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September 3 2018

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September 3 2018 | The Journal of Commerce 19 Port Productivity: Drayage and Chassis Report Cover Story Special Report seeking to upgrade the quality of chassis and provide motor carriers with a greater voice in cooperative chassis pools. NACPC — now with 12 members — focuses on providing high-end chassis, priced "at cost," by owning or leasing 18,000 premium chassis to six regional gray pools and four premium overseen by CCM. The sporadic difficulties truckers have had in obtaining chassis have also drawn new, smaller players into the market, often plying niche sec - tors. Milestone Equipment Holdings, for example, began supplying chassis in 2015 with an all-new fleet. It says it will nearly double the size this year to almost 20,000 chassis. The company argues that new chassis in the long run help cut costs through better fuel consumption, fewer repairs, and less time lost due to breakdowns. What is 'open choice'? Open choice is what some IEPs describe as the ability of a trucker or shipper to decide which IEP is used in merchant haulage contracts to provide a chassis for moving a container to or from a terminal, rather than have the ocean carrier make that decision. Open choice proponents say that although ocean carriers said they were getting out of the chassis business, the carriers still exert a large amount of control over the trucker on which chassis to use. The ocean carrier makes that decision under carrier haulage con - tracts, so-called store-door bills of lad- ing, in which delivery of the container and the chassis that carries the cargo is part of the service bought by the ship- per from the ocean carrier. Yet in some situations, the ocean carrier also limits the choice of the trucker on merchant haulage contracts, too — even though the trucker typically pays for the equip- ment and invoices the BCO. The ocean carrier's continued control on chassis choice stems from the terms under which the carriers originally sold their chassis fleets. As part of their agreement to buy the carriers' chassis, the buyers — the IEPs who now put them out for rent or lease — struck an agreement with the carriers that the units would get used and provide an income flow that would help to pay off the investment. Some in the industry say that the original sale agreements contained exclusivity clauses not only for the off by the ocean carriers ages. Radial tires and LED lights are becoming standard, and IEPs across the country are offering premium chassis at a price. Some providers are undergoing extensive chassis refurbishment, rather than buying new chassis. Wanted: mechanics A lack of mechanics to quickly re- pair broken US chassis has contributed to shortages, adding to delays in picking up cargo at rail ramps, putting an extra challenge on US shippers that already face higher drayage rates and restrained door capacity from ocean carriers. Chassis repair companies say that in the strong economy, they find it difficult to recruit and retain technicians because the companies struggle to offer a competitive wage and sometimes can't meet demand. The main players in the US The three largest marine chassis providers — TRAC Intermodal, of Princ- eton, New Jersey; DCLI, of Charlotte, North Carolina; and Flexi-Van Leasing, of Kenilworth, New Jersey — account for the bulk of the marine chassis sector. TRAC estimates there are about 530,000 to 545,000 marine chassis nationwide, of which the company owns 180,000 chassis, or about 34 percent of the marine chassis market. Flexi-Van, with 125,000 marine chassis, has about 23.5 percent of the market, and DCLI, with 135,000 ma - rine chassis, has about a 24.5 percent market share. The three IEPs account for about 83 percent of the market. Other organizations have emerged over the years to manage chassis. Before ocean carriers sought to sell their chassis, Ocean Carrier Equipment Management Association (OCEMA) — a Washington, DC-based association of 15 steamship lines op- erating in the United States — formed Consolidated Chassis Management (CCM), of Budd Lake, New Jersey, to develop and own chassis pools. The initial goal was to cut costs by pooling equipment, but as ship lines reduced their exposure to chassis, CCM opened its pools to other equipment providers and now manages about 120,000 chassis in six pools. In 2012, 11 motor carriers in the American Trucking Associations pooled their chassis inventories and formed the NACPC, of Nashville, Tennessee, ed in a one-stop shop for their freight. The move also can enable NVOs to simplify the billing process and gain access to a higher quality of chassis than they might get from doing daily rentals from a cooperative pool. The 'gray' pool impact Ports have tried — with some success — to reduce unnecessary trips and congestion by creating "gray" or "interoperable" pools, meaning a chassis can be picked up or dropped off at any location that contains all the major IEPs. Los Angeles-Long Beach created one in 2015, and the Port of New York and New Jersey has tried for three years to create one with the three main IEPs; so far, it has created only a smaller version with one IEP — Flexi- Van Leasing — and the North American Chassis Pool Cooperative (NACPC) that launched May 14. The aging problem Truckers are increasingly demand- ing, and IEPs are providing, new, higher-end chassis, as the fleet sold

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