Carriers, owner-operators wait on Port of Vancouver's drastic overhaul

By Charlie Morasch, Land Line contributing writer | Friday, December 05, 2014

Canada’s largest port is preparing to enact aggressive requirements that would drastically change the size and makeup of trucking companies allowed to move shipping containers.

An examination of port truck licensing at Port Metro Vancouver by local, provincial and Canada’s federal government has resulted in a flurry of proposed requirements that many say are too expensive for small businesses.

With a Feb. 1 enforcement date looming, however, the port still hasn’t released its final product to the trucking companies that will be required to comply with the changes.

The multi-level government overhaul of truck procedures at Port Metro Vancouver has stoked fears the action will add to already growing inefficiencies that keep container vessels from docking and make truck drivers wait hours for their loads.

The port counters that a new licensing program will remove inefficiencies in the driver pool, resulting in lower wait times and more freight for other companies. Port Metro Vancouver estimates 300 to 700 trucks must be eliminated to ease congestion and stabilize the trucking workforce.

“There are too many trucks registered for the work that is required, which has caused intense competition between trucking companies, not enough work for many truckers, and reports of undercutting of agreed rates,” the port said, according to a news release.

Early proposals have worried owner-operators that the changes are designed to banish their segment from port deliveries entirely. One recent proposal by Port Metro Vancouver would require owner-operators to be sponsored by a trucking company licensed by the port. Not surprisingly, the plan sparked divisions between owner-operators and company drivers and calls for available sponsorship spots to go first to drivers with seniority.

Anna Deeley, a media spokesperson with Port Metro Vancouver, said the port has not yet issued any formal specifics to the final program. Several specifics are highlighted in a memo Port Metro Vancouver made available on its website.

Though the Feb. 1 date is fast approaching, Port Metro Vancouver has no plans to delay the license program changes.

Just when will truck owners know what the new rules are?

“That’s an excellent question,” said Louise Yako, President and CEO of the British Columbia Transportation Association – which represents 1,000 fleets in the province. Seventy of BCTA’s members operate about half of all trucks that serve Port Metro Vancouver. “At this point, we’re in a wait-and-see mode.”

Big changes
Like many North American ports, freight inefficiencies, long truck turn times and labor concerns have prompted calls for change. Port Metro Vancouver, which boasts movement of $172 billion of goods annually, began tackling its issues last year.

Yako said many port stakeholders, including BCTA, have asked port officials to reform the truck license system for years. Motor carriers are required to have licenses and truck drivers must be permitted. Many carriers have asked for the port to simplify the process and require only licenses for carriers.

In 2013, she said, Port Metro Vancouver began examining the issue and asking stakeholders for input. 

When owner-operators and other drivers began a “withdrawal of service” – friendly language for a labor strike – in February 2014, container movement slowed enough to garner attention from multiple levels of government. Truckers picketed for higher wages, saying the average pay rate at the port was $15.59 per hour, down from $23 elsewhere in the province.

“There was a four-week period where there was a real reduction of containers moved by truck through this port,” Yako said. “Then the truck license system reform got rolled into a whole series of recommendations that were part of the joint action plan developed by the province, the federal government, and Port Metro Vancouver. So even though the truck license system reform was going to happen anyway, it’s gotten really ... complex.”

Port Metro Vancouver’s Deeley said the reform is an effort to help address complaints by both truck drivers and trucking companies.

“There’s been a tremendous amount of consultation,” Deeley told Land Line. “The strike was very impactful to the port and the economy as a whole. We take very seriously the issues raised during information gathering sessions. The last eight months have really been about consulting with trucker sand trucking companies to get to the point we’re at now.”

If Port Metro Vancouver's company sponsorship requirements don’t force some owner-operators to leave, new bonding requirements may be enough to turn many away from applying for a license.

In addition to requiring owner-operators to be part of a company with a minimum number of trucks, the port also has proposed a performance bond of $300,000 be posted to recoup driver wages from companies not paying required rates. Several trucking companies told the port last month such a requirement is “not affordable for smaller companies and is higher than the expected truck wage liabilities it is intended to cover,” according to Port Metro Vancouver documents, so the port has said it plans to reduce the bond amounts to $250,000 per trucking company (15 or 20 trucks).

In addition to the cash and fleet size rules, by Feb. 1, 2015 only trucks with model year 2000 or newer engines will be allowed onto port docks. In a subsequent Port Metro Vancouver consultation document, the port hinted at allowing 1994 through 1999 trucks to keep rolling until Dec. 31, 2016. The port said by 2019 it would begin enforcing a 10-year rolling age maximum for licensed trucks.

The port has repeated the need to lower the pool of available trucks from the current 150 trucking companies with about 2,000 trucks.

To help separate trucks not needed, the port plans to score licensed trucking companies on safety compliance, pay rate compliance, asset utilization, operational performance and average fleet age as part of a scorecard. 

“If at a later date it is determined there remain too many trucks in the system, it is our intent that overall performance against the average would be one tool in potentially reducing the number of truck tags,” the port wrote in an input consideration memo released in November.

That’s not all.

On Nov. 4, Port Metro Vancouver announced a plan that would prevent trucks in fleets smaller than five trucks from entering the port. Smaller trucking companies would be allowed to band together to form their own five-truck fleet, but would collectively be forced to pay $45,000, which amounts to about $9,000 per truck.

Another port proposal would require each truck owner licensed to the port to provide multiple chassis per truck.

One motor carrier owner with trucks dedicated to moving port freight says the proposals will devastate owner-operators. Six-figure bond amounts aren’t aimed at safety, said the man, an OOIDA member who asked his name be withheld from publication.

“Well, what the hell do we have insurance for?” he said. “What they’re doing is taking away the right of the little guys to prosper and become somebody. They want to monopolize the harbor for big companies.”

The OOIDA member said his family and others immigrated from India years ago to enjoy the freedom of business markets in the West. The port’s proposal, he said, is not progress.

“What we’re doing is just going back to the caste system,” he said.

Deeley said the plan will not eliminate owner-operators from the port. The port’s transition program will enable owner-operators to obtain “up to $15,000 each” to help them transition away from port work.

“Truckers are going to be able to work elsewhere if they choose to,” Deeley said. “There is a generous compensation program – equivalent to about three months of work – that’s designed to help them transition out of the port container trucking business.”

Waiting for the other shoe
The port listened to stakeholders and said it would submit a new plan by Nov. 24. As of Thursday, Dec. 4, Yako and other stakeholders were still waiting. And worrying.

“Putting together a rigid new system is going to be very administratively and bureaucratically difficult,” Yako said. “Our concern is that they would not be able to respond in a timely manner.”

Port Metro Vancouver has hinted at creating separate licenses for long-haul trucking companies, and Yako believes that will be addressed after the initial license overhaul.

Owner-operators, Yako said, haul too much freight to be shut out at the ports.

“I think there will always be a need for owner-operators in this sector because there are peaks in cargo flow,” Yako said. “You really need to be able to ramp up and ramp down when business gets busy or slow.”

The OOIDA member worries the Vancouver proposal could influence change at other ports where freight inefficiencies and labor unrest happen.

“This is very, very bad,” he said. “And it will happen in other ports if it happens here.”

Canada’s federal government regulates all port structures, Deeley said. Such a major change in license requirements would seem to be difficult for American ports and their local power structures to implement.

Port Metro Vancouver’s use of GPS devices, which were added to all port trucks a year ago, did help all parties understand the root of inefficiencies. Deeley said the use of GPS is something more likely to help all ports learn more about how their freight systems work.

The BCTA’s Yako doesn’t expect the port plan to be imitated by other ports.

“If other ports think they need this, they can certainly do it,” Yako said. “I think in the long run, it wouldn’t make sense for other ports to adopt this model.”

Though she was referring to Canada, specifically, trucking was deregulated in both the U.S. and its neighbor to the north decades ago, Yako pointed out. Proposals that require layers of government involvement and limit economic opportunity don’t seem like progress.

“Our industry is supposed to be economically deregulated,” Yako said. “I don’t know that it makes sense to re-introduce economic regulation. There is a reason why the trucking industry became deregulated. We are seeing a consequence of incredible regulation with the increase of inefficiencies at ports already.”

The OOIDA member is less diplomatic.

“This is forcing the little guy to give up his license and go to work for somebody else,” he said. “This is a mafia of a different kind.”

Copyright © OOIDA

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