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September 3 2018

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18 The Journal of Commerce | September 3 2018 Port Productivity: Drayage and Chassis Report Special Report PROVIDING ENOUGH MARINE chassis to ensure containers are quickly deliv- ered to their beneficial cargo owners (BCOs) seems a simple enough task. Yet the issue has taxed port and railroad terminals across the United States for at least a decade, generating a steady drumbeat of cargo disrup- tions because of sporadic chassis inac- cessibility amid rising concern about shortages and the cost, availability, and quality of equipment. From the early days of modern con- tainerization in the 1950s until 2009, there was basically one chassis model in the United States. Unlike other coun- tries where truckers, forwarders, or shippers owned chassis, ocean carriers owned the equipment and stored them on marine terminal grounds. The ocean carriers provided them to BCOs along with the containers. Maersk Line upended that model nine years ago when it announced its intention to exit the chassis business, a decision driven partly by rising costs exacerbated by changes in federal reg - ulations governing chassis roadability. The carrier formed a new company — Direct ChassisLink Inc. (DCLI) — to own, maintain, and provide chassis to customers. Other carriers followed suit and transferred their chassis to intermodal equipment providers (IEPs) that provided chassis on the carriers' behalf, either directly or through pools. The subsequent exit from the chassis business of nearly 20 ocean carriers has resulted in a convoluted patchwork of arrangements that vary from region to region. Today, as mega-ships are being moved into Asia-to-US routes, terminals are loading and unloading thousands of containers in shorter bursts, causing stakeholders in the supply chain to worry whether there are enough quality chassis to handle the extra stress on the supply chain. For chassis providers, the challenge is how to meet peak demand without having large numbers of chassis sitting idle for the rest of the time. So far, the industry is still search - ing for the most efficient solution. Since the carriers sold their chas- sis, the most commonly used chassis provider model is one in which ocean carriers, BCOs, or truckers rent chassis from an IEP, often on a daily or short-term basis, with truckers re- moving a chassis from the IEP's depot for a particular job and returning it at the end, paying for the period. Several diverging trends that shape today's marine chassis market demonstrate the difficulties involved in providing chassis and the sustained effort to find a better system: The role of ocean carriers Ocean carriers remain significant players in the chassis market, even after most carriers sold their chassis to IEPs. Ocean carriers tell the trucker which chassis provider to use on door contracts, known as carrier haulage, and sometimes on merchant haulage, in which shippers or truckers make arrangements to line up the equip - ment. Although the market share controlled by carriers declined over time, TRAC Intermodal believes that about 60 percent of moves are still made with carrier haulage, and 40 percent are merchant haulage. The continued presence of carriers in the process has prompted some IEPs and truckers to demand "open choice," the right of BCOs and truckers to have full autonomy on which chassis to use in merchant haulage moves. What are NVOs doing? Non-vessel-operating common carriers (NVOs) are also signing deals with IEPs. These contracts allow the NVOs to direct a trucker to use a spe- cific chassis on the first or last mile, even though the BCO is not using the traditional carrier haulage model. That way, NVOs get cost-effective options and can satisfy BCOs interest- Shipping industry seeks long-term solutions to problems obtaining chassis By Hugh R. Morley Looking for a fix

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