May 1 will mark a milestone for importers in the U.S.-Asia trade. Many of the 2011-2012 service contracts they sign with ocean carriers will no longer provide free chassis usage to shippers.
Eventually, as most ocean carriers stop providing the equipment to move goods beyond ocean terminals, it’s likely more than 80 percent of the 750,000 chassis in the U.S. will be owned and leased out by non-vessel operators such as motor carriers and equipment lessors that will charge users for the equipment, said Tony Marquette, vice president of sales at TRAC Intermodal.
Marquette and other equipment providers at the Harbor Trucking Association of Los Angeles-Long Beach on Jan. 19 said harbor drayage companies should prosper under this new regime because their drivers will increase the number of trips they make each day to and from container terminals.
The ubiquitous chassis has been a fixture in harbor drayage around the world for more than 40 years, but the U.S. is the only country where ocean carriers provide the equipment. In this country, the chassis and the container being carried are considered a unit. Carriers allow free time for use of both the container and the chassis.
Maersk Line changed that model in 2009 when its equipment subsidiary Direct Container Link began charging some users $11 per day per chassis. At first, truckers complained about the loss of free equipment, said Tomas Reagan, director of West Coast operations at Maersk Equipment Service, but they soon chose to lease the chassis from DCLI because they were averaging about 1.5 additional moves per day.
The beauty of the new regime is that chassis are detached from shipping lines, said John Mizerek, vice president of sales at Flexi-Van Leasing. The trucker who owns or leases a chassis can use it for multiple hauls each day to whatever facilities must be served. Until now, a chassis could only be used on behalf of the equipment provider, which in most cases was the shipping line, to haul its own containers.
Ocean carriers own about 45 percent of all chassis in the U.S., and leasing companies also own about 45 percent. Railroads, motor carriers and marine terminals also own a few. More importantly, ocean carriers are considered contractually to be the equipment providers for more than 75 percent of the national fleet. That makes them responsible for maintenance, repair and storage costs associated with chassis, Mizerek said.
Chassis are costly to maintain, and they occupy valuable real estate at marine terminals, reducing the efficiency of the terminal’s primary function, which is to handle cargo. Ocean carriers in the U.S. for years talked about getting out of the chassis business, but it took a decision by Maersk, the world’s largest container line, to start the process. A dozen carriers have since started to shed their chassis or announced intentions to do so.
For most shippers, the service contracts that take effect May 1 in the eastbound Pacific will signal the end of free chassis usage. Leasing company executives suggest the largest retailers may negotiate “deals,” but most drayage companies that are charged to lease chassis will try to pass the cost on to the shippers.
Chassis lessors provide a variety of plans. The basic plan includes a daily fee of $11 to $15, with the chassis provider assuming responsibility for storing and maintaining the equipment. Lessors also offer longer-term arrangements where truckers will be responsible for such costs but will benefit from volume discount pricing.
Harbor drayage companies on the West Coast are concerned about potential operational issues at ports where volumes are large and marine terminals tend to be single-user, proprietary facilities. Most chassis service curtailments since 2009 have occurred at lower-volume East and Gulf Coast ports and inland hubs with general-user terminals that stack containers on the ground.
The leasing company executives said they expect Southern California terminals that store containers on carrier-owned chassis will shift to grounded operations as cargo volume grows. This should make it easier for truckers who arrive with chassis to be serviced efficiently because the containers will not have to be “flipped” from a carrier chassis to the trucker’s chassis.
Contact Bill Mongelluzzo at email@example.com.