The drayage challenge
South Florida's fragmented drayage trucking industry struggles with a diverse customer base
Robert Acu'a, the head of the Florida Independent Truckers Association (FITA), has some issues he'd like to get out in the open.
Acu'a, who is also the president of East Florida Hauling, says steamship lines and intermediaries such as customs brokers and freight forwarders, often push hidden costs that should be paid by importers and exporters onto drayage trucking companies. Many ocean carriers and the intermediaries know the short-haul trucking companies are a nearly invisible link in the supply chain, with little leverage when dealing with multinational shipping lines or even the broker/forwarder community.
Drayage trucking is an industry made up of comparatively small, local companies, whose customers range from brokers and forwarders to ocean carriers and sometimes the actual shippers who are the beneficial owners of the cargo.
What's more, drayage trucking companies work with drivers that are usually owner-operators of individual trucks, independent subcontractors that are much like employees. Local drivers have staged two strike-like labor actions in South Florida since 1999, the first leading to a de facto agreement that led to trucking companies paying drivers more per trip and also covering their insurance costs.
Meanwhile, Acu'a adds, the highly competitive local trucking companies are tending to charge their customers lower drayage rates at a time when overall operating costs are going up.
'We're making money. But it's getting harder and harder, and the margins are getting smaller and smaller.'
Acu'a led the push to organize the trucking companies after the '99 labor action that slowed truck traffic at the Port of Miami to a trickle for two weeks. It was tough selling a group of independent and competing local companies on the idea of working together in an association, but FITA was incorporated in 2000 and now boasts nearly 50 member companies out of the roughly 80 trucking companies in Miami. Acu'a has been the president now for more than five years.
Serving many interests. Drayage trucking companies typically get their money from customs brokers when they handle import cargo. For exports, the direct customer is more likely a steamship line or a freight forwarder. If an actual importer or exporter arranges drayage, the trucking company will get paid by the shipper.
Most of the time, drayage trucking companies do not own any trucks. Instead, they oversee drayage, serving as the contact point for intermediaries, steamship lines, and sometimes rail carriers, then playing a role similar to a truck broker when they contract with owner-operator drivers.
The overwhelming number of drayage companies in South Florida are non-union, although there are a handful of companies that are members of the International Longsohoremen’s Association. The union companies operate under a slightly different set of rules, using ILA drivers and holding advantages such as the ability to keep a standing inventory of containers already on chassis. That can trim a good two hours of the company's response time when they receive a call.
In addition, the union companies will only make round trip deliveries. Non-union truckers may have to hit a third point, for example, picking up a container at the Port of Miami, delivering the container to a warehouse, then returning the container to a carrier at Port Everglades.
While some trucking companies work with any steamship line, there are others that work exclusively with one ocean carrier.
Southeastern Consolidated Industries, Inc. is a holding company for a group of drayage-related companies, operating what is probably the largest truck depot in Miami inland at 7500 N.W. 82nd Avenue. It has subsidiary companies that were created to service specific ocean carriers, with other subsidiaries serving multiple carriers. It also has a container repair operation and a used-car export operation. Most of its work force is union, giving it a special niche in the market that some steamship lines specifically request.
Seaboard Marine, the carrier with the highest volume at the Port of Miami, has its own trucking company, purchasing its own fleet and using drivers who are Seaboard employees. During the work stoppages by truckers at the Port of Miami, only Seaboard kept its cargo flowing through the port.
For the most part, however, the market is dominated by the independent local companies.
Acu'a said that those companies face many challenges, and some are fundamentally unfair.
His pet peeve is the hidden costs that commonly get billed to trucking companies.
For example, steamship lines routinely bill the trucking companies for cleaning and repairing containers after a trip. Questionable billings cited by FITA members include a charge for cleaning oil from a container that had an inbound shipment of roofing tiles, or a cleaning bill for an inbound shipment of frozen fish from Ecuador that should have been handled by the importer.
Acu'a estimates that 90 percent of trailer interchange receipts (TRs) have checked as having some kind of damages. There is a technological twist to the issue, because TRs in the electronic era are the size of a standard credit card. There is a notation for damage, but there is no space for specifying the exact damages. Drivers simply deliver the container, and then sign off that it has been delivered.
He said that when trucking companies are dealing with smaller companies, the truckers quote a price under collect on delivery (COD) terms, for which the truckers are paid either before delivery of shortly afterwards. But container cleaning and repair bills are submitted to the trucking company a month to a month-and-a-half later. If there is a $100 cleaning or repair charge, the trucking company cannot go back to the importer who has already paid his bill.
On the other hand, the drayage truckers have to deal with cash flow situation in which they pay their drivers at the end of the week, and then wait for 30 days or 60 days before they get paid by an intermediary like a customs broker.
The industry estimate for nonpayment is around 15 percent, usually involving intermediaries that are struggling to stay afloat or have gone out of business.
Trucking companies also point out that their costs go well beyond hiring drivers. The trucking companies have insurance costs that run from $8,000 to $10,000 per truck per year, and overhead costs such as offices and clerical and dispatch staff.
Acu'a said trucking companies are also stuck with per diem charges, usually caused by importers who do not have empty containers ready to return in time.
Steamship lines say they have been stung hard by slow turnaround times for equipment, and in recent years they have sharply increased per diem charges to $100 a day or more after an initial 'free period' that runs from three days to five days. The free time and per diem charges vary from ocean carrier to ocean carrier.
The shippers who are responsible for late containers often insist they were not warned about the practice and refuse to pay the charges.
In Florida, truckers who do not pay per diem costs will be denied access to containers until the bill is paid.
That practice drew heavy objections in California and led to a bill in the state legislature prohibiting steamship lines or terminal operators from penalizing trucking companies, and specifying that per diem charges must be paid by the beneficial owner of the cargo.
Another unusual element of the South Florida market is that many of the drayage trucking companies supply their own chassis when they move a container.
Acu'a said local trucking companies started using their own chassis in the late '80s because they would get an old or damaged chassis from steamship lines, then end up being charged for needed repairs. In some cases, trucking companies were suspicious if the repair work was actually completed.
'We decided we'd buy our own and fix our own and save money,' Acu'a recalled.
He added that part of the problem in South Florida is that most of the equipment used for drayage stays within the state.
'You'll find that around Jacksonville, where a lot of trucks are crossing the state line, the equipment is in better shape because it has to pass inspections,' he explained.
Acu'a believes that even when a truckers' direct customer is an intermediary, importer, or exporter, the party in the supply chain that maintains the most control is the steamship line.
'It all goes back to them,' he said. 'They should be telling their customers about the hidden costs and making them pay when they have held a container too long on damaged a container while they have it. The shipper should have to pay for cleaning a container, but it's easier to make the trucker look like the bad guy.'
Acu'a maintains that ocean carriers have known about the truckers' fundamentally unfair charges for years, but they often ignore the issue.
'It's easy to look the other way, or say that the local (Florida) office can't change the policies set by the home office,' which is typically in another country.
Acu'a stresses that not all ocean carriers stick the trucking companies with unfair costs. Some are much better than others.
Meanwhile, he hopes he can get local trucking companies to speak with more of a single voice and increase their influence within the transportation services chain.
He also encourages FITA members to maintain a high standard of service and professionalism.
'I'm trying to help change the image of trucking companies,' he said. 'At this point in my life my passion for the industry is more important to me than the money. I care, and I have respect for what I do.'
Disputed costs for drayage companies
Container cleaning. Truckers maintain they get stuck with cleaning charges when it was actually the shipper that created a dirty container.
Container repairs. Truckers are charged for damages, even though the damage could have been done by any of the parties along the supply chain, such as a fork lift driver in a warehouse.
Per diem charges. If an import container is held beyond the two or three 'free days' allowed by the carrier, equipment providers like steamship lines begin charging per diem fees of $100 a day or more. This charge is often passed on the trucking company rather than being charged back to the shipper. Truckers say ocean carriers should tell shippers up front about the possible costs.
Repositioning costs. While trucking companies quote a rate on a simple round trip, they are sometimes ordered to bring a container to a third location (such as bringing a Miami container to Port Everglades) without being compensated. Truckers want advance notice of these moves so they can build the cost into their quote.
Road repairs. If a trucking company is moving a container on someone else's wheeled equipment and there is a problem such as equipment failure or a flat tire, the trucker has to pay for the service call, which can run $200 on a $250 round trip delivery. Truckers want equipment that is in better condition.
