Harbour Link Blog Archive

Reflecting on the Cost Impact of TLS and the BCCTA

Posted 2017-11-14 by Harbour Link in opinion

November 2017

Harbour Link Container Services takes pride in its good reputation as an industry leader and for its adherence to high standards of business ethics and regulatory compliance, including ensuring our drivers, dependent contractors (owner operators) and staff are treated respectfully and receive fair compensation.

Foremost, we are a company with a motto for being strong on service, reliability and people, with a primary interest to share the success of the company with all employees in the Company. Our employees are the face of our Company and are referenced in our motto "Strong on People"

What we don’t understand, is why Harbour Link as a highly ethical operator paid out substantially more retro pay than many of our competitors. The retro pay flowed from the enactment of the British Columbia Container Truck Act in 2015. Is it because we retained comprehensive original records of all business transactions and payables (including driver pay), as required by law, and conducted ourselves openly and transparently to enable a full audit to be conducted accurately to calculate the pay differential to be paid to drivers from the decision by the BC Government to impose retroactive pay on the drayage sector, stemming from a law enacted in May 2015 but imposed retroactively to April 3rd of 2014.

Harbour Link supported rate regulation because (in our opinion) it was needed to stabilize the container drayage sector. The issue however is, it took the Government a full year to determine the rates, during which period, all business activities continued as normal with rates and charges already in place. When the rate review by Government was completed and rates were legislated May 2015, the Government imposed the rate differential to be paid retroactively to April 3rd 2014. The decision to enact rate retroactivity for one full year was absurd. It would have been equally absurd for drayage carriers to provide supplementary retro invoices to customers for services previously performed and completed.

Frankly, we do not believe many industry members acted honestly with respect to settling their retroactive pay obligations. Nor do we believe the auditing process followed by the BC Trucking Commissioners office used a common standard of criteria to conduct the audit of TLS trucking carriers. Many carriers failed to provide comprehensive records to allow for a transparent audit. As a result, we believe that our decision to do the right thing by providing comprehensive original records and to act with the highest degree of integrity imposed a massive unfair financial burden on Harbour Link.

To set the record straight, before the enactment of the BC Container Trucking Act (BCCTA) in May 2015, the compensation paid to owner operators and company drivers by Harbour Link was in accordance with pay levels negotiated and set forth in the Collective Bargaining Agreement (CBA) negotiated and executed between the Company and the driver’s Union. Harbour Link’s CBA was in good standing and in full compliance with all labour law requirements and included comprehensive pay settlements for all drivers including Health and Welfare benefits regardless of whether employed as dependent contractors or Company employee drivers.

To our amazement, in addition to the sum of the total retroactivity paid by the container trucking sector through the requirements of the BCCTA, the BCCTA set aside the contractual negotiated wage rates set forth in the various collective agreements between the container trucking companies and their owner operators, including the private agreements applicable to non-union carriers. We estimate the total retroactivity required to be paid collectively by the container trucking sector amounted to about ten million dollars.

Ironically, throughout the process of drafting the BCCTA by Government, the container trucking sector was not informed about the level of compensation being contemplated by Government, nor the plan to establish the BCCTA retroactively to take effect from 3rd Aril 2014. Neither did Government consult with the employers (Companies) operating in the drayage sector (nor the BCTA) about the proposed high level of compensation being planned which would have enabled drayage sector Companies to develop a plan for the accrual of matching funds (implement a temporary surcharge) for the eventual retro payment of higher rate levels to be paid to owner operators and company drivers.

And while the container trucking sector was kept in the dark about the content of the BCCTA until December 2014, the container drayage sector was focused on completing their respective applications to qualify to meet the new paradigm of a “fee based” Terminal Licensing System (TLS) established by VFPA for the deployment of container trucks visiting the Port’s container terminals.

TLS established high standards of prequalification criteria for Companies to continue to receive a TLS Port access license. TLS also established an additional annual fee for each qualified truck deployed in the TLS licensee’s fleet requiring port access and transit. So while the BC Government worked closely with the unions and other stakeholders without the presence or input by the container trucking companies, the drayage sector companies did not know whether their respective Company would qualify and be selected by FVPA (Port of Vancouver) to continue as a TLS carrier on a go forward basis after February 1st 2015 under the New TLS truck licensing system.

It is important to note that VFPA TLS fees, combined with the new regulated compensation paid to owner operators and company drivers under the scope of the BCCTA have added substantial cost for the Port’s customers and Canada’s trade routed via the Vancouver Asia Pacific Gateway.

To reflect on the outcome on the above developments we provide the following opinion:

  1. TLS has generally achieved overall benefits by improving safety compliance and higher operating standards for the container trucking industry. However, changes to TLS are urgently needed to enable TLS Licensees the ability to grow their businesses in step with customer demand and to facilitate business sales, mergers and acquisitions.
  2. The adoption of the BCCTA and its Regulations has generally helped stabilize the ethical standards and business practises within the container trucking sector and has brought fair wages and equal compensation for the services provided by dependent owner operators and Company drivers. However, some immediate adjustments to the Regulated rates are urgently needed to achieve parity of cost between the 3 alternate options of compensation; i.e.dependent owners that are paid by the container trip versus by the hour and the hourly wage level paid to Company truck drivers.
  3. A short trip rate also needs to be incorporated into the regulated rate grid to facilitate the short haul transport of containers when the total distance of a container trip is less than 2 kilometres. Presently the zone rate schedule requires full zone payment to be made regardless whether a container is transported between neighbouring properties/businesses or moved much greater distances covered by the rate for the full zone. Paying a full zone rate for short haul container moves between close neighbouring business (less than 2 km) that take less than half an hour to complete from pickup to delivery, is overly generous and disproportionately very costly.

  4. The overall cost impact associated with TLS renewal for our Company in 2018 will increase to $204,949.00 per annum (plus GST and other TLS costs and applicable taxes). The TLS cost combined with the new higher stabilized compensation to be paid to owner operators and Company drivers per the BCCTA has resulted in a substantial rise in container trucking costs for customers using the Vancouver Gateway.
  5. Given the magnitude of the aforementioned TLS costs, we anticipate that commencing 2018 a supplementary modest container fee of $3.50 per container (Port levy) will need to be added to our invoices as a contribution towards rising TLS costs.

Harbour Link will continue to be an industry leader and strong supporter of the Vancouver Gateway and an industry voice and advocate to achieve balanced solutions that enhance fluidity and operational efficiencies for all.