New Fees Spark Debate

Posted on March 3, 2019 · Posted in TMTA Flash
Sharing this JOC article for your reference. It is unfortunate that motor carriers are required to pay fees for being efficient and reducing un-
necessary congestion on highways and in terminals. The lines continue to push charges to the truckers on excessive peridiem rates, gouging de-
murrage fees, undocumented maintenance fines, and now charges for
street turns.

New fees spark US truck turn cost debate
Ari Ashe, Associate Editor | Jan 22, 2019 4:01PM EST The decision by
several ocean carriers to independently begin charging fees for so-called street turns has sparked a fierce debate on the financial responsibility of managing the back office work but also not discouraging a practice bene-
fitting all stakeholders. The balance between the savings of street turns
versus costs of processing the paperwork has been upended with these
fees. A street turn is essentially a form of recycling. A trucker will reuse a container after an importer empties its cargo for an export load. Without street turns, a trucker would return an empty box to the terminal, pick
up another empty, and finally drive to the exporter. Street turns elimin-
ate the unnecessary congestion this causes on highways and in terminals. Maersk Line said last week it will charge US and Canadian customers $30 through a platform provided by Avantida, an INTTRA company that pro-
vides empty container management. Zim Integrated Shipping Services
and HMM days earlier announced fees of $40 and $50, respectively. Lawrence Burns, senior vice president of trade and sales with Hyundai America Shipping Agency, said he doesn’t consider these fees burdensome to
truckers; he considers them necessary to cover labor costs. The Inter=
modal Interchange Executive Committee, which is the group of industry
stakeholders that oversee the administration of the UIIA, reviewed the
revisions to the HMM and Zim agendas and found no conflicts with the
Uniform Intermodal Interchange and Facilities Access Agreement, a
necessary step in the process.  The Intermodal Interchange Executive
Committee is a standing committee of the Intermodal Association of
North America.  SM Line, which had been reported to be charging $75,
won’t be joining Maersk, HMM, and Zim. A source familiar with the
matter explained SM Line pays draymen a round-trip rate, so a trucker
doing a street turn would be paid twice. SM’s policy is to convert the
round trip into a one-way invoice, deducting the pay for the second half
of the round trip. In short, it’s a clerical update rather than a new fee, the source said. Truckers’ perspective Truckers, however, believe charging for a decades-old practice is a revenue grab. “These change[s] violate the basic good business practices currently in place regarding such turns,
and will result in a negative impact on all stakeholders in the intermodal community,” wrote Jeff Bader, president of the Association of Bi-State Motor Carriers, in a letter to IANA and HMM. Ocean carriers argue the back-office work involved in a street turn is complex and costly. They juggle several responsibilities when a container is suddenly transferred
between two customers, ranging from detention time to chassis
invoiceing. Ocean carriers must also ensure the container isn’t promised to another customer or due for maintenance. There are administrative
costs, but no one knows how much. As a source told JOC, ocean carriers
configure their systems to attach a container to a bill of lading. When a
trucker exits a terminal, container data are sent to the ocean carrier.
When the same container is returned, the transaction is closed. If the
importer took too long, a detention fee applies. A street turn, however,
disrupts this process in midcourse. Some input a fictitious move into
their computer systems, while others delink the box from the importer
and attach it to the exporter. Either way, it’s a manual process the ocean
carrier considers time-consuming. Creating this dummy transaction stops one detention clock and starts another. Without an adjustment, beneficial cargo owners (BCOs) may receive erroneous invoices. If an ocean carrier incorrectly processes a street turn, chassis charges will also be out of
whack. Not only does the ocean carrier have to fix the detention clock, it also transmits information to chassis providers. Whether it’s TRAC Intermodal, Direct ChassisLink Inc., or Flexi-Van Leasing, the ocean carrier
notifies the chassis provider when one transaction ends and another
begins for an accurate invoicing. Cargo owners use carrier haulage
because they want a simple solution with one party managing end-to-end logistics. They expect one invoice covering all the charges of the shipment. Could this process be automated? Yes, and the Avantida platform is one of several technological solutions on the market to process street turns.
For now, however, it is a very manual task. But it’s also reasonable to ask: do ocean carriers really incur $30, $40, or $50 in operating expenses per
street turn, or is it an excuse? Truckers worry about congestion,
wasteful trips Truckers have two choices if these fees remain in place:
pay it or cut down on street turns. The fear is truckers will choose the
latter, sending drivers into marine terminals to exchange one empty
container for another. “[Street turns] are an essential component of our
industry’s efforts to reduce traffic and congestion in the port area, reduce overall [diesel] emissions, and increase operational efficiency for all
stakeholders,” Bader said. The 170 members of the Association of Bi-
State Motor Carriers, covering New York and New Jersey, are only some among many opposing these fees and worrying about the fallout. John
Esparza, CEO of the Texas Trucking Association, likened the decision to a business requiring employees to pay for tap water or to use the restroom. He said the decision would have far-reaching impacts. “We battle with
highway congestion in Houston; imagine how much extra traffic we’ll be putting on the roadway. It puts more stress on our infrastructure. Try explaining (that to)

the folks who maintain and repair our roadways,” he said. “This just adds inefficiencies to the supply chain. No one wins.”

And if a driver is paid $75 for a local dray, there is no longer an incentive to do a street turn. Port authorities have been absent from the discussion to date. Port directors are stuck in the middle between BCOs and ocean carriers. The American Association of Port Authorities told JOC.com it is aware of the fees and is discussing the issue with its membership. Ocean carriers claim the fees will be on truckers and not BCOs. But Todd Ericksrud, CEO of MatchBack Systems, believes ultimately importers and exporters will pay through higher dray rates.

“This is very problematic for trucking companies [that] have been successful building networks around a port [with importers and exporters sharing assets]. Many of these companies offer discounts to BCOs to create those matchbacks, but now that’s in jeopardy,” he said.

The nexus to BCOs is indirect in that their rates might go up one day. The real issue for the BCOs is whether this slows down the supply chain, especially for exporters, and whether they join the opposition or stand on the sidelines while the truckers fight the battle.

Contact Ari Ashe at ari.ashe@ihsmarkit.com and follow him on Twitter: @ariashe_joc.