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ContainerEconomicsMaritimeNewsTrucking

Drayage throws shade at ocean carriers’ latest money grab: fees for street turns

Truck gates at Port of Houston (Photo: Port of Houston)

Surprise fees for practice that reduces congestion at ports and improves driver turns amounts to ‘dirty pool’ on part of the steamship lines.

The move by four ocean carriers to charge for on-street reuse of marine containers is prompting an outcry from truckers and shippers, who say they are being charged for something that effectively costs ocean carriers nothing.

In updates to their universal operating agreements with North American drayage and intermodal carriers, Hyundai Merchant Marine and Zim American Integrated Shipping imposed fees of $50 and $40, respectively, on a “street turn” for containers, effective February 4. A street turn is when a just-emptied shipping container gets handed directly to an exporter rather than returned to a marine terminal, and then sent back out for export use.

Maersk is also reportedly charging $30 for its new automated street-turn service now available at North American ports. SM Line is also said to start charging $75 for street turns.

The new fees come on top of the existing and onerous detention and demurrage fees that ocean carriers and marine terminals already charge customers when a box is used longer than its free time.

The new fees prompted the trade group Agriculture Transportation Coalition to call them the “least constructive, poorly considered steps conceivable,” because the fees will prompt shippers and drayage carriers to return empties to already congested marine terminals.

The greater Houston region may be particularly impacted as a boom in petrochemical production has led to more exports of plastic resins and pellets, says John D. Esparza, president of the Texas Trucking Association.

He says drayage carriers are more than willing to do street turns to save trips to crowded marine terminals and provide more turns for drivers. But the new fees from ocean carriers remove the incentive.

“It’s dirty pool,” Esparza said of the new fees. “To charge for street turns is not just opportunistic, but it’s very short sighted.”

Drayage, as with other trucking sectors, is fighting for drivers. Esparza says the new fees might tip a driver into the over-the-road market in place of drayage.

“The driver’s pay is impacted and their ability to make more turns is impacted” by the new fees, Esparza said. “The sheer frustration of congestion makes it difficult to keep drivers in the seat.”

An executive with a Texas-based drayage carrier, who spoke on condition of anonymity, said his company “will no longer street turn boxes” due to the fees.

He says carriers and drivers already make so little on that third leg of a container trip that the fee hurts the economics of making a street turn.

“It’s a penalty on the trucking companies and ultimately on the drivers for something that’s efficient,” the executive said.

The executive says he is now forced to go back to their shippers to recover the fees. If it’s not recouped from the shipper, then the fee “will come out of the driver’s pocket.”

“If our hand is forced on it, we’ll drop that import, and go back to the port, instead of just bringing the empty to an exporter,” the executive said. “It doesn’t make any sense except as an administrative fee to drop directly to the shipping companies’ bottom line.”

 At 105, SONAR’s Trucks in Market Index shows Houston as tight relative to other markets (Source: SONAR)
At 105, SONAR’s Trucks in Market Index shows Houston as tight relative to other markets (Source: SONAR)

Another trucking operations manager says the street turn actually saves the ocean carriers money as they do not have to pay an in-gate fee at marine terminals when a container is returned.

“Because we street turn, the shipping lines are not having to pay any storage fees in container yards, any gate transaction fees, and reduced EDI transaction fees,” the manager said.

The manager agrees that there is already little to no revenue for making a street turn, so the fee is going to have to come out of pocket.

“If they are charging $75, you might not even make $75 on that leg,” the manager said.

In aggregate, the fees can potentially add up. The manager estimates street turns in the region served by the Port of Houston might exceed “six figures” annually.

“Say you are an exporter that ships 20,000 containers per year, and there’s a bunch of those in Houston,” the manager said. Assuming every box is street turned, “you are looking at a $1 million per year increase and nothing has changed.”

Esparza says the TTA is looking into what recourse is available to the trucking industry for fighting the fees.

“We are certainly encouraging everyone to push back on these fees,” Esparza said.

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Michael Angell, Bulk and Intermodal Editor

Michael Angell covers maritime, intermodal and related topics for FreightWaves. His interest in transportation stretches back several generations. One great-grandfather was a dray horseman along the New York waterfront and another was a railway engineer in Texas. More recently, Michael has written about the shipping industry for TradeWinds, energy markets for Oil Price Information Service, and general business topics for FactSet Mergerstat and Investor's Business Daily. When he is not stuck in the office, he enjoys tours of ports, terminals, and railyards.
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