Virginia's chassis success story

Virginia's chassis success story

June 1 marked an important milestone at the Port of Virginia. On that Wednesday, Hapag-Lloyd container line joined the port's chassis pool and, in doing so, brought participation in the pool to 100 percent.

By many measures, Virginia's chassis-pool project was a risk that could have a lot of downside: Participation in the Hampton Roads Chassis Pool II (HRCP II) was an all-or-nothing proposition for the steamship lines. When HRCP II was created, the port put out a clear message to the lines: Join the pool and you can keep your special equipment (tri-axels and gen-set chassis) on port property. If you don't want to join, fine, but all of your assets must be removed. In short, participation was mandatory.

The Port of Virginia's leaders knew that without demanding 100 percent participation, pockets of individual chassis operators would surely lead to the historical problems associated with chassis, such as poor maintenance and underutilization.

The decision to start HRCP II was made following the 2003 peak retail season, when the Port of Virginia's operating capacity was tested. And during that period a complete renovation of Norfolk International Terminals' south berths was taking place alongside many other small construction projects. Combined, these things made it evident that space was at a premium and periodic congestion was becoming an issue.

In developing the HRCP II, there were multiple goals the port wanted to achieve. Primary among them was to relieve congestion by decreasing the number of chassis stored on the terminals and to create additional space for containers. Other goals included standardization and improvement of the quality of chassis; increasing the speed, efficiency and safety of the interchange of containers; and lowering the cost of chassis.

The first step the port took in development of the HRCP II was to establish its governance. The chassis pool's operating company is Virginia Intermodal Management LLC, which is overseen by an independent board of directors composed of executives from the ship lines, equipment companies and one alternate member from Virginia International Terminals Inc., the Virginia Port Authority's operating company.

The second step was to write a set of legal agreements and operating procedures - a process that took 10 months to prepare for signatures. In drafting these documents, executives from several steamship lines and the Ocean Carrier Equipment Management Association were asked to participate to allow input from all parties. The result of this inclusive process was clear, understandable, easy-to-read contracts.

Step three was ensuring HRCP II had a sufficient inventory of chassis, which was accomplished by using in-house data and literally hand-counting chassis. The result was the removal of 5,000 chassis from the port's marine terminals. In addition, the port signed contracts with chassis equipment suppliers to guarantee the price, delivery schedule and conditions of additional chassis necessitated by growth in cargo rates.

Possibly the most critical aspect of the success of this project was one overriding philosophy: No unsafe chassis will be made available. Virginia Intermodal Management ensures this philosophy is upheld by tagging damaged chassis, collecting and comparing maintenance and repair data at the terminal's inbound and outbound gates and quarantining unfit chassis at a separate corral.

Moreover, the port did not want to set up the chassis pool to be a profit center. Given this, it was agreed that HRCP II would be a break-even venture; all of its operating costs would be covered by user fees.

Thus far, HRCP II has been successful. There is more container space, congestion has waned, trucks are getting on and off the roads quicker - and more safely - and all steamship lines are onboard.

One of the keys to success of HRCP II is maintaining proper utilization levels: Too low and space becomes an issue; too high and carrier needs and availability of on-terminal operations become strained. The port has kept usage below target levels for the past three months at about 78 percent, while cargo has increased nearly 14 percent. In addition, managing the chassis pool requires repositioning units to handle needs. Every day, Virginia Intermodal Management and Virginia International Terminals discuss flow between terminal and rail to determine if repositioning needs can be met via the natural movement of cargo, or if units will have to be redirected.

Though still a work in progress, the Port of Virginia has developed and implemented its model for a successful chassis pool. It is a model created using input from nearly all facets of the industry to ensure success.

J.J. Keever is deputy executive director of the Virginia Port Authority. He can be contacted at (800) 446-8098, or at jjkeever@portofvirginia.com.