Harbour Link Blog Archive
Posted 2015-09-22 by Harbour Link in opinion
It has been a while since writing our last blog. During the intervening period many positive developments have occurred at the Port of Vancouver Gateway. These include the actions taken by PMV and their terminal operators to improve gate turn times and the stability brought to the container drayage sector by the enactment of the Container Trucking Act by the BC Government in May 2015.
By way of background, Harbour Link advocated for the actions taken by PMV in February 2015 pertaining to the NEW TLS truck licensing system and also generally supported the intervention by the Federal and BC Government to help bring stability to the container trucking sector through expanded regulation of the container drayage sector and the enactment of the BC Container Trucking Act (CTA).
Relying on the intervention of Government and Crown Corporations to help solve industry issues did, however, create a surprising dynamic that resulted in a process that excluded any consultation by Government with drayage carriers or industry representatives, resulting in the outcome being very different to carrier expectations and also extremely costly to industry.
This misstep by Government to consult only with Union leaders (UTA and UNIFOR) in the preparation of the CTA, without consulting or including drayage companies at the table to provide input and perspective of the business implications and the reality/validity of union demands on the competitiveness of the Vancouver Gateway and their impact on Canadian trade was indeed very surprising.
A major concern resulting from the CTA and the new TLS is the following:
Payment of Retroactivity Compensation
The CTA as presently written requires the Off Dock rates set forth in the Container Trucking Act (CTA) to be paid retroactively to owner operators and drivers back to 3rd April 2014. The Off Dock rates were not revealed to the drayage sector by Government until late December 2014.
Before the enactment of the CTA in May 2015, the compensation paid to owner operators and company drivers by drayage carriers for Off Dock container moves was in accordance with the rates set forth in negotiated collective bargaining agreements executed between the respective Unions’ of unionized drayage Companies (Harbour Link is a unionized Company) and/or through individual service engagement agreements made between Companies and their non-union dependent contractors and drivers.
The sum of the total retroactivity flowing from the CTA, which by law, replaces the negotiated rates set forth in union labour contracts (by our estimate) amounts to multi millions of dollars.
The container drayage sector was not informed about the level of compensation being contemplated by Government to be paid to drivers and owners operators for non-port container movements until December 2014. Neither did Government consult with the drayage sector or the BCTA about the proposed high level of off dock rates being planned by Government to enable Companies to develop a plan for the accrual of funds (establish a surcharge) for the retro payment of the higher rate levels to owner operators and drivers.Moreover, the container drayage sector did not know whether their respective Company would qualify and be selected by PMV to continue as a TLS carrier on a go forward basis after February 1st 2015 under the New TLS truck licensing system.
A bigger and more challenging competitive hurdle facing the fragmented drayage industry, was the inability for any carrier to ask their customers to agree to accept a temporary surcharge to fund the provision of retro compensation planned by government without losing the customers’ business. This was particularly the case for drayage carriers with union contracts in good standing. They simply could not substantiate to customers that such retroactivity would apply and supplant the non-port rates set forth in the negotiated labour contracts already executed and agreed with the union representing their owner operators and drivers.
The Off Dock rates set forth in the CTA, in our opinion, should have been applied on a go forward basis from the date that the rates were approved and enacted by Order in Council of the Lieutenant Governor of BC in May 2015 or from February 1, 2015, which is the date that TLS reform was adopted by PMV and stipulated full compliance with the provisions of the CTA.
To use a modern euphemism - It is what it is - the law is the law and the Joint Action Plan agreement executed between the UTA and UNIFOR and Government/PMV underpins the political obligation by Government to ensure that retro pay is provided to all owner operators and drivers by all container drayage carriers, regardless of the merits / damages that will occur in doing so. How retro pay will be collected from carriers that were forced to exit from the container drayage sector prior to February 1st 2015 (due to their failure to qualify as a PMV - TLS licensee) is a matter to be addressed by the Government appointed Trucking Commissioner.
Undue Hardship Imposed by the Retroactive Pay Requirement
What is an unequivocal fact, the imposition of the retroactive pay provisions under the CTA imposes extreme unfair financial hardship on the container drayage sector. For a variety of reasons, the liability created by this retroactive obligation was neither predicable nor mitigable. This is particularly so for the period between April 2014 and February 2015 (when PMV embodied the CTA into the new TLS system), it was not possible to pass on to customers costs associated with potential off dock rate increases which were, at the time, unknown. The result is that most, if not all, container drayage carriers now face an extreme financial burden in bearing the imposition of this liability and some or many, may be forced out of business if required to make the retroactive payments required by the CTA without some mechanism of assistance.Proposed Retroactive Pay Resolution
In August 2015 Harbour Link made a submission to the Trucking Commissioner proposing the formation of a “Container Drayage Carrier Association” to provide sufficient internal leadership and authority to compel appropriate self-regulation. We fully acknowledge and anticipate that considerable consultation and debate will be required to finalize and implement an initiative of this nature. However, we do not view this as an insurmountable challenge – but an opportunity for needed reform to achieve a solution for the retro payment of the higher wages and to address other issues to help bring greater efficiency and stability to the Vancouver Gateway.
We believe the first priority of the Container Drayage Carrier Association would be to immediately resolve the issue of retroactive pay under the CTA. To this end, we have proposed consideration of the following potential terms of membership in the Association:
- Membership in the Association would be compulsory by all TLS licensees (drayage companies) as a condition to receive / renew their TLS license issued by PMV. This is necessary in order to achieve a sectorial resolution of the total liability and to develop an appropriate methodology to calculate liability for each drayage carrier pursuant to the retroactive pay provisions set forth in the CTA;
- The Association would be responsible for securing a source of funding to provide for immediate payment of the agreed liabilities associated with the retroactive pay provisions in the CTA;
- the Association would assist the Commissioner’s office in ensuring that all Licensees are compliant with the requirement to pay all agreed-to liabilities associated with the retroactive pay provisions in the CTA; and
- All Association members will include a new fee to be established by the Association, for each port move of a container, which will be charged to customers to fund the retroactive pay liability enacted by the Provincial Government under the provisions of the CTA.
As a Company known for providing industry leadership and identifying workable solutions to complex issues, we acknowledge and fully understand PMV and Government must fulfill the commitments they made as set forth in the Joint Action Plan; albeit that the agreement was executed between Government and Union/Society representatives, without carrier input or consultation, to achieve the reopening of the Vancouver Gateway following the withdrawal of services by truckers.
As noted above, the outcome of the skewed agreement made by Government has triggered damaging consequences and imposed extreme financial obligations on the drayage sector to continue as a service provider. We have also learned from our previous efforts to establish a drayage carrier association, waiting for drayage carriers to organize any form of association on their own is not a realistic option. A “top-down” mandatory association is required.