US shippers voice anger at new ‘street turn’ fees

Date: Tuesday, January 22, 2019
Source: Lloyd's Loading List

Agriculture Transportation Coalition calls the charges by container lines ‘one of the least constructive, poorly considered steps conceivable’

US shippers have hit out at plans by some container lines to introduce additional fees of up to US$75 per container for ‘street turns’, arguing that the fees will harm all parties by deterring what is an efficient way of optimising scarce resources.

The Agriculture Transportation Coalition (AgTC) said exporters, importers, truckers and others in the containerised ocean supply chain “are appalled that ocean carriers have announced they will impose fees ranging from $40 to $75 on ‘street turns’, effective 4 February”. A ‘street turn’ is when a truck driver delivers a container from a marine terminal to a container yard and instead of returning empty-handed, picks up another container to return to the port, “avoiding having two trucks, two trips to accomplish the same thing”.

Shippers report that fees have been introduced by three lines - Zim ($40), HMM ($50) and SM Lines ($75) - but that they fear other shipping lines will join them in introducing fees.

AgTC said street turns reduce trucks in port areas and on highways; reduce congestion; reduce fuel used; reduce emissions; reduce demand for containers and chassis, which are often on short supply; reduce costs for exporters, importers, ocean carriers, “and thus consumers, and keep US exports and competitive - the AgTC’s objective”.

The shipper body commented: “Fees imposed on street turns must be one of the least constructive, poorly considered steps conceivable. It injures all, including the carriers themselves, by adding to congestion and delay which already makes marine terminals at some of our largest ports, the greatest challenge to the US export-import supply chain.

“Penalizing street turns threatens one of the only measures available to shippers, carriers, terminals, and truckers to address the unending congestion.”  

AgTC suggested that carriers “would be well served by better understanding what happens once the container is off the ship”, adding: “Street turns are supported by major importers and many exporters such as the AgTC members, as a means to reduce trucking costs, the number of truck moves, and congestion which is choking the terminals.

“All parties should be concerned about the detrimental impact on the environment, particularly in and around the vicinity of port complexes. At a time when ports are mandating green trucks and reduced emissions, this street turn fee is already increasing the number of trucks and emissions.”

The association said that collaboration was what was needed to help improve supply-chain efficiencies for all parties, noting: “Ocean carriers would do well to understand the consequences of this and other initiatives, before imposing them. The Agriculture Transportation Coalition has offered to meet with these and other carriers to help them understand how the street turn penalty will impede cargo flow and increase costs, emissions, etc.  

“We have offered to assemble a committee of some of the most well-informed, experienced shipper members of the AgTC, including exporters, importers, and truckers to meet constructively with the carriers on this initiative. We are reaching out to port authorities, marine terminal operators, environmental organizations and government agencies to participate in this effort to prevent further deterioration of the ag export supply chain, which is already so challenged by the on-going trade disputes with China and other countries, and tariffs imposed on our US ag and forest products exports.”

One AgTC member commented: “I think it is absolutely insane that anyone would want to undermine efficiency.  Many terminals are currently not even receiving empties, so by street turning we are actually doing the Ocean Carriers good and helping them keep the cargo moving.

“We do have a few carriers that make it very difficult to ‘street turn’ containers, so we actually charge a premium to handle their imports and we give discounts to importers that will utilize the carriers that do make it easy for us to street turns. In the end, the ocean carriers that don’t want street turns will lose import business over this, assuming other truckers will charge accordingly.”

Another AgTC member noted: “It is of great concern to us that the ocean carriers are moving in a direction to disincentivize street turns.  This move is contrary to the many efficiencies we have worked so hard to gain over the past few years. It will increase congestion at both the marine terminals and on the roadways as it adds trucks to the roads, the terminal queues, the terminals themselves.  

“It is a huge mistake by the ocean carriers and will increase costs and congestion.”

A third AgTC member commented:“Obviously this is a disincentive to street turn the carriers who have announced this fee: Hyundai, Zim or SM lines.

“You would think with as congested as the terminals are and inefficient they are with all these appointment systems, they would relish the street turns and efficiencies a street turn offers. It reduces terminal congestion, saves the SS Line a gate expense, increases driver productivity, not to mention it’s better for the environment to reuse boxes vs empty units passing, in opposite directions on the highways.

“This is just another revenue scheme for the steamship lines.”

As reported this week, Maersk Line is to begin offering automated street turn request processing to its customers in the US and Canada through the Avantida digital platform, which aims to free customers from the “administrative hassle” of making manual requests and can provide accurate, reliable responses in minutes. 

Lloyd’s Loading List understands that there is a fee charged initially for arranging a street turn under the Maersk scheme but that this fee is refundable if the subsequent booking goes ahead. But Avantida’s chief executive Luc De Clerck commented: “Each ocean line defines their own business logic and rules when it comes to street turns.

“There is a fee associated to arrange a street turn; the price level is defined by each ocean line. In Europe, the fees for street turns vary between €30 and €50 depending on the ocean line and country. We believe that the fees for the US market will be in the same range.”

Asked whether the company had made any calculation of how much this new service might save customers, he responded: “Over the past years we have had frequent exchanges and meetings with the users of our platform (transport companies and logistics service providers). The benefits can be very diverse: avoiding congestion at terminals and ports, less empty miles, more efficient usage of drivers and equipment, a fully digitised process, etc. From our calculations, the benefit for the transport companies is, on average, a factor of 5 higher than the fee charged by the ocean lines.”


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