Harbour Link Blog Archive

BRIEFING PAPER: Port of Vancouver Interface Issues

Posted 2013-02-18 by Harbour Link in opinion

We have written extensively about the interface issues at Port of Vancouver's container terminals that impede the ability to accommodate truck traffic efficiently. These include the trucking sector's inability to secure sufficient and timely reservations to pick-up and deliver containers, and when a reservation is secured, to be able to access the port without trucks encountering wait times well in excess of 2 hours to access the container terminals.

We have been asked to explain the nature of the problems being encountered and to offer recommendations of how these problems should be addressed to heighten the competitiveness of the Port of Vancouver as Canada's Asia Pacific Gateway. The following briefing paper attempts to provide background and perspective to the ongoing problems that are being encountered.

INTRODUCTION

This Briefing Paper has been prepared by Harbour Link Container Link Services Inc, a provider of container drayage and off-dock container terminal services for importers, exporters, 3PL providers and shipping lines. The Company has an operating history spanning 20 years and operates from an 11 acre Customs Bonded, fully paved and highly secure OFF-DOCK container terminal located at 7420 Hopcott Road (Tilbury Island), Delta, British Columbia. Canada. The paper is intended to provide a summary of the service and operational issues that are impeding the ability of the trucking sector to efficiently pick-up and deliver containers at Port of Vancouver's container terminals.

DEFINITIONS

Full Service Operators (FSO):
An FSO has a direct customer relationship of providing drayage services to the port's customers, i.e. shipping lines, importers, exporters and 3PL providers. As the provider of drayage services for the port's customers the FSO makes a significant investment in rolling stock, land, buildings, staff, computer systems and is responsible for providing a fleet of trucks and container chassis ( ratio 3.5 chassis per tractor) to perform drayage services for the port's customers. For example, in the case of Harbour Link, in addition to investing in Company trucks, computer systems, land, offices, etc., the Company owns/controls a fleet of over 85 trucks and more than 300 chassis to accommodate the daily service requirements of the port's customers. The Company employs over 125 staff/drivers.
Owner Operator (O/O):
An O/O owns a truck and works for an FSO. O/O's do not have direct customer relationships. O/O's are contracted by an FSO to provide a tractor and driver for an hourly fee or a fixed fee per trip in accordance with the Vince Ready MOU enacted by the Federal Government. The O/O provides only a truck and driver needed by the FSO to perform trucking service and relies on the FSO to market and secure business and to provide the chassis to perform the drayage service required, as well as to provide all administration, marketing, insurance and dispatch services. An O/O works for an FSO as a dependent or independent contractor.

THE ISSUES

TLS LICENSE

A truck licensing system (TLS) was adopted by the Vancouver Fraser Port Authority - Port Metro Vancouver (PMV) in 2005 to stabilize the container drayage sector after a dislocation of services at the Port (due to wildcat actions) taken by Owner Operators to protest the long queuing delays at the Port's container terminals that seriously impeded O/O earnings.

During the past two years the BCTA (Harbour Link is an active participating member) has met with PMV to seek changes to the TLS that will improve the deployment of existing truck fleets and enable an FSO to recruit additional trucks in step with business requirements. These meetings to date have not resulted in any meaningful changes to the TLS system.

PMV have told the BCTA that the truck licensing system is overseen by a steering committee and any changes to the TLS system must be approved and authorized by this committee, which includes representatives of the BC Ministry of Transportation and Infrastructure, Transport Canada and the Federal Ministry of Transport. The TLS system, as presently structured, prevents the trucking sector from deploying truck fleets in a manner to accommodate the changing daily dynamics of both local and long haul container trade. As a Company engaged in both long haul and local trucking, Harbour Link often has trucks that normally work long-haul sitting idle (a slow long-haul day) when the trucks could be gainfully deployed (and are needed) to haul local containers as part of the local fleet. This problem exists because PMV has a two tiered TLS licensing system, one license for trucks engaged in long-haul and the other license for trucks deployed to perform the local drayage of containers.

The two tiered TLS system limits a truck with a long-haul TLS license to access the port to pick-up or deliver only long haul container assignments. In the case of trucks with a local TLS license, their license permits the pick-up or delivery of any container, regardless of the container's point of origin or its final destination.

The TLS system adopted by PMV applies only to the Port's container terminals. Truck traffic associated with handling other commodities at other terminals in the Port does not require a TLS license, which costs an FSO in the container drayage business $300 per annum per truck. In the case of Harbour Link's present fleet size this amounts to $25,500 annually. No such licensing scheme exists in the case of rail or ship traffic flows. During the past two years the BCTA has appealed to PMV to change the TLS rules to enable an FSO to utilize long haul trucks with a TLS license to also handle local containers to accommodate the changing daily dynamics of an FSO's local and long haul business and to optimize truck deployment. Frankly, it is extremely inefficient for the activities of a truck with a long-haul TLS to be restricted to delivering only export or empty containers to the Port that originate from outside of the Lower Mainland, and during the same transit of the Port not to be permitted to pick up a local container (Full or Empty) to achieve the two-way movement of the truck.

Both Harbour Link and the BCTA have requested PMV to revise the TLS licensing system to allow FSO's to add both Company owned trucks and O/O trucks to their fleets and to change the TLS licensing policy so that TLS licenses are issued only to an FSO, not directly to Owner Operators. In response to industry concerns about the TLS system, PMV engaged consultants to investigate TLS issues in mid-2012, yet PMV announced in January 2013 they are many months away from deciding what changes, if any, will flow from the consultant's recommendations. The purpose of this briefing paper is to emphasize the serious negative business impact the present TLS protocols/policy is having on the drayage sector and to urge the Steering Committee to fast track the adoption of changes to the TLS to help improve the deployment of trucks to accommodate the Port's growth and customer service requirements.

For greater clarity, we present hereunder, the changes that we believe are needed to the TLS system to optimize the deployment of trucks in the best interests of all port stakeholders. These recommendations are supported by the drayage sector generally and the BCTA.

  • Enact a policy that grants TLS licenses only to Full Service Operators (FSO)
  • Before issuing additional TLS licenses to an FSO, it should require the FSO to substantiate the business support for the quantity of truck licenses requested through an application process which substantiates trade growth to support the licenses.
  • Require each FSO to substantiate they have an inventory of trailing equipment (chassis) leased or owned under their direct care, custody and control to support the additional truck licenses requested.
  • Require each FSO to substantiate they conduct their business in full compliance with the safety standards of the National Safety Code (NSC) by having a minimum 12 month "Satisfactory” carrier safety rating.
  • Require each driver that applies for a port pass to validate their employment with an FSO by providing a confirmation letter of employment issued by the FSO. Adopt a policy that when an O/O's employment with an FSO is terminated, the port pass of the O/O (driver) also be suspended pending reengagement by an alternate FSO sponsor.
  • Enact a policy that when an FSO directly engages an O/O as part of an FSO's fleet, the TLS issued to the FSO for the O/O truck shall be restricted exclusively to the designated FSO and only for the period the O/O remains with the FSO.
  • Require the TLS to be removed by the FSO upon termination of an O/O services by the FSO.
  • Permit an FSO to add both sponsored O/O and Company trucks to their fleet, subject to the trucks being compliant with PMV aging and environment policy/standards.
  • Require each FSO to declare the quantity of Company trucks and dependent Owner/Operator trucks employed/engaged by them and the union affiliation / status of each.
  • Eliminate the two tiered distinction between Local and Long Haul TLS licenses to allow all trucks engaged by an FSO to perform local and long haul work as dictated by the Port's customers' daily container movements. This change will provide the flexibility needed by an FSO to deploy their truck fleet more efficiently, provide assured daily work for all trucks and reduce operating costs by enabling the FSO to use the entire truck fleet to perform a combination of long haul and local transactions in step with daily requirements.

      The current TLS license types are distinctly different for Highway and Local.
    • A Local TLS license allows a truck to perform the pick-up and delivery of both local and long haul containers.
    • A Long Haul TLS license restricts the truck to picking up and delivering only long haul container movements.

RESERVATIONS

The reservation systems used by the Terminal Operators are preventing the trucking sector from securing timely reservations to facilitate the seamless flow of containerized cargo in and out of the Port.

The reservation problems include:

The inability to secure timely reservations to pick-up and deliver containers for customers to meet their daily supply chain requirements.

The inability of the reservation system to provide time windows for reservations to enable a truck to deliver and pick-up containers as a two way container movement.

Achieving two way container movements is a prerequisite to enabling an FSO to optimize truck utilization, operational efficiency and truck performance and to reduce traffic congestion. Presently, only a small portion of container movements at the Port are completed as two way container moves. In most cases FSO's are required to dispatch two trucks, one to pick up and the other to deliver containers, which, could be accomplished in one truck cycle if the reservation system was structured to allow the two-way coordination of reservations.

At some terminals, the present requirement is for each FSO to LOG IN AT MIDNIGHT each day to secure reservations needed to serve their customers. If reservations are not secured within the first 5 minutes after midnight, it frequently results in no reservations being available to fulfill customer supply chain requirements.

The gate line-ups at the container terminals that frequently prevent a truck carrier from meeting the time window of the assigned reservation for the pick-up or delivery of containers. Trucks are frequently caught in long gate entry line-ups waiting to access the container terminal. These long line-ups often result in trucks (when they finally reach the terminal entry gate) being turned away by the Terminal Operator because the time window of the reservation has expired. In addition to the significant cost already incurred by the FSO for the delay, the terminal operator also imposes a $25 missed reservation fee on the FSO for the Terminal Operator's own failure to provide unimpeded access to the terminal gate.

The objective of a workable reservation system is to enable the Terminal Operator to schedule daily work in a manner to prevent gate line ups and to enable trucks to receive service within the time window of the reservation issued by the Terminal Operator to pick-up / deliver the container.

Contrary to the present operating practice of Terminal Operators, reservation compliance must be measured from the time a truck first joins the line-up to access the container terminal. The refusal by Terminal Operators to recognize the reality that truck waiting time to access the terminal to deliver/pick-up a container against an assigned reservation for the transaction must be included as part of the time window of the reservation issued by the Terminal Operator.

CRITERION FOR A WORKABLE RESERVATION SYSTEM

A workable reservation system must provide sufficient reservations to accommodate the ingress and egress of daily truck traffic volume to match the supply chain requirements and the container volumes of importers and exporters within the window of the earliest receiving date (ERD) and the free time window granted by the Terminal Operator for each vessel.

It must permit truck carriers to achieve productive two-way container movements i.e. permit each truck on the entry leg to deliver a laden export container or empty container and on the egress leg to pick-up an import container or empty container whenever possible. The reservation system must be automated and match requested reservations in a manner to optimize two-way in/out movements as much as possible for truck carriers.

When the daily demand for reservations exceeds the capacity limitation of the terminal, the reservation system must accommodate unfulfilled reservation requests automatically for the next business day.

Reservation requests for import containers must be by specific container number/bill of lading number and be issued after the release of the container/bill of lading by the shipping line and after arrangements have been made by the truck carrier for the in-bond transit of the containerized goods and/or a clearance release by Canada Customs, DFAIT and other government departments.

Reservation requests for export containers must be by confirmed booking note numbers issued by the Shipping Company. Bogus/cancelled/unfulfilled booking note numbers should carry a monetary penalty.

Reservation requests for the pick-up of Empty Containers should be made based on corresponding export booking number/release number issued by the Shipping Company. Reservation requests for the delivery of Empty Containers to the terminal should specify the quantity of empty containers and the preferred time window for which reservations are required.

Reservation requests for export cargo should be permitted up to 4 calendar days in advance of the Earliest Receiving Date (ERD) of the nominated vessel. The cancellation of reservations should be permitted up to the day prior to the reservation without penalty.

When a reservation has been issued for an export booking, the reservation system should permit swap flexibility to enable the truck carrier to utilize the secured reservation for an alternate valid booking note number when, due to reasons beyond the truck carriers/shippers control, the original shipment covered by the reservation becomes unavailable for the reservation already provided.

The reservation system must permit same day reservations to accommodate the transfer of cargo between the port and the railheads (CP & CN) and for perishable containerized cargo, as well as for the transit of containers by long haul trucks which originate from or are destined to points outside of the Greater Vancouver Lower Mainland.

Because of the dynamics unique to long-haul trucking, the reservation system should provide sufficient flexibility to enable the "time window” for long-haul trucks to be adjusted and/or to be facilitated using a by-pass gate lane due to the uncertainties created by weather, traffic and road conditions.

To maintain the integrity of the reservation system, the reservation system should include provisions that hold the Terminal Operators and Truck Carriers respectively accountable for their commitments and obligations to the reservations issued/accepted.

TERMINAL GATE COMPLIANCE INITIATIVE (TGCI)

In January 2012 Port Metro Vancouver's Container Terminal Operators implemented penalties for missed and/or cancelled reservations, without any prior consultation with the parties responsible for the payment of the penalties. The forgoing initiative is referred to as the Terminal Gate Compliance Initiative (TGCI) and its stated goal is to improve the efficiency of the container terminal truck gates for legitimate truck traffic.

Since the adoption of the TGCI, the BCTA and its alliance members have engaged with PMV and the Terminal Operators to endeavor to achieve changes to the TGCI with respect to the following:

To achieve an agreement between the Trucking Sector and Terminal Operators that includes "quid pro quo provisions” in order to bring balance and fairness in the application and the assessment of cancellation/missed reservation penalties. The penalty charge of $25 for each cancelled/missed reservation is imposed only on the truck carrier. However, many of the missed reservations by truck carriers are caused by service failures of the Terminal Operator, the frequent inability to access terminal gates due to truck line-ups/traffic congestion, or for other reasons beyond the control of the truck carrier.

The trucking sector believes that penalty fees should be imposed when a truck carrier, through no fault of the Terminal Operator fails to keep a reservation. Conversely, the Trucking Sector strongly believes a penalty fee should equally be applied against the Terminal Operator when the Terminal Operator fails to complete confirmed reservations within the specified time window of each reservation.

To achieve changes to the existing reservation system that enables truck carriers to secure timely reservations in a manner to accomplish two-way container movements in/out of the port whenever possible. This will require significant changes to be made to the present methodology used to assign/secure reservations, including the need to adopt a time window per reservation, i.e. to allow for an appropriate time window for a truck to accomplish each reservation related to achieving two way container movements.

To achieve agreement with the Terminal Operators not to issue penalties when a significant event (e.g., the closure of roads and bridges, delays caused by train switches within the port area), that prevent trucks from accessing the container terminals, the closure of any terminal due to weather conditions or equipment failure) that prevents the ability of truck carriers to meet/fulfill reservation obligations. Establish a process for appealing penalty fees that is conducted by a third party adjudicator. The party imposing the penalty cannot be the party to adjudicate the fairness of the penalty.

Establish protocols to permit the swapping of reservations by truck carriers without the Terminal Operator imposing a cancellation fee. Include protocols to ensure sufficient reservations are provided to match the daily flow of containers in/out of the Port with the supply chain requirements of the Port's customers.

To revise the protocols established by Terminal Operators that deny service (entry to the Port) when a truck carrier fails to pay penalty fees within 30 days, including penalty fees that are under appeal.

NIGHT WORK (OPTION)

Presently, the lion's share of the container traffic moved by truck within the Greater Vancouver area is conducted during the day shift. Finding a solution to move a substantial portion of this traffic away from the dayshift to nights and weekends is a necessary step to mitigate increasing traffic congestion problems. Severe traffic congestion exists today for all corridors that link the Port's container terminals to the road network that serves the Greater Vancouver Area. This congestion is a powerful indicator of the need to develop a strategy to accommodate the growth in truck traffic in step with the evolving growth of the Port's container volume, especially at Roberts Bank. The road congestion problem at Roberts Bank will infinitely worsen following the inception of a second terminal at Roberts Bank (T2) (2.4 million TEU) and the development of the TFN Industrial Port Trade Zone development. The TFN development is expected to come on stream in the near future and will generate significant truck traffic within the Robert Banks corridor associated with containerized cargo consolidation and distribution activities.

As a container drayage carrier and the operator of an off-dock container terminal, Harbour Link would like to incorporate a night service to achieve the relay of containers between the Port's container terminals and our off-dock container terminal to enable the relay of containers to customers on a 24/7 basis. This is not presently possible because night gates are only offered by the Terminal Operators on an inducement basis, which often results in only one terminal being open at night and the availability of less than 3 night gates per average week to pick-up or deliver containers at night.

For the drayage sector to provide night services, it is necessary to have the gates of all the container terminals open a minimum of 5 nights a week (union meeting night excepted). This would enable truck carriers to generate adequate work opportunity to hire steady night drivers to permit their truck fleet to be gainfully deployed at night to pick-up and deliver containers at the Port. Moreover, given the high volume of containers that move by truck and the difficulties being encountered to secure timely reservations, we believe the container terminals should also be open on Saturday.

The above initiative will remove a huge volume of truck traffic off the road corridors that link the Port of Vancouver during the dayshift. To achieve such an initiative will require both Government and PMV involvement to drive the change, which, in our opinion, is an imperative to accommodate the growing container traffic being generated by the Vancouver Gateway. It will also correct the serious shortage of reservations presently being experienced by the Port's customers by opening up significantly more working hours to handle the growing truck volume at the Port of Vancouver Gateway.

As a closing note, we believe the integration of drayage and off dock container terminal services will enhance the ability of the Vancouver Gateway to optimize the cohesive flow of containers. It will also achieve greater velocity and fluidity at the existing container terminals and provide the option/solution for customers that require 24/7 uninterrupted supply chains.