Some port drayage companies in the Port of New York and New Jersey have begun imposing congestion surcharges following weeks of delays at container terminals.
Several motor carriers told the JOC that market conditions don’t permit them to impose surcharges. But some said they are considering added charges, and that this winter’s crisis at the port has left them little choice.
“I’m adding $175 on top of my normal rate,” said Evans Papantouros, president of EP Transportation & Logistics. “If I take a load to say, Linden, N.J., my normal rate is $240 plus fuel surcharge. Now it’s $415.”
Papantouros said such a surcharge may sound high, but that it reflects several hours when a driver is forced to wait in line outside or inside a terminal, burning $4.20-a-gallon diesel while waiting to pick up a load.
“Two days ago, one of my drivers spent four hours inside a terminal waiting for somebody to bring them a load, and that doesn’t count the time they’ve waited outside,” he said.
“Each day, more and more of them are just getting out of line and not working,” he said. “You can’t blame them — they’re spinning their wheels for basically nothing. Our customer service is declining. We’re constantly having to reschedule everything.”
Motor carriers are taking a variety of approaches in efforts to recoup costs. Salson Logistics said last month it would assess customers detention charges of $60 an hour after the first three hours of waiting time.
Other motor carriers say they’re attempting, with mixed success, to pass along demurrage costs incurred when drivers cannot remove containers from terminals before free time expires.
Such charges represent only a fraction of the costs the congestion has imposed on shippers, who say supply chain disruptions are becoming severe. The Retail Industry Leaders Association this week called for immediate steps to end the crisis.
New York-New Jersey container terminals have struggled with backlogs since the start of the year. Operations have been disrupted by repeated winter storms that have stalled hydraulic equipment and coated pavements with black ice.
Adding to the problems have been shortages of rock salt, longshore labor and intermodal chassis. Trucking companies have been hoarding chassis because they fear they’ll be unable to obtain roadworthy equipment at terminals.
Terminals have spent several million dollars on unbudgeted overtime to keep gates open on several Saturdays this year and on Lincoln’s Birthday and Presidents’ Day, both International Longshoremen’s Association holidays.
But these and other steps failed to clear backlogs. Today, the truck queue outside Maher Terminals, the port’s largest, extended more than 2½ miles.
Winter weather has disrupted ship schedules and resulted in bunching of ship calls. This, as well as the fact that larger ships are disgorging more containers on a single call, has complicated terminal operations at New York-New Jersey and other ports.
This week the Virginia Port Authority established an industry task force to find ways to reduce long turn times at its terminals, and to plan for a trucker appointment system targeted to begin in May.
New York-New Jersey’s current crisis is the latest in a series that began with a two-week shutdown after Hurricane Sandy in late 2012 and resumed with system implementation problems at Maher Terminals that led to port-wide delays last summer.
“Everyone’s frustrated,” said Carl Frederick, co-owner of Container Transport Services. “It’s worse than Hurricane Sandy.”
Papantouros said this winter’s delays at the port are the worst he’s seen in 35 years in the business. He said political leaders need to demand solutions.
Mike Baicher, CEO of West End Express in Dayton, N.J., said some of his customers have advised that they’re diverting shipments to Baltimore because of New York-New Jersey’s delays.
He said some of his owner-operator drivers are demanding higher pay and refusing assignments to pick up a second load during a day at a terminal they know is congested.
“Nobody wants to sit in a truck five to seven hours hoping to get a load,” he said.
Although owner-operators are paid by the load, many drayage companies have been paying them for waiting time and attempting to pass the costs to customers.
Baicher said he’s avoided imposing a congestion surcharge. “My customers aren’t to blame for this,” he said. “A lot of my customers have paid demurrage, so I don’t feel comfortable hitting them with a congestion charge.”
But he added, “I can’t fault the guys who want to do it. Somehow you’ve got to recoup the money. This business is about time. if you can’t bill for your time, you’re in trouble.”
Joseph Bonney, Senior Editor | Feb 21, 2014 3:13PM EST