Date: Friday, November 13, 2020
Source: Freight Waves
Maersk reacted quickly to last week’s broadside criticism of the current state of operations in the ports of Long Beach and Los Angeles, releasing a response and setting up a meeting with the Harbor Trucking Association that first aired its members’ issues.
The HTA, along with the California Trucking Association, last week asked in a prepared public statement that ports and shippers suspend their demurrage and detention charges while the backlog at the ports of Los Angeles and Long Beach sort themselves out.
“Maersk is actively working with the Long Beach, California-based Harbor Trucking Association whose membership of 15,000+ truck drivers performs the important role of harbor trucking from ports to warehouses and distribution centers — essential to supply chain success,” Maersk said in its statement.
Representatives from Maersk and HTA are planning on meeting in the next few days, according to representatives from both sides of the divide.
The original statement by the HTA and California Trucking Association did not specifically target Maersk in its criticism but was a more broad critique of delays and inefficiencies that the organizations say are harming their members’ economics.
The Maersk statement also quoted Narin Phol, the company’s regional managing director for North America, as saying that “every week brings new volumes, new challenges and opportunities so it is essential we collaborate effectively with our HTA partners. We are exploring short-term and long-term solutions with all our key stakeholders to address the situation.”
Weston LaBar, the CEO of the HTA and the force behind the earlier release, described Maersk’s statement as a “great overture for a carrier to publicly reach out and say we understand that we are creating problems,” LaBar said in a phone interview with FreightWaves.
LaBar expanded on his criticism of operations at the ports, which have been beset by imbalances among containers and long delays to load or unload. While the market has been hit hard by a surge in imports coming out of the resumption of operations after the pandemic cut trade drastically in its early stages, LaBar said truckers serving the port have been squeezed since the advent of alliances.
As LaBar noted, in his six years as the chief executive of the HTA, he’s experienced several “once in a lifetime” incidents of significant delays for a variety of reasons.
Maersk and MSC make up the 2M Alliance, which allows a wide range of cross-company cooperation but which LaBar said has made serving the ports more challenging for drayage drivers. For example, Maersk and MSC work out of different terminals in the LA/Long Beach port area.
LaBar suggested that the Federal Maritime Commission, which needs to grant alliances the ability to form, might start looking at the impact of these agreements on drivers, which would create an incentive for the shipping companies to take steps to solve the issues raised by HTA.
The alliances, LaBar said, have reduced vertical integration and forced drayage carriers to engage in what he called a “giant Easter egg hunt.” Previously, picking up and dropping off a container could be accomplished with one company. But with alliances, that is no longer the case.
“It has yielded administrative cost increases and penalties that are assessed to the trucking companies for the inefficiencies that were created by this,” LaBar said.
The problems that drayage drivers are seeing are not new but “it has been coming to a head,” LaBar said. There is no obvious incentive for shipping companies to tackle the issues, LaBar conceded, but the current crisis means that “people are starting to realize we might have to fix this system. It is pretty much broken.”
Tom Boyd, manager of media relations for Maersk, said the 2M Alliance was kept “very simple, because we knew that the more people you have on ships and terminals, the more complicated it gets for end users.” The roots of the alliances, Boyd said in a phone interview with FreightWaves, date back to a period five to six years ago when shipping companies were regularly losing money. He likened shipping alliances to code-sharing agreements among airlines.
In the original statement, CTA and HTA said the problems for drayage drivers had been made worse by a growing difficulty in doing dual transactions, where a container is dropped off and picked up by the same truck and chassis at a single location. LaBar said alliances had aggravated that situation.
In Maersk’s prepared statement on its plans to meet with HTA and work through the problems it has laid out, the company said that 65% of the transactions at its Pier 400 were dual transactions, “and the goal is to increase this, enabling higher productivity trips for harbor truckers.”
Boyd said the statement released last week was “a much stronger press release than we’ve seen in the past from HTA, so we knew right away we wanted to show that, hey, we’ll work with them.” “For us, it is really about improving trucker turn times,” he added.