The Federal Maritime Commission has cautiously cleared the way for truckers, shippers and others to participate in co-op equipment pools of Consolidated Chassis Management, a company controlled by 20 ocean carriers.
It’s the latest step in an evolution from the traditional model in which ship lines have been the dominant U.S. suppliers of intermodal chassis. Outside the U.S., truckers and cargo interests provide their own chassis.
In recent years, carriers have quit providing free chassis in selected markets, allowing equipment lessors to supply the market. Carriers, meanwhile, have expanded their use of equipment-sharing pools that spread suppliers’ costs and expand coverage.
CCM, a subsidiary of the 20-carrier Ocean Carrier Equipment Management Association, was established in 2006 and now operates six regional cooperative pools. Their approximately 130,000 chassis comprise an estimated 20 to 25 percent of the U.S. total used for international shipments.
“The pools have done a great job in helping ensure adequate supplies of chassis to meet demand,” said Jeffrey Lawrence, OCEMA’s executive director. “We think opening them to more contributors will result in flexibility that creates competitive opportunities for the shipping public.
“We’ve had expressions of interest from shippers, motor carriers, leasing companies and other logistics companies that would like to structure their arrangements with ocean carriers in different ways that would allow them to become contributors to the pools,” Lawrence said.
Under its revised antitrust-immunity agreement, CCM will take over management of its pools now run by lessors Trac Intermodal and Flexi-van. CCM has added staff and developed information technology to manage the work.
The FMC approved changes in CCM’s agreement after it was modified to satisfy industry groups and commission staff. Among other things, CCM promised it wouldn’t directly lease chassis to parties that don’t supply equipment to its co-op pools.
FMC Chairman Richard Lidinsky Jr. said he based his approval on CCM’s pledge that the revised pact “does not seek to extend the Shipping Act’s exemption from other antitrust laws, in any form whatsoever, to entities, such as equipment leasing companies, that are not ocean carriers.”
The Justice Department and National Industrial Transportation League had expressed concerns that CCM’s original proposal would stretch the pools’ antitrust immunity to encompass domestic entities not regulated by the FMC.
The Institute of International Container Lessors said the amendment’s original wording would have allowed CCM to unfairly compete with IICL members Trac Intermodal and Flexi-van in direct leasing of chassis.
Lidinsky said the FMC would monitor the agreement “to ensure that it does not result in an improper extension of the Shipping Act’s exemptions from general competition requirements, a reduction in competition, an increase in transportation costs, a reduction in transportation services, or labor disputes that disrupt the flow of commerce.”
The International Longshoremen’s Association urged the FMC not to provide CCM pools with “leverage to engage competitors in pricing wars that … require decreased operating revenues to be offset by decreases in labor costs.”
Lidinsky said the FMC would monitor CCM to ensure the pools don’t make “any changes that will affect, directly or indirectly, where chassis are maintained or repaired, or how many chassis are maintained and repaired pursuant to their current collective bargaining agreements.”
The FMC, Lawrence said, opened the way for an “open pool” system with more choices for users. “This is a very dynamic marketplace, and we wanted flexibility to ensure that the pools meet the needs of shippers, carriers, ports and others,” he said.
“Ocean carriers continue to own and operate the pools and for the foreseeable future will be the main contributor to the pools,” he said. “What this amendment does is create an open flexible system that will create competitive opportunities for the shipping public.”
CCM never intended for its pools to lease to users that don’t contribute chassis to its co-ops, Lawrence said. “That was a misunderstanding of what the amendment intended to do,” he said. The pools will continue to divide costs among members, with no markup.
Each regional pool will continue to operate independently, Lawrence said. A participant in CCM’s Denver-based pool, for example, can’t use chassis from the South Atlantic pool without contributing chassis to it.
Although CCM has replaced Trac and Flexi-van as pool managers, it expects them to remain involved as equipment suppliers and users. Lessors that contribute chassis to a pool can draw from it to supply their own customers under daily rentals or longer-term leases. “They’ll have access to equipment at the same cost basis everyone else in the pool does,” Lawrence said. “They can turn around and have whatever arrangements they have with their customers.”
As carriers try to reduce their costs, chassis management practices are in flux. Lawrence said CCM’s revised agreement recognizes that. “This agreement opens up a tremendous range of options,” he said. “We don’t know how many arrangements and options will eventually evolve in the marketplace. What we do know is that this agreement allows an open pooling system that provides more flexibility and more competition. The more choices in the marketplace, the better it is from our view.”