Editor Dana L. Brundage and Senior Editor Peter T. Leach discuss ocean carriers' decision to stop supplying port truckers with chassis, how port truckers can obtain chassis from this point forward and how the industry will be impacted in this podcast.
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Q: Peter, more and more ocean carriers are announcing that they will no longer be providing chassis to port truckers in terminals in order to reduce costs, and therefore, it will be the responsibility of the port truckers to bring containers away from the terminals. What has been the general reaction to these announcements?
A: Port truckers have always been responsible for bringing the containers to and from the terminals. But it’s the container lines that have provided the chassis on which they need to carry those containers. You can’t move a container unless you have a chassis to move it on. But the carriers have provided them in the past. But now a lot of the big carriers – NYK, OOCL, COSCO, CMA CGM -- have announced that they are starting to phase out providing containers at various, mostly East coast, ports. At least CMA CGM said that they are going to extend it to Long Beach-LA next year. The problem is that, at least among the port trucking companies that are the ones who moved those containers back and forth between the ports and the warehouses and the distribution centers, is they really haven’t been told. First thing they see is a press release announcing that their carriers are no longer going to provide the chassis. And for the smaller truckers, that’s a problem because they may not have the capital to either buy or rent the chassis. The big trucking companies, yes, they probably have a lot of their own chassis and can easily rent more from the big chassis leasing companies like Flexi-van or the company that used to be called Seacastle, that is now TRACK Intermodal. In fact, they recently announced that they are going to start renting chassis to port trucks on a day-to-day basis for $11 a day. They are joining Maersk Line, which got out of the business last year of providing chassis for free and they set up direct chassis link to rent those chassis to port truckers. So it’s a big impact on the trucking industry.
Q: In terms of options, is renting the main option? Do they have other options? And how will it affect them financially?
A: Well, the smaller trucking lines are already under a lot of pressure because of the recession and a lot of them went out of business. The ones that are left, or at least the ones I have spoken to, said yes, they will rent or buy the chassis. Some of the smaller ones that don’t have deep pockets are going to be in trouble because they just won’t have enough. And they may have to rent them on a day-to-day basis, like from TRAC International, or from Maersk direct chassis link service. For now we don’t know how it’s going to shake out. It’s really hard to predict. The truckers just didn’t see it coming, or a lot of them didn’t see it coming, and now they are wondering quite frankly what to do.
Q: Do you think that this is going to be a huge adjustment for the industry?
A: It’s going to be a huge adjustment, a major impact. It’s going to be both positive and negative. It’s going to cause a shake out of trucking companies. Some of the smaller ones won’t have the capital to provide the chassis. But in terms of time and efficiency it should be a great improvement. A trucker who comes down to a terminal at the Port of Newark, for example, he’s going to pick up an NYK container. Now, as of this day, he’s got to shop around and look all over the lot to find an NYK chassis to match it. Because that’s what the carrier wants: an NYK box with an NYK chassis. After September, when NYK gets out of the business of providing chassis, that trucker, if he’s got his own chassis, can just pick up the box without spending the time to look around. On top of this right now, and not related to the carrier decision, is the fact that there is a shortage of chassis. There just aren’t enough at the ports because a lot of the carriers laid up their chassis last year or turned them back to the leasing companies. So they can’t get them out fast enough. They’ve got to repair them, inspect them, repair them and get them on the road. And the chassis leasing companies too have laid up the chassis. They had too many chassis last year during the great recession and they’re struggling to cope with the sudden demand of B-shaped recovery. Eventually as it shakes out it’ll be more efficient, it’ll be much easier for the truckers to find chassis and carry the boxes out. They’ll save time. But for now, there’s going to be a big wrench in the transition period, which could take years.