Photos by Asia Morris.
The Harbor Trucking Association, a coalition of Los Angeles and Long Beach intermodal carriers, announced on Friday that it had been copied on more than 70 letters sent by 70 different Southern California trucking companies in the drayage business at the ports of Los Angeles and Long Beach, to the Intermodal Association of North America (IANA) and various steamship lines to declare force majeure, as defined under the Uniform Intermodal Interchange and Facilities Agreement (UIIA).
Weston LaBar, Executive Director of the Harbor Trucking Association and Partner with Long Beach-based PEAR Strategies—"a bi-partisan public affairs and digital strategy firm" according to its website—explained at a press conference February 6 at Port Logistics Group in Compton, that "A force majeure basically means that there is a situation out of their control that's impacting their ability to fulfill a contract called the Uniform Intermodal Interchange [and Facilities Access] Agreement, and there is a clause under force majeure that basically suspends a lot of the provisions under the UIIA when a situation of force majeure is declared."
In this case, according to IANA, UIIA force majeure would preclude Motor Carriers from being assessed per diem charges.
LaBar went on to explain that trucking companies are getting charged both per diem and demurrage fees, where some of the companies are receiving bills in the hundreds of thousands of dollars per month for not being able to return empty shipping containers to yards that are too congested and for not being allowed to take possession of full containers at the port. Motor carriers can be charged up to $175 a day for having to store a container or other equipment.
"At this point in time, there is no recourse other than to dispute these, declare a force majeure and hope that these disputes will be realized and these invoices will be cancelled," he continued. "And the fact of the matter is if we don't solve this short-term, if we don't solve this with the force majeure, sooner rather than later we're going to lose a lot of the smaller trucking companies in the port and it's something we can't afford because we need all the manpower we can to overcome the congestion."
Such charges, according to the release, are in violation of California State Law under SB 45 and are pushing Licensed Motor Carriers (LMC) to their financial limits. The smaller companies that can no longer afford to pay the mounting fees are being locked out of the port, which is only worsening the congestion crisis and hurting the truck drivers whose jobs have been placed on hold.
Michael Johnson, Trucking Operations Manager at Port Logistics Group, explained that motor carriers have to have an agreement with every ocean carrier in order to handle their equipment. The UIIA's job is to ensure that the motor carriers' insurance and other requirements are validated so they can properly handle and transport the containers.
The Dispute Resolution Process (DRP) under the UIIA was used mostly for Maintenance Repair Invoices (MNR) when ocean carriers still owned and distributed chassis, according to Johnson. Now, since most chassis have been sold to private leasing companies, "that part of the equation doesn't really exist anymore within the UIIA," he said. According to the UIIA, Motor Carriers have the ability to file for binding arbitration in regards to per diem charges, the type of charge that accumulates when equipment cannot be returned or picked up. However, according to Johnson, the DRP within the UIIA, only pertains to MNR invoices and per diem invoices. Invoices for being refused at the gate to drop off or pick up a container after having to wait for three hours, are virtually nonexistent, due to most terminals being paperless. "There has to be an invoice generated to be disputed or else there's no resolution," Johnson said succinctly.
Because of the congestion, strategic issues have been costing drivers valuable time. Fred Johring, Chairman at Golden State Express gave several examples, such as truck drivers having to wait three hours to drop off a container, only to be refused at the gate. "The UIIA agreement requires that you notify us by 4:00PM the day before of diversions of empties if we're not to take them back where we're picking them up," Johring said. "That simply is not being done. We have to check on every container to see where they want it."
Johnson explained that the ocean carriers are not honoring the motor carriers' requests to waive these invoices, the costs of which accumulate while the containers have nowhere to go.
"Right now they have no room and they really have no choice, and we understand that, but the problem is you're still charging us for the per diem," he said.
Johnson said that while the Port of Long Beach's attempt to relieve congestion by opening up the 90-acre Pier S to store empty containers was appreciated, "we've also been told [by the ocean carriers] that even if we do use the yard it will not end our responsibility until the container is actually ingated at a marine terminal. We can't even use that as an option."
During a tour of the yard, Johnson pointed out a row of containers that he said would never have normally been there, explaining that driving and having to maneuver a truck through these quickly-diminishing spaces for storage is posing a major problem. It makes it harder on the drivers and is becoming increasingly time consuming and unsafe.
Michael Mayor, Committee Member at Mayor Logistics, said that the slowdowns are affecting not just the truck drivers, but also his workers in the warehouse.
"It's hard to see... we have 250 employees in the warehouse, we bring in 75, this whole week," he shook his head. "Its hard to tell the other 125 employees that they don't have work. When we had to check distribution today and it wasn't even a third of what it should have been, you can tell that their economy at lower levels is also being affected, because these employees are $10 to $12 an hour employees. It affects them directly."
The HTA's release explained that while many of the trucking companies have, in fact, entered the DRP process under the UIIA to have the invoices dismissed, it's simply not a big enough step to invoke the necessary changes that need to be made in order for them to continue conducting business at the ports, especially during times of congestion.
"Our complaint is that the industry is so much in flux right now that we cannot plan any dispatch moves[...]" Johnson said. He added later that there are "so many of these problems that are not written into the UIIA Agreement. It just was never thought of." According to IANA, any participant can submit requests for modifications to the Agreement, which the truckers plan to do so alongside declaring force majeure.
"We're going to continue to file DRPs until we, number one, achieve our goal of having per diem invoices waived and in the long term we're seeking to go into the UIIA Agreement and addendums [the commercial terms between the truckers and Equipment Providers, which are outside the scope of the standard UIIA Agreement] and rewrite them so that when conditions like this exist, there is more of a balance between an ocean carrier and a motor carrier and bring in the terminal operator because they are responsible, as well," said Johnson. "Right now, the only responsible parties are the ocean carriers and the trucking companies."
The HTA plans for this force majeure to be recognized, for these invoices to be waived and for this particular stand to serve as a catalyst for change for the Southern California motor carriers the organization represents. The HTA is advocating for an amendment to the UIIA agreement to add a Motor Carrier Bill of Rights, which, according to a statement, would ideally give the LMC "an equal seat at the table, as well as equal and fair protections under this one-sided agreement." This Motor Carrier Bill of Rights would give HTA members the protection from these accruing charges and strategic issues they say are out of their control. The HTA is currently working with the California Trucking Association and the American Trucking Association to draft the addendum.
[Editor's note: This story has been updated with additional information.]