With the recent announcement that the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) have reached a tentative agreement to the on-going labor dispute on the West Coast, the issue becomes how to clear the tremendous backlog of containers in the Ports of Long Beach and Los Angeles. Estimates are that the backlog will take 2-3 months to clear depending on how many shifts the ports run.
In the meantime, trucking companies in Southern California are still being charged hundreds of thousands of dollars in “per diems” by equipment providers for late returns of empty containers. These charges started to soar in the Fall of 2014 as the labor disputes and other issues combined to create crisis level congestion at the ports. (See our discussion of this issue in December.)
This port congestion problem interfered with every aspect of motor carrier operations making it impossible to consistently return empty containers on time. The result has been that trucking companies are caught in the middle, unable to return empty containers on time and then getting charged “per diems.”
Motor Carriers faced with these charges generally have 30 days to dispute them under the terms of the Uniform Intermodal Interchange Agreement (UIIA). Equipment providers must respond, generally within 30-60 days depending on the provider’s “addendum” to the UIIA. In the event the dispute is not resolved, the motor carrier has 15 days to invoke binding arbitration under the UIIA. Specific rules about invoking the dispute resolution process can be found in the UIIA document itself and the equipment providers’ addenda. The actual dispute resolution process involving UIIA arbitration is also explained at the UIIA website. Port congestion and labor disputes are conditions of “Force Majeure” under the terms of the UIIA which should exempt motor carrier from paying the per diems.
Motor carriers have been paying these charges or challenging them using the UIIA process. Few of those disputes have been resolved so far and we expect the pace of disputes to increase. The Harbor Trucking Association and California Trucking Association are both advising members on the dispute resolution process. Motor carriers should follow the UIIA procedures to make sure that no deadlines are missed for disputing these charges or invoking arbitration. When invoking binding arbitration, it is important to properly explain the Force Majeure condition and show how it has affected motor carrier operations.