Container lines have surprised even themselves by moving so quickly, after years of dithering, to quit providing U.S. customers with free chassis. It’s been a long road toward a worthy goal, but the carriers still must steer around a few potholes.
One involves labor. No one seems eager to pick a fight over this issue with the International Longshoremen’s Association, which maintains and repairs chassis in Atlantic and Gulf ports, but the labor issue could eventually prove sticky. The ILA will fight any reduction in its existing M&R work and will probably try to use any change as an opening to try to expand the union’s jurisdiction.
Another question is how beneficial cargo owners will react if carriers take the next logical step -- ending store-door moves, which combine drayage with port-to-port carriage. If BCOs have to arrange their own drayage, will they demand lower rates from ocean carriers? Even if they do, carriers may consider it a price worth paying to shed the hundreds of millions of dollars they now spend on chassis.
Yet another question, which hasn’t gotten much attention, is how the exit from chassis ownership will affect carriers’ balance sheets. If container lines shift chassis off their books, will they be forced to write off some of these assets? If so, the numbers could be sizeable, especially for an industry that lost $15 billion globally last year.
How sizeable? We don’t know for sure, but let’s do some rough math: Of the 700,000 or so chassis in the U.S., it’s estimated that carriers own 300,000. Presumably, some of the carriers’ chassis are fully depreciated, but many are not. New chassis cost $8,000 to $9,000. For discussion’s sake, let’s assume the average carrier chassis has a depreciated value of $4,000. Multiply that $4,000 by 300,000, and that’s $1.2 billion for the carriers to account for somehow. How the carriers solve these problems will determine how speedily they can get out of the chassis business. If it were simple, they'd have done it years ago.