August 24, 2005
The Memorandum of Agreement
On July 29, 2005, the federal government issued an Order In Council (OIC) which exempts the parties in the Vancouver port dispute from the Competition Act for 90 days enabling the independent owner operators and the trucking companies to fix freight rates.
On August 2, 2005, the Vancouver Port Authority imposed a mandatory 90-day truck licensing system that compelled trucking companies to pay owner operators the rates outlined in the Memorandum of Agreement (MOA) issued by facilitator Vince Ready.
While these actions prompted the owner-operators to return to work, Retail Council of Canada's members are concerned this "solution" has solved little and has in fact created several serious, though perhaps unintended and unanticipated, consequences.
Our members concerns are as follows:
| > | Initially, the interim licensing provisions and MOU applied to not just the 45 companies and 1,200 independent owner-operators involved in the dispute — but to all 482 trucking companies and 7,200 drivers previously authorized to work at the port: collateral damage ... individuals and companies caught up in the crossfire of a conflict in which they were not involved. (An arbitration ruling August 19th clarified that the MOA does not apply to long haul carriers or those who use their own equipment.) |
| > | The 90 day OIC forces carriers to sign a two-year agreement with the Vancouver Container Truck Association. |
| > | The MOA institutionalizes, for the next two years, "per trip" compensation — in the view of our members, the most inefficient and inequitable of trucker compensation models when compared to compensation by the hour or by the kilometer. For example, the "per trip" model does not compensate drivers for wait times. The locked-in rates specified in the MOU reflect a productivity environment where two container trips per day is the norm. As the Port achieves productivity improvements and reduces wait times, truckers will be able to make three or four trips a day. Shippers will be forced to pay rates that overcompensate. |
| > | Monitoring, auditing and enforcement of the terms of the MOA will require the creation of a costly bureaucracy and an unwarranted intrusion into the affairs of many businesses which were in no way involved in this summer's dispute. |
| > | The MOU is contrary to the spirit of Canada's National Transportation Policy which is based on competition and free market forces. |
| > | Rate regulation will reduce the cost competitiveness of the Lower Mainland's ports. |
Recommendation: That the port licensing system and application of the terms of the MOU be subject to the 90 day consultation period only.
Recommendation: That any future port licensing system prescribes service standards rather than rate regulation.
Recommendation: That government refrain from a re-introduction of trucking regulation at Lower Mainland ports and enable shippers such as Canada's retailers to select their transportation partners based on service and cost.
Recommendation: The Vancouver and Fraser Port Authorities be authorized to conduct an inquiry into possible impediments to the effective functioning of free market dynamics at the ports.