Truckers on March 26 reached agreement with Canadian and port officials to end a month-long strike over trip rates and long queues at Port Metro Vancouver that severely disrupted cargo deliveries and caused some ocean carriers to divert loads to the nearby U.S. ports of Seattle and Tacoma.
At the height of the strike, truck traffic in and out of the port was reduced by 75 percent. Port Metro Vancouver estimated that the slow-down cost the economy as much as $885 million per week.
Throughput was close to normal by the second week of April as terminals worked to clear the backlog of containers.
Vancouver, Canada’s largest port, was not completely shut down by the strike because 70 percent of its inbound and outbound container volume is moved by rail. It was too early, as of print deadline, for Vancouver, Seattle and Tacoma to ascertain how much cargo volume they had lost or picked up due to the work stoppage by truck drivers. Shippers made arrangements to truck most of the diverted cargo back to the Vancouver area, according to Tacoma spokeswoman Tara Mattina.
“It is in all of our best interests that truckers come out of this dispute with their issues resolved because disruptions like this hurt each of us and Canada’s international trade reputation deeply,” Robin Silvester, CEO of Port Metro Vancouver, said in a statement.
About 1,400 union and non-unionized truck drivers picketed and refused to haul containers to and from the port because of complaints about minimum rates and lack of compensation for wait times at terminal gates.
Vancouver stands alone as the only port in North America that has implemented a stringent licensing system to control the supply and conditions of delivery drivers. The licensing system was established following strikes in 1999 and 2005 to maintain higher piece rates. It was supposed to correct the problem of too many truckers fighting for business, undercutting market prices and operating sub-par equipment. The licenses are required to access the port and are conditional on truckers meeting environmental, safety and security standards. There are two kinds of licenses: one for asset-based companies with employee drivers and one for companies that subcontract loads to independent drivers.
The ports of Los Angeles and Long Beach, for example, require that trucks be registered and meet certain conditions of their Clean Air Action Plan, but do not license in the way a municipal taxi commission limits authorized taxi drivers.
Officials agreed to implement a 14-point action plan to address the truckers’ concerns. Federal mediator Vince Ready negotiated changes to compensation with trucking companies, terminal operators, and unions, while Port Metro Vancouver agreed to work with terminal operators to improve terminal wait times.
Rate adjustments are expected to vary because there are more than 150 trucking companies serving the port, some with company drivers, who may or may not be unionized, and some with owner-operators and each with their own wage agreements. The government didn’t have the power to increase rates, but facilitated negotiations and agreed to enforce them. Under the license agreement, license holders and their customers agree to comply with the established rates.
Main improvements agreed to by the federal government and the port include:
- Immediately increasing trip rates by 12 percent over the minimum rates negotiated by a mediator to resolve a 2005 strike.
- Establishing in federal regulation a benchmark minimum rate for all hourly drivers. The rate is initially anticipated to be (CAN)$25.13 on hire and $26.38 after one year of service.
- Immediately doubling the fuel surcharge paid to owner-operator drivers to 14 percent.
- Regulators increasing audits and enforcement to ensure trucking firms pass on the fuel surcharges and pay appropriate rates to independent drivers. Enforcement has proven difficult in the past. A new whistleblower program is designed to make it easier for drivers to report companies trying to undercut the minimum rate and non-payment of negotiated rates.
- A commitment by Port Metro Vancouver to implement initial reforms to its truck licensing system by June 15. The goal of the new system is to create a more stable trucking industry and control the total number of licensed trucks to avoid a surplus.
- Tiered penalties for gate delays. The four container terminals are required to pay motor carriers $50 per trip for time spent waiting beyond 90 minutes, $75 for a two-hour delay, $100 for a 2.5-hour delay, and $20 per half hour beyond that. Owner-operators who are paid by the trip will receive $25 if forced to wait two hours passed their scheduled pick-up time.
- Immediately launching an extended-hours pilot project. Shippers will be able to nominate which terminals would operate longer on which days based on cargo forecasts provided by the port authority. Below a proposed volume threshold (60 percent of regular hours), terminals will be entitled to compensation for unrecovered costs. Stakeholders will work to develop a risk-sharing formula and compensation will be tied to terminal performance during extended hours. The port authority has previously pushed terminal operators to extend gate hours, depending on demand.
- Implementing by January an enhanced common reservation system that pulls together individual terminal systems under one umbrella to increase two-way loaded moves.
- Expedited outfitting of all trucks with GPS technology. Under the licensing system, about 1,000 trucks are currently outfitted with the tracking technology. Having the entire dray fleet with GPS capability will allow terminals and the port authority to understand where bottlenecks are. The port will publish the real-time backups on its website.
Many U.S. ports would welcome Vancouver’s problem when it comes to wait times. The Vancouver Port Authority says it knows from GPS data that about 63 percent of trucks wait less than an hour to serve a terminal. About 5 percent of truckers are waiting longer than two hours.
Waits of one to two hours are common at the ports of Los Angeles and Long Beach, and other ports, during peak shipping periods.
This article was published in the May 2014 issue of American Shipper.