The intermodal industry in the coming years will have to learn to live with at least several different chassis models, but one thing for certain is that the cost of handling containers at railyards will increase.
That’s because most intermodal railyards today store containers on chassis, but now that ocean carriers are getting out of the business of supplying chassis, railyards will transition to a grounded operation in which containers are stacked several rows high.
“There are increased costs associated with a grounded terminal,” Paul Dean, director intermodal equipment and maintenance at Norfolk Southern Railway, told The Journal of Commerce’s Inland Distribution Conference Sept. 18 in Kansas City, Mo.
Railyards reconstructed for grounded operations are costlier to build because they require reinforced concrete. Grounded operations need additional container lift equipment. And moving containers from a train to the ground and later to a chassis increases the risk of cargo damage, Dean said.
Since the dawn of containerization more than 50 years ago, ocean carriers have owned and provided chassis to the trade. Beginning in 2009, carriers began to transition in their U.S. operations to the international model of relying upon third-party providers to supply chassis to truckers and cargo interests.
That movement is accelerating, and ocean carriers today own only 17 percent of the global chassis fleet, said Philip Wojcik, president and CEO of Consolidated Chassis Management. CCM is the backroom operator of a cooperative chassis pool for the Ocean Carrier Equipment Management Association. Wojcik said all 19 OCEMA member lines have changed their chassis provision to some degree.
CCM’s cooperative pool is but one of several models that operate at ports and inland locations. Direct Chassis Link, which was formed by Maersk Line and was recently sold, operates a neutral chassis pool. Third-party pools are provided by companies such as Flexi-Van and TRAC. Truckers have formed a chassis pool, and some ocean carriers continue to own and provide chassis.
Operators of intermodal railyards recognize that they will have to transition to grounded container operations as other parties assume responsibility for providing chassis to the trade.
“Regardless of the model, BNSF will transition to a grounded operation,” said Brant Ring, assistant vice president of intermodal terminal operations. As this happens, fewer chassis will be needed in the national fleet, which is a positive development.
However, the new models will also create inefficiencies in the supply chain. Truckers will experience longer turn times, Ken Kellaway, president and CEO of RoadOne Intermodal Logistics, said.
“The overall turn time at a grounded operation is 15 to 45 minutes longer than at mounted operations,” he said. Also, truckers that have to first go to an off-site chassis pool site before proceeding to the railyard to pick up the container will incur an extra leg in their journey.
While other segments of the transportation chain must also brace for increased costs and inefficiencies, the already fragile drayage industry “cannot absorb other sectors’ challenges, problems and operating losses,” Kellaway said.