A trucking trade group claims terminal operators and ocean carriers are profiting from the supply chain crisis plaguing California ports. It is urging Gov. Gavin Newsom to enforce a state law to prevent those businesses from charging port truckers excessive container and equipment fees when drivers are unable to return empty containers and grab customers’ loaded ones because of ongoing congestion issues.
The Western States Trucking Association submitted a letter to Newsom on Tuesday, urging him to direct state agencies to enforce Senate Bill 45, which was enacted in 2005. The group called it an attempt to “level the playing field between small trucking companies and large multinational corporations” by not charging per-diem and demurrage fees under certain circumstances, including when terminals are closed during normal working hours, weekends or holidays, or because of port congestion issues.
“The circumstances described in the law are numerous and most directly relate to the current state of dysfunction at California ports,” Joe Rajkovacz, director of governmental affairs for WSTA, wrote.
“While appointment systems when functioning properly can aid port efficiency, that is often not the case,” Rajkovacz stated. “Add to this dysfunction, the inability to return empty containers or even worse, a trucker waiting in line with an appointment trying to return an empty container being turned away at the gate after hours of waiting [because of a unilateral terminal decision to quit taking a specific steamship line’s containers].”
This renders port truckers unable to haul a single loaded container during their shift since they must have a “dual transaction,” which means exchanging an empty container for a loaded one.
“The cost of this inefficiency is being borne by the trucking companies and independent contractors,” Rajkovacz wrote.
While SB 45 became law 16 years ago, it largely remains unenforced by drayage companies because the onus is placed on trucking businesses to file a civil lawsuit against the terminal operators or steamship lines to recoup what they deem to be excessive per-diem or demurrage charges, according to Bill Aboudi, president of AB Trucking, which is headquartered less than 2 miles from the Port of Oakland.
Aboudi said some terminal operators and ocean carriers violate SB 45 every day. They continue to charge truckers when gates are closed because of computer system glitches or because drivers’ containers are not available for pickup despite set appointment times or they are unable to return their empties because of congestion issues.
While SB 45 looks good on the books, Aboudi said it’s time-consuming and expensive to go up against the terminal operators and steamship lines, which have reported billions of dollars in profits in the first 10 months of 2021.
“If it’s a smaller company, the owner can’t be tied up in court because they are dispatching and busy running the day-to-day operations of their business, so you end up having to just pay it, take a loss and just move on,” Aboudi told FreightWaves. “If not, you will be banned from doing business by the terminals until those fees are paid.”
Per diem is the charge paid when intermodal equipment is not returned by the end of the allowable free time to its origin or to another location as previously agreed. Each ocean carrier sets its own number of “free time” days, Aboudi said. Truckers pay per-diem charges to ocean carriers if containers are returned after free time expires. That can average around $175 per day on dry containers, and reefer charges can run a drayage company around $375 per day. Plus the truckers have to pay a separate per diem to the chassis provider.
Demurrage is a charge paid when intermodal equipment is stored on terminal property. It is typically used to encourage port truckers to quickly clear out shipping containers from the marine terminals.
However, with supply chain bottlenecks, Rajkovacz said port truckers are being viewed by terminal operators and steamship lines as a “convenient ATM to bolster their profits” because of the drayage companies’ inability to pull or return their containers during the set number of free days.
“If those profiting from their own created dysfunction are denied the ability to financially benefit from their own actions, they will have every reason to improve the efficiency and throughput at our ports and a growing crisis can be partly resolved,” Rajkovacz wrote.
This is a developing story.
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