their extra
permits to companies that are not able to make reductions as easily. This
creates a system that guarantees a set level of overall reductions, while
rewarding the most efficient companies and ensuring that the cap can be met
at the lowest possible cost to the economy.
The profits: If the federal government auctions the emissions permits to the
companies required to reduce their emissions, it would create a large and
dependable revenue stream.
These financial resources could be used to achieve critical public policy
objectives related to climate change mitigation and economic development.
The federal government can also choose to “grandfather” allowances to the
polluting firms by handing them out free based on historic or projected
This would give the most benefits to those companies with higher baseline
emissions that have historically done the least to reduce their pollution.
What Would a Successful Cap-and-Trade Program Look Like?
The goal: To limit the rise in global temperature to approximately 2.0 degrees
Celsius (3.6 degrees Fahrenheit) above pre-industrial levels by 2050 by reducing
carbon dioxide and other emissions from companies as part of a larger plan for
curbing global warming.
The cap: To achieve this goal, the U.S. government should steadily tighten the
cap until emissions are reduced to 80 percent below 1990 levels by 2050.
Businesses would have to obtain permits entitling them to emit a certain quantity
of carbon dioxide or its equivalent in other greenhouse gases.
All permits would be auctioned off by the government. Emissions permits in the
near term would likely fall in the range of $10 to $15 per metric ton of carbon
dioxide or its equivalent.
The trade: Companies unable to meet their emissions quotas could purchase
allowances from other companies that have acquired more permits than they need
to account for their emissions.
The cost of buying and selling these credits would be determined by the
marketplace, which over time would reduce the cost of trading the credits as
trading becomes more widespread and efficient.
The profits: Initial estimates by the Congressional Budget Office project that an
economy-wide cap-and-trade program would generate at least $50 billion per year, but
could reach up to $300 billion.
Approximately 10 percent of this revenue should be allocated to help offset costs to
businesses and shareholders of affected industries.
Of the remaining revenue, approximately half should be devoted to help offset any
energy price increases for low- and middle-income Americans that may occur as a
result of the transition to more efficient energy sources.
The other half of the remaining revenue should be used to invest in renewable energy,
efficiency, low-carbon transportation technologies, green-collar job training, and the
transition to a low-carbon economy.
Some resources should also be invested in the energy, environment, and infrastructure
sectors in developing nations to alleviate energy poverty with low-carbon energy
systems and help these nations adapt to the inevitable effects of global warming.
Revenues from the permit auction would essentially be ―recycled‖ back into the
economy to facilitate the transition to an efficient, low-carbon energy economy
and ensure that consumers are not unduly burdened by potentially higher energy
Patty Senecal, California Government Affairs
International Warehouse Logistics Association