Harbour Link Blog Archive

How is the Vancouver Gateway Progressing?

Posted 2014-07-28 by Harbour Link in opinion

Since writing our last blog, the Vancouver Gateway has weathered the turmoil created by a 26 day withdrawal of services in March 2014 by Owner Operators under the control of the United Truckers Association (UTA) and also UNIFOR, which led to all of the Port’s container terminals becoming seriously bottlenecked.

Before the trucker disruption, the Gateway was already encountering a serious backlog caused by the gradual piling up of eastbound rail traffic on the container terminals, resulting from severe winter weather difficulties that prevented rail carriers from positioning sufficient rail equipment to handle the Port’s intermodal business.

The withdrawal of services by members of the UTA and subsequently UNIFOR, was prompted by growing trucker frustration over the worsening turn times being encountered at the Port to deliver and pick-up containers.

The issue of the lengthening and unacceptable turn time for trucks at the Port has been an issue of discussion between the drayage carrier sector (led by the BCTA) and PMV/Terminal Operators during the past three years, without any meaningful progress being achieved to improve gate protocols and truck turn times. The lack of progress resulted in a one day work stoppage by truckers in 2013 to protest the lengthening turn times and the impact it was having on their livelihoods. Much lip service and some promises were made to the truckers in 2013 by PMV to address the port interface problem but they failed to achieve any meaningful improvements to the worsening truck turn times being encountered. So, it came as no big surprise when, in late February 2014, the Owner Operators took the ultimate step to park their trucks until an action plan was put in place to address and correct the problem.

The outcome of the above work stoppage by UTA and UNIFOR resulted in a 14 Point Action Plan (Action Plan) being concluded with Government and PMV (without any communication or consultation with the drayage carrier sector or the BC Trucking Association) that included among other things a 12% increase in the Vince Ready rates set forth in the Port Authorities Operations Regulations and the doubling of the fuel surcharge (FSC) by the Federal Government of Canada, both of which were enacted into law on the 3rd April 2014. To say the least, these cost escalations were a surprise, given that the cause and justification of the work stoppage by the truckers (Owner Operators) was to resolve the unacceptable truck turn-times being encountered by them at the Port, not compensation issues.

So, what about truck turn times? Have they improved and does the Action Plan include protocols to ensure that trucks achieve acceptable turn-times?

The answer is “YES” truck turn time has improved significantly. According to Harbour Link’s fleet GPS data, it is presently taking less than one hour (on average) to complete a single container transaction at the Port, compared to 2+ hours previously taken by truckers prior to the work stoppage.

How has this been achieved?

The Terminal Operators adopted a policy of opening their gates for two shifts daily Monday to Friday commencing on July 2nd, and invoked changes to their gate processes and operating policy for handling truck traffic at their terminals. These changes by the Terminal Operators were implemented in part to mitigate the requirements imposed on them under the aforementioned Action Plan and secondly, to provide a wider time window needed to process rising truck volumes.

The Terminal Operators also adopted a $50 reservation fee on July 2nd for all dayshift pickups and deliveries. A similar levy is also imposed in cases when a reservation is obtained for the pickup / delivery of containers during the evening shift and the truck carrier/customer subsequently fails to fulfill the reservation. The justification for the reservation levy flows from the need for the Terminal Operators to raise sufficient funds to pay for the cost of adding labour to man their gates for two full shifts.

The methodology used by the Terminal Operators to apply the reservation fee on dayshift transactions has resulted in a strategic effort by the container sector to mitigate the added cost of daytime pickup and deliveries by insisting truck carriers facilitate the Port transit of their containers only during the evening shift. The net result - the bulk of Port trucking has rapidly moved to the evening shift, with insufficient reservations being available during this shift to match the sectorial requirements of container trade.

As a primary carrier committed to achieving workable solutions to improve supply chain performance, we strongly believe that for the drayage industry and container sector to obtain sufficient reservations and fluid services during any working day to match the daily requirements of the trade, it is imperative the terminals be manned for two full shifts and the container sector bear the added cost incurred by the Terminal Operators to provide same.

Based on what has evolved so far, it is very clear the majority of shippers and receivers are exerting every effort to avoid paying the reservation fee imposed on the dayshift. This has resulted in a lopsided playing field developing wherein the bulk of the evening shift reservations are being used to accommodate the needs of major traders, which in turn, is preventing truck carriers from securing evening reservations for smaller shippers/receivers. The outcome: the full cost of the dayshift reservation levy (used to generate the funds needed to pay the added cost to man the evening shift) is being primarily paid by smaller shippers and receivers.

With the above in mind, we believe the container trade collectively must recognize that the Terminal Operators cannot correct the gate interface and turn time issue if the local container sector insists on all reservations being switched to the evening shift. Nor can they provide sufficient reservations in one shift to match the mass of the daily supply chain requirements of the sector. In our opinion, the Terminal Operators want very much to achieve a seamless solution for the transit of containers through their terminals and this is the underpinning reason why they have moved to a full two shift gate system.

We believe, the fairest way to generate the funds needed by the Terminal Operators to provide the volume of reservations required by the local container sector is to do it in a manner that achieves a level playing field for all. Such a solution is to apportion the marginal added costs to support a two shift gate opening in the form of an equalized reservation fee (single common levy) that is imposed on all reservations, regardless of whether they are for the day or evening shift.

Regarding the merits of the Terminal Operators establishing a reservation fee: It is the view of the Terminal Operators that the Port’s present volume of gate traffic does not support the full cost incurred by them to provide two full shifts of gate operations. Accepting the forgoing to be correct, supports the need for the Terminal Operators to adopt a reservation fee at this time. However, as we go forward with rising annual container volumes, we strongly believe the reservation levy should be reviewed and adjusted annually to reflect the diminishing cost differential of the shortfall associated with maintaining a second full shift of gate operations. The long-term expectation would be to see a gradual reduction in the reservation fee in step with throughput volume increases, and in savings resulting from performance enhancements through the deployment of automation technology by the Terminal Operators.

For the moment, we believe the focus must be on achieving a solution that will enable all parties to achieve the seamless interchange of their containers at the Gateway (Terminal Operators, truck carriers, truck drivers, 3PL, importers and exporters, off-dock operators, warehouse sector, etc.) and in the process fulfill the collective objective of all participants in the supply chain to improve the fluidity and service performance of the Gateway.

Interestingly, the introduction of the dayshift reservation fee has adversely interfered with a truck carrier’s ability to provide the seamless fluidity of dispatch assignments for Owner Operator contractors and drivers. The reason for this stems from customers wanting to avoid dayshift pickups and deliveries and the limited availability of evening shift reservations. The net result; drivers are experiencing waiting time gaps between dispatch assignments causing the need for them to work more hours to complete the same number of daily dispatches for the same daily earnings. It has also resulted in the need for drivers to perform a lot of one way trips and substantially more evening work.

Collectively the underlying factors include:

  1. The maxing out of NSC permissible driving hours by drivers, mostly consumed by the waiting time gaps between Port reservations.
  2. The challenges being encountered away from the Port to pick-up / deliver containers to customers’ doors during the evening shift, resulting in the need for truck carriers to assemble containers on chassis at an intermediary waypoint and to perform two-leg movements of a container at a much higher cost.
  3. The significant rise in one way Port moves, caused by operational process changes by the Terminal Operators, making it much more costly and less efficient for both truck carriers and their drivers.

The above factors are preventing truck carriers from accepting late evening shift reservations because of the non-availability of drivers with sufficient eligible driving hours to be compliant with NSC permissible driving hours. It is also resulting in the need for drayage carriers to increase their truck fleets to handle the same level of business.

To conclude, we refer to a quote made by Winston Churchill “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty”. We classify Harbour Link’s management and staff to be “optimists” because we indeed continue to strive to find solutions and opportunity in every difficulty we encounter. For this reason, we advocate that all of us must continue to be very mindful of the need to achieve solutions that optimize the harmonization of our respective roles and activities in a manner that will benefit all stakeholders. The last thing any of us wish to encounter is another dislocation by truckers caused by our collective failure to address their concerns to ensure that the Vancouver Gateway functions efficiently in everyone’s best interest.