The Harbor Trucking Association (HTA) is urging the Federal Maritime Commission (FMC) to monitor detention penalties and rising chassis charges tied to the coronavirus disease 2019 (COVID-19) that it says are imposing onerous administrative costs on truckers.
The group is asking the FMC to preach restraint between carriers and truckers/beneficial cargo owners (BCOs) to diffuse rising tensions before they boil over into a showdown over what is fair, reasonable, and legal. If unresolved, the HTA warns that BCOs will be forced to bear the costs.
Terminals in the Port of Los Angeles and Port of Long Beach have been cutting hours or closing altogether, and placing restrictions on the return of empty containers. Some terminals are not accepting certain empty containers, while others will only accept empties if the driver also retrieves an import, known as a dual transaction.
Terminal operators have made those operational decisions because COVID-19 has led to hundreds of blank sailings. The Los Angeles-Long Beach port complex is experiencing more than 40 blank sailings in February and March, Gene Seroka, executive director at the Port of Los Angeles, told the DrayTech conference in Long Beach on Thursday.
Without vessel calls or cargo to handle, terminal operators are cutting back hours to save on labor costs. Blank sailings also mean fewer vessels to transport empty boxes back to China, causing a land scarcity issue. Without a return location, however, empty containers are piling up with chassis trapped underneath, with no resolution in sight.
There are no perfect solutions because COVID-19 is harming everyone, but ultimately truckers and shippers do not want to bear the unreimbursed costs of a supply chain in standstill.
“There is a refusal to allocate a place to return empty containers and to stop the clock on detention from the lines,” HTA CEO Weston LaBar wrote in a letter to the FMC, obtained by JOC.com. “There is a refusal to stay open and accept empty return containers from the marine terminal operators whose yards, in many cases, aren’t even close to being at capacity.”
Ocean Network Express voluntarily waived all detention charges as of Feb. 25 while asking trucking companies to store all its boxes. Robert Loya, vice president of CMI West, a drayage provider, called ONE’s announcement a positive step, but even ONE won’t cover for the storage costs or compensate for the accruing chassis charges.
The pool of pools has also told motor carriers there are no return locations for chassis, but there has been no decision to waive daily chassis rates.
“For the motor carrier this is a declaration of force majeure,” LaBar wrote. “This letter is to provide notification that the drayage community cannot continue accepting the administrative burden, cost, or responsibility for any charges for empty containers and daily chassis charges that may accrue as a result of current terminal conditions.”
Force majeure, which is a legal term referring to unforeseeable circumstances that prevent someone from fulfilling a contract, is a key clause in the letter.
“If terminals, carriers, truckers, or others declare force majeure, then all bets are off and it's every man for himself. Everyone will circle the wagons and cite obscure clauses in various documents to limit their own exposure,” said J. Peter Hinge, a retired executive who spent nearly 20 years with CMA CGM. “Let’s hope it doesn’t get to the point of a general force majeure declaration.”
A spokesperson for the FMC said the agency received the letter Thursday and is closely monitoring the situation in California.
“As always, the Commission is being vigilant in its monitoring for any activity that might be a violation of law. More broadly, the Commission also stands ready to be of any assistance to stakeholders we can,” the spokesperson wrote in a statement.
What is reasonable?
Absent force majeure, Hinge had some very specific thoughts on what is reasonable.
“For merchant haulage, if ocean carriers are unable to accept empty containers at their regular terminals and if there are no local alternatives, then the detention clock should be stopped,” he said.
For carrier haulage, also known as door moves, BCOs should use the stop-clock function, although that does not cover chassis charges, only container fees. For BCOs without stop-clock rights, Hinge recommends that BCOs “decline any responsibility for detention charges incurred due to the empty container not being picked up by the carrier's trucker.”
As far as terminals, Hinge said if the operator is not accepting empties and there are no other local alternatives, then the detention clock should be paused, unless the BCO went beyond free time prior to the disruption.
“If a terminal will receive empties only at night or weekends and a trucker chooses not to make use of such a facility, then the detention clock should continue uninterrupted,” he said. “If a terminal only receives empties on a part-time basis and it becomes impossible for all empties to be received, due to long lines, street closures, or similar terminal-related circumstances, then the detention clock should be paused unless the empty container is already past the free time.”
The issue gets murky, however, when a terminal allows empty returns only when part of a dual transaction, Hinge said.
“Let’s say a consignee only has one container on the ship and has no exports, it would be unreasonable to require a double transaction in such a case. If, on the other hand, the consignee has multiple containers on a vessel, or sitting on the same terminal waiting to be picked up, then I don’t think it unreasonable that in times of congestion the terminal requires a double transaction,” he said.
The deciding factor, Hinge believes, is whether the return of empties is impossible through no fault of the consignee. If so, the clock should be paused, in his opinion, if free time hasn’t expired. If there are options, even unpopular ones, then the clock should not be paused, he said.