Ocean carriers are accelerating their retreat from providing free intermodal chassis, and truckers are moving to take a bigger role.
The American Trucking Associations’ Intermodal Motor Carrier Conference has created a cooperative for drayage carriers that want to buy chassis. Curtis Whalen, the conference’s executive director, said truckers want to improve the quality of the chassis they use.
Meanwhile, Memphis-based motor carrier IMC Cos. said it would acquire more than 1,500 chassis from Orient Overseas Container Line’s U.S. unit. The motor carrier will contribute the chassis to Consolidated Chassis Management’s Mid-South co-op pool for dedicated use by OOCL.
In another development, Direct ChassisLink Inc. agreed to participate in and contribute equipment to CCM’s Chicago-Ohio Valley and Gulf Coast regional co-op pools. DCLI was formed in 2009 when it took over Maersk Line’s chassis fleet and began providing daily rentals to motor carriers.
Those actions follow the Port of Virginia's recent decision to allow ocean carriers to transfer their chassis fleets to third-party ownership or lease. Virginia’s move is a step toward allowing truckers to own chassis in a port-wide pool that's now supplied exclusively by ship lines.
Container ship lines have been moving for years to reduce their exposure to ownership and maintenance of chassis, a multibillion-dollar problem that ocean carriers don’t face anywhere else. In other countries, truckers, forwarders or shippers typically provide chassis.
“The exit plans are gaining momentum,” said Steve Rubin, a former TRAC Intermodal and “K” Line executive who was lead author of an authoritative Transportation Research Board study of the evolving chassis industry.
CCM’s 2005 formation was a major early step in the evolution. CCM, which is owned by the 18-member Ocean Carrier Equipment Management Association, has 128,000 chassis, about 20 percent of the U.S. total, in six regional pools.
Maersk shook up the industry in 2009 when it launched DCLI, which unveiled a new model for daily rental of chassis to truckers. Lessors TRAC Intermodal and Flexi-Van quickly followed with similar rental programs.
Since DCLI’s debut, carriers have moved rapidly to quit providing free chassis in some or all locations. Of the 20 largest container lines in the U.S. trade, only Mediterranean Shipping Co. and Evergreen Line still provide truckers with free chassis at all locations.
APL, a prominent holdout, announced last March it would join the exodus. “By 2014 we’ll be out of the chassis business,” David Howland, vice president of land transport services at APL Logistics, said at this month’s conference of the Council of Supply Chain Management Professionals. “It’s just an asset that is too darn expensive for us to manage and maintain.”
CCM laid the groundwork for an expanded role by truckers last year when it won Federal Maritime Commission authority to allow motor carriers and other parties to contribute chassis to CCM’s regional co-op pools. IMC is the first motor carrier to take the plunge.
“This is an historic event for our company and industry in developing an industry solution to transition ownership of chassis from ocean carriers to other entities,” IMC Chairman Mark H. George said in announcing the deal.
IMC is part of the planned North American Chassis Pool Cooperative. The ATA-sponsored co-op would “acquire ocean carriers’ chassis and then contribute those chassis back into the CCM gray-pool model,” George said.
“Simply said, the cooperative’s desire would be to replace ocean carrier or other owning entities’ ownership with NACPC ownership and to have an active ‘say’ in managing the chassis through participation in a CCM pool,” he said in a statement.
The trucking association is working on regulatory approval for the national co-op, Whalen said. “We’re moving quickly, but it’s still a fairly arduous process,” he said.
As the chassis supply model evolves, truckers want to ensure their needs aren’t ignored, Whalen said. “We need to do something to get better input into the process,” he said. “We also need to upgrade the nature of the chassis we depend on. We’ve always said we thought chassis were not maintained as well as we would maintain them.”
Ocean carriers stepped up efforts to reduce their exposure to chassis after the Federal Motor Carrier Safety Administration implemented changes that made equipment owners instead of trucking companies responsible for chassis safety while on the road.
Rubin said the cost of new chassis could be offset by improved utilization. He said chassis turns average only 52 20-foot-equivalents a year in the U.S., compared with 300 TEUs a year in Asia. “For steamship lines, the vessel is the dog and the chassis is the tail,” he said.
Howland cited the Intermodal Container Transfer Facility in Southern California, where the ports of Los Angeles and Long Beach have formed a working group to develop an optimal model for chassis supply. “Eighteen years ago, I visited the ICTF in LA for the first time, and they had 55 acres of chassis storage with every color chassis you can possibly imagine out there,” he said. “I was back at the ICTF in July, and they have 55 acres of chassis storage with every color chassis you can possibly imagine.
“Eighteen years and nothing changed. That’s horrible,” Howland said. “We cannot afford in this industry to chew up 55 acres of prime LA terminal capacity with chassis.”