By Keith Norbury
On behalf of their clients, freight forwarders are asking that Vancouver container terminal operators roll back or cancel storage fees charged during a truckers’ strike earlier this year. The Canadian International Freight Forwarders Association (CIFFA) got involved in the dispute because importers and exporters “don’t have any cohesive base because they don’t belong to an association,” said CIFFA Executive Director Ruth Snowden. After the strike ended March 26, Ms. Snowden began receiving calls from association members whose customers were hit with storage bills for cargo that had been immobilized during the strike. Those callers included one freight forwarder that had posted $1.5 million in guarantees, she said.
After hearing for three or four weeks that CIFFA “ought to do something about it,” the association issued a press release on May 22 to demand that terminal operators roll back or refund “millions of dollars in unexpected” storage charges. CIFFA estimated those fees might exceed $20 million. In its news release, CIFFA identified the three terminal operators as TSI Terminal Systems Inc., which runs Deltaport and Vanterm; DP World, which runs Centerm; and Fraser Surrey Docks. TSI now handles about 77 per cent of Port Metro Vancouver’s (PMV) container traffic, with about 55 per cent of PMV containers going through Deltaport. DP World accounts for about 19 per cent of container traffic at PMV, and Fraser Surrey Docks about four per cent.
Terminal operators respond to allegations
Bill Wehnert, Vice-President of Sales and Marketing for Fraser Surrey Docks, said his company wasn’t commenting on CIFFA’s request to roll back or eliminate the storage fees. However, he did add that very little cargo was stored at Fraser Surrey docks during the strike.
Louanne Wong, Manager of Market Initiatives and Development for Global Container Terminals, said via email, “As you are aware, all parties operating in the Gateway were harmed by the truck dispute. While we do not comment on customer matters, it is well-known that TSI Terminal Systems Inc.’s policy provided a substantial discount to demurrage following the dispute.” Ms. Wong had asked for and received a list of questions about CIFFA’s allegations. However, she did not offer any responses other than the above statement.
DP World (Canada) Inc., though, did provide detailed answers to those questions via email from General Manager Maksim Mihic. “DP World Vancouver will not refund or roll back the fees,” DP World said. “Terminal operators incurred a significant cost during the strike period. Despite terminal congestion due to strike and massive rail delays, DP World Vancouver did not delay any vessel, kept the gate open and serviced the rail without declaring a force majeure.”
Why is DP World taking that position? “To run the terminal for one month with a full complement of labour and equipment is extremely expensive,” the company said. “Assets employed in terminal operations are valued in hundreds of millions of dollars. In order to run such an operation continuously, one needs to recover these costs. We do not have the option to close the terminal or to just stop working. “ DP World added that its commercial arrangements are with its customers, its public tariff is listed on the company website, and it “will try to address concerns of our customers in the best possible way.” As for how much DP World charged in storage fees during the strike, the company said it was “a fraction” of CIFFA’s $20 million estimate. “Demurrage charges did not compensate for our cost incurred during the strike period,” DP World said.
Demurrage fees posted on website
According to CIFFA, the average storage fee was $3,000 per container during the 28 days of the strike, and those fees rose during the strike to over $400 a day for a 40-foot container. DP World pointed out that its demurrage charges are posted on its website. Imports subject to examination by Canada Border Services Agency are free for the first three days. Before April 1, when the rates were raised slightly, each 20-foot-equivalent unit (TEU) was charged $100 per day for the first five days after the three-day free period, and $220 for every day after that. At those rates, a TEU import container stored the entire 28 days of the truckers’ strike would attract a demurrage charge of up to$4,900.
DP World’s demurrage fees at the time for a TEU export container received by rail was $35 for the first seven days and $90 days for each day after that. So, an export container held at the terminal for the duration of the strike could face fees totaling $1,865.
“The interesting part is that CIFFA is trying to reverse charges; a better approach would have been to advise members how to get their cargo out to stop the demurrage charges,” DP World said. “Not all members were faced with same problem. The strike lasted 28 days. However, import cargo in the yard peaked at about 900 containers. Over 3,000 containers exited the terminal during the strike. The real question is why some companies were more successful in managing their business than [sic] others.”
Fees never intended as punishment
DP World said it was unfortunate that The Brick, which was billed nearly $500,000 for 129 containers, did not get its containers out but blamed the problem in part on everyone’s expectation that the strike wouldn’t last as long as it did. Instead of asking for compensation from terminals, companies like The Brick should have performance bonds in place “so when disruption to their business happens they are covered,” DP World advised.
Kevin Ho, a Director of forwarder Schenker of Canada Limited, said in the CIFFA news release that “the tariff is designed to get containers off the dock. It was never intended to be used to punish importers and exporters caught with their cargo stranded in the port during a labour dispute. The imposition of the storage fees is unfair.” DP World agreed that the tariff is designed to move containers off the dock but added that it is also “to pay for the land usage if containers are not moving.” The terminal has limited space and needs that space to move cargo, movement that is the source of its revenues. That yard “was fully used during this strike,” DP World said. However, the company noted that other land was available within the port area, and “we even offered our barge service to evacuate cargo and some customers took advantage of it.”
CIFFA said that the terminals may have profited in the short term by imposing the storage fees, but that they might lose business in the long term because shippers will go to other gateways like Seattle or Prince Rupert.
In response to that, DP World said its goal is to stabilize the industry, support a 14-point plan, “and create market conditions that will steer industry away from risks like this strike.” The terminal operator also pointed out that the strike hit everyone involved — truckers, trucking companies, terminals, importers, exporters and many others — and cost the country as a whole. So DP World characterized CIFFA’s efforts to roll back the charges as “unfair,” saying, “We all pay for it.”
CIFFA Director Garry Mooney made a similar observation, noting that “the impact on the economy, jobs, and consumer prices is going to felt across western Canada and particularly in B.C.” However, he added that “penalizing Canadian importers for a situation that was out their control is hardly a way to build customer loyalty.”
DP World stressed that in such a situation, an active search for solutions needs to take place while the strike is happening. “Some customers were very successful and creative in taking their cargo out of the port area. DP World Vancouver was very creative in managing the terminal during the strike and kept it open,” the terminal operator said. It even brought in an extra vessel to help.
Another strike threat on the horizon?
But CIFFA’s Ms. Snowden said, “Let’s not kid ourselves, the terminals contributed partially towards the inefficiencies that led to the work stoppage.” And she added, “Had they been running an efficient port operation, then the truckers may not have had to have a work stoppage. If the truckers could have earned a reasonable living at the port, there may not have been a strike.”
Truckers threatened to hit the bricks again in mid June if they don’t received the pay hikes “promised in a fragile agreement,” the Vancouver Sun reported. A joint statement issued June 13 by federal transport minister Lisa Raitt and her B.C. counterpart, Todd Stone, noted progress in the Joint Action Plan that ended the strike. However the ministers said they “remained concerned about the consistent application” of the plan’s rate increases for truckers. The ministers vowed to “to take action to ensure compliance” of the action plan. As an interim measure, a provincial audit program was being strengthened with targeted investigations underway, the ministers said.