Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.
Groundbreaking Drayage Reform Taking Shape at Port Metro VancouverFriday, November 07, 2014 > 08:55:04
(Journal of Commerce – Peter Tirschwell)
Port Metro Vancouver said it’s on track to deliver on far-reaching reforms that ended a trucker strike that crippled Canada’s largest port for a month in March. The reforms, which will be in place by early next year, include government-imposed pricing for all drayage moves including between off-dock sites, a reduction in the number of licensed port drivers, a port-wide appointment system and creation of a “drayage czar” with powers to ensure the system stays on an even keel. Taken together, it is the most ambitious effort by any port in the world to stabilize port trucking, fixing what had been “a structurally flawed marketplace,” for port trucking at the port, said Port Metro Vancouver CEO Robin Silvester.
“We are creating a drayage system that is the most sophisticated and structurally stable in North America if not the world,” Silvester said in an interview with JOC.com at the COSCO-organized World Shipping (China) Summit in Chongqing. “We’re not pleased with what happened in March, but pleased with where we’re ending up now. We’re breaking new ground.”
The strike in March led to key reforms including the plugging of a loophole in which the pricing for drayage moves between off-dock facilities was unregulated as opposed to moves to and from the dock, which had been regulated since 2005. That led to steep discounting which drove down pricing and thus driver pay, a key complaint of truckers during the March strike.
“That loophole has been shut,” Silvester said.
Another reform is the creation of likely the world’s first so-called “Drayage Czar,” a provincial government-appointed commissioner with a staff, and the powers of the office derived from the federal government. The job of the czar is “totally to focus on the ongoing stability of the drayage sector,” Silvester said. Powers will include managing rate regulations and the truck licensing system including administering compliance audits.
Yet another element is a coming reduction in the number of port-licensed drivers to keep supply and demand in balance. Based on GPS data from trucks the port was able to determine it had massive oversupply, putting pressure on pricing. Thus by Feb. 1 it will reduce the number of truckers licensed to enter terminals from 2,000 today to between 1,200 and 1,500, Silvester said in his first extensive interview about the coming reforms. GPS data spewed out 1.2 million points of usable data per day will also help determine what infrastructure the port should invest in, he said.
Also coming by February is a change to a penalty system that was unpopular among the port’s terminal operators which penalized them for long truck turn times. Terminals reportedly paid over $1 million in fines after the system was rolled out earlier this year. The new system will start the clock on turn time calculations when trucks enter the terminal pre-staging area, as opposed to when they entered port roadways, an area that terminal operators said they have no control over.
“The ideal will be that we will be collecting nothing in terms of wait time penalties,” Silvester said, adding that a port-wide truck reservation system will also be put in place by early 2015.
He said terminals moved to five-nights per week gate hours in July. “We have seen the wait times over an hour decline substantially since May when they introduced the new system,” he said.
Vancouver has a complex system in which the federal government sets a minimum rate for driver pay, the provincial government enforces the rate and the port authority licenses both the trucking companies and the drivers. The port is served by a mix of unionized trucking companies and trucking companies that use owner-operators like in the U.S. Vancouver has no chassis problems, unlike Los Angeles-Long Beach and New York-New Jersey because the shipping lines never provided chassis there unlike in the U.S., and thus never had to transition out of them, leaving a vacuum like they did in the U.S. Chassis are provided by truckers who charge shippers for their use.
Silvester said the work put in this year at the port, provincial and national level will soon be paying off. He said, “There is very good convergence around delivering this solution.”