It’s tough to stay profitable in California— where, when it comes to harbor trucking, it is the state of extremities. That is, extreme port congestion, diesel prices, and owner-operator shortages, according to Patty Senecal, vp of Transport Express.
Owner-operators taking containers from the Ports of Long Beach and Los Angeles typically wait anywhere from two to seven hours to load their freight, Senecal told Fleet Owner.
With trucking companies faced with such staggering delays at the port level, the conventional owner-operator model of getting paid by the load no longer applies, Senecal said, adding that Transport Express pays their drivers on average $55 per hour for waiting time.
“The only way to make the system work is to provide an incentive,” Senecal said. “Like everybody else, they expect to be paid when they work. They bring value to the supply chain, and the last mile is the toughest. We can’t expect them (owner-operators) to stay two, four or six hours for free.”
Ruben Lopez, an owner-operator who works at the Port of Oakland, told Fleet Owner that he waits about three to four hours per load. He hasn’t been noticed any major shifts in company pay structures because of the congestion. “It’s definitely harder to be profitable. There are definitely a lot of demands, but in the end, you go to the terminal and you spend the whole day doing one to two loads,” Lopez said.
“Not every single company pays you for standby time. I’d say about 20% of the companies do that with owner-operators. Right now, things haven’t been changing at all,” Lopez said. Of the companies that do compensate for standby time, Lopez said he’s heard of rates in the range of $20 to $35 an hour.
According to Transport Express’s Senecal, the poor working conditions that result from port congestion along with increasing operating costs have shrunk the owner-operator pool. “In a year I was able to recruit two drivers, and then only because they were relatives of other drivers working here. One of their relatives was willing to show them the ropes,” she said.
Lopez has also noticed a fall-off in owner-operators as they struggle with stagnant pay rates in an increasingly costly business. “The hardest part is like myself I have to pay my house and I have to support my family. I cannot afford to take the day off— it’s like a hole, once you get into this hole,there’s no way out.”
Although Lopez says he has no plans to leave the business, he is looking for other options to supplement his income. “I’m trying to get into other little businesses, hopefully I’m not going to look at this job as a primary, but as a secondary job,” he said.
“The driver shortage is the direct function of the pay shortage— the only way we could [widen the owner-operator pool] is either to raise the compensation level or by increased efficiency— and efficiency improvement isn’t going to happen right now,” said Transport Express’s Senecal.
Besides the time-per-load inefficiencies that harbor trucking companies face, demurrage fees for staying inside the ports too long and late-equipment fees are other costly side effects of port congestion.
These added costs have to be contractually passed onto customers, Senecal said, which puts stress on carrier-shipper relationships.
“They can’t get their landed cost (total cost of freight) correct. That impacts how they price their business to their customers. It causes havoc on our customers when they get all these unknowns on them and they have nowhere else to turn— they are kind of stuck,” Senecal said.