New rules on zero-emission trucks will roll into action in January, and port leaders are warning of the cost implications to agriculture and other industries.
Ports face the most stringent requirements under the Advanced Clean Fleets (ACF) rule from the Air Resources Board (CARB), driving port executives and agricultural leaders to plead with policymakers for more state dollars to smooth the transition.
“Port infrastructure and functionality opened the world to California's bountiful agriculture and incredible innovation. And it is what has made California the global economic powerhouse that it has been in the last century,” said Almond Alliance CEO and President Aubrey Bettencourt. “What got us here isn't going to get us there in this next century.”
The Assembly Select Committee on Ports and Goods Movement held an oversight hearing recently to solicit policy proposals addressing the many issues ahead and to inform a committee white paper for legislative leaders and the governor’s office. The resounding response was that the financial gap far exceeds the Newsom administration’s $1.2 billion for port and freight improvement projects announced in July.
“Our revenues support our ongoing operations, but not infrastructure,” explained Danny Wan, executive director of the Port of Oakland, the primary gateway for the state’s agricultural exports. “We're not a monopoly. We have to compete against the other ports in other countries.”
A billion-dollar loan to build a new terminal 20 years ago nearly bankrupted the port and it is just now digging out of that burden, according to Wan. The port had laid off nearly half its workforce in 2009 to account for the debt, coupled with fallout from the Great Recession.
He applauded the stance of California Transportation Secretary Toks Omishakin for considering ports as basic transportation, countering long-held assumptions that transportation is “simply the roads.” Wan argued that roads and highways are subsidized by the state, not the users, and ports should be the same, since they are also an investment in the economy.
He noted that Georgia has “expanded like crazy,” while also embracing clean technology like hydrogen, electric trucks and grid upgrades. The Port of Oakland has dropped from 4th to 10th place for container volume, and the Port of Savannah has stepped up to fill that gap. Wan owed that to the port being state sponsored, with the Georgia Legislature and the port planning infrastructure investments in partnership.
“The state of California needs to adopt a statewide freight policy,” he said.
Danny Wan, Port of OaklandThat would help shore up roads to handle heavy ZEV trucks, for example. He also called for prioritizing the strengths of each port, such as Oakland’s dominance with agriculture and frozen products.
Elaine Forbes, executive director of the Port of San Francisco, wanted CARB to take more steps to address potential unintended consequences earlier in the regulatory process. She called for more robust feasibility analyses before drafting regulations, and to work closely with operators and port directors on the concepts.
Further down the supply chain, the ACF impacts are likely to trickle down to farmers as well as California’s rural and disadvantaged communities. California Farm Bureau President Jamie Johansson explained that when ships skip the port and delay agricultural exports, foreign markets turn to countries that supply the same goods at much lower prices, “leaving California farmers struggling to compete while meeting the state's burdensome regulations.”
Rayne Thompson, vice president of government affairs and sustainability at Sunkist, stressed that suppliers from Argentina and Chile can ship their fruit to East Coast ports at half the cost. While Sunkist was bidding at $41 a carton to buyers, Argentina was offering just $22. Thompson feared the CARB rule would exacerbate the issue by raising freight costs significantly and hurting California growers.
Johansson cited a USDA Nation Agricultural Statistics Service report that found production costs for U.S. farmers and ranchers rose 18% in 2022. He warned that CARB’s ACF rule presents another large expense for his members, as they deal with converting tractors to low-emission and electric models as well.
ACF bans the sale of new diesel-powered truck engines by 2036 and requires large trucking companies to transition to ZEVs by 2042. CARB requires the phase-in to start next year, with a 6% mandate on all sales—while new data indicate the state hit 7% of sales in 2022.
Wan believed the overall ACF goal is feasible but argued that CARB has too narrowly targeted its regulations on certain technologies and timelines.
“When you start specifying to that kind of level, it departs from the reality of the operations,” he said, adding that the agency should set a goal and let industry find the technologies and methods to achieve it. “You would fully anticipate—if you talk to the trucking associations—that these rules are going to have to be postponed somehow. It's simply not going to be enforceable at some point.”
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He worried about truckers leaving the industry due to the high cost of ZEV trucks, while businesses shutter and rates go up for Central Valley agricultural freight.
Johansson argued the mandates will bump transportation costs up for every step of the supply chain, propelling food prices beyond the current inflation-induced numbers, while Bettencourt warned the reduced cash flow into agriculture would have economic impacts to rural communities.
“This is a major equity issue,” added Forbes. “In San Francisco, our truckers are overwhelmingly Black-owned small businesses.”
The drayage truck rules carry macroeconomic implications as well. Bettencourt called the rule “the next serious threat” to port access for almonds, after pandemic supply chain disruptions wreaked havoc on the industry. She said it will be the deciding factor in choosing Oakland as the industry’s port of preference.
Nearly half of the state’s almond processors are within 100 miles of the port, while none are stationed close to the Port of Long Beach. Upgrades to rail infrastructure would enable farmers to send their shipments to the Southern California port, foregoing Oakland altogether, according to Bettencourt.
Due to the short driving ranges with emerging ZEV truck models, she worried processors would add more fees for farmers to account for charging times and that it would create vulnerabilities in agriculture and the food supply chain, leaving the system less resilient to future events.
She requested lawmakers expedite the necessary port investments to achieve the state’s climate goals.
“If we fail to make Oakland a priority port again and invest in the modern infrastructure network to support it from the Central Valley to the coast, we lose it,” said Bettencourt. “That we can't afford.”
Those messages are getting little traction in the Legislature, according to Republican Assemblymember Vince Fong of Bakersfield, vice chair of the committee. He felt many of his colleagues “don't understand or aren't trying to understand the supply chain” issues facing the ports and agriculture. He and Committee Chair Mike Gipson pressed industry leaders to make their voices heard in Sacramento.
“Their problems are our problems,” said Gipson.
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