Redressing the Power Imbalance

redressing the power imbalance

An initiative this week shows the trucking industry that there is a way of redressing the power imbalance which dogs many operators on a day to day basis. The Voluntary Port of Melbourne Performance Model (VPPM) has been negotiated between the Victorian Transport Association, the Victorian Government and the Stevedores in the port.

All trucking operators have been plagued by the random arbitrary acts by the stevedores, where so-called ‘infrastructure charges’ are introduced with little warning and zero consultation. This cost, which operators have to pass on to their customers, is purportedly to pay for the right of the truck to enter the stevedores facility to collect or deliver a container.

The argument has long raged that the shipping companies should be the ones charged and not the truckies. The difference is that the shippers are large global companies with a lot of power in the market. Meanwhile, with a few notable exceptions container haulers are small to medium trucking operators who are competing against each other and lack the market power to get any leverage over the stevedores. 

The scheme announced this week sees a little of that power imbalance being wound back with the stevedores having protocols to follow to improve transparency in their dealings over the charges and other issues which impact on trucking operators.

To begin with changes in charges can only happen once a year, so there are no surprises. The intention to increase the charges has to be flagged to the government in advance. There must be an explanation of and reasons for any change, the rationale must be explained. This gives the government time to act if it regards the actions as unfair.

Many operators will be looking at this arrangement and asking why their big customers could not also be similarly reined in. With such a large proportion of trucking operations being relatively small the power imbalance between trucking and its customers stretches across many sectors of the industry.

Some companies which load a multitude of trucks every day are well known for bringing in changes to the rules or operating procedures with little warning or explanation. Operators just have to accept the changes and take the hit in many cases. There is no recourse to any form of appeal as the larger dominant shipper simply tells its contractors to like it or lump it.

How did the VTA get this change up? It’s not a solution but it is a step towards fairness and there will be fair notice given of increased charges. The answer has to be that the trucking operators stuck together and use what little leverage they have to put pressure on the stevedores and convince the government to intervene in a situation which is blatantly unfair and completely opaque.

The lesson here is that when it comes to being bullied by the big consignors and consignees, the only way to get some degree of fairness is to work together. 

Sectors other than container fleets have associations and can work together to get some results where the market power imbalance is skewed. The improvements coming through in ramp safety for livestock operators is a case in point, where government got involved to help the process.

However, there are other even more skewed power imbalances which make life tough for the trucking industry. Perhaps the fierce competitors working under those condition can take heart and, perhaps, look at the example of some small guys redressing the power imbalance with the big guys.

redressing the power imbalance