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Feb. 17, 2014

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INTERNATIONAL MARITIME IMPORTING | EXPORTING | PORTS | CARRIERS | BREAKBULK | GLOBAL LOGISTICS 48 THE JOURNAL OF COMMERCE www.joc.com FEBRUARY 17.2014 By Bill Mongelluzzo A CHASSIS-SHORTAGE CONTAGION that has plagued the three largest U.S. ports since late last year is a stark reminder to cargo interests, trucking companies and water- front labor that the cozy world of ocean carrier-owned chassis, unique to the U.S., has come to an end. A new world in which equipment-leas- ing companies and chassis pool operators will call the shots is taking shape, but the transition period is creating all kinds of problems for port communities, especially those in Los Angeles-Long Beach and New York-New Jersey. "It's unmanaged. It's chaos," said David Adam, president of United States Maritime Alliance, the employers' organization that negotiates and administers the waterfront contract with the International Longshore- men's Association on the East and Gulf coasts. Labor jurisdiction over chassis contin- ues to be an issue in New York-New Jersey, and jurisdiction is certain to be an issue in this year's contract negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union on the West Coast. But that is just one component of an extremely complex chassis environment. Ownership of the equipment, billing, chas- sis repositioning and equipment availability are more important issues as shipping lines finalize their departure from the chassis business. Since the dawn of containerization 50 years ago, carriers owned and maintained chassis, a model unique to the U.S. When a cargo owner sent a truck to pick up an inbound container, the terminal operator mounted the box on a carrier-owned chassis and turned it over to the trucker. Some- where in the invoice there might have been a charge for the chassis, and sometimes not. SELLOFF BEGINS Carriers three years ago began to sell off their chassis, and in the process they relieved themselves of the costs and head- aches associated with chassis ownership, storage and repairs. Many of the chassis were sold to equipment-leasing companies. In many ports, the transition from carrier-owned chassis to neutral f leets was smooth. However, problems such as marine terminal congestion, long truck lines and delayed cargo deliveries because of a shortage or dislocation of chassis have hit high-volume ports with a vengeance. Ports that have had neutral, or "gray," chassis pools for several years are generally operating smoothly. Gray chassis can be picked up at one terminal, or at an off-dock storage yard, and they can be dropped off at a completely different location. The "split moves" that cause nightmares for harbor truckers — dropping the container off at one terminal and the chassis at another location — are eliminated. Consolidated Chassis Management manages gray chassis pools in the South Atlantic and at Gulf ports, and at a number of inland locations and rail ramps. CCM, which is owned by the Ocean Carrier Equip- ment Management Association, is a pool manager; it doesn't own the equipment, but acts as a cost pass-through, said Phil Wojcik, president and CEO. Equipment providers, which include leasing companies and those shipping lines that have not yet sold their chassis to a third party, contribute equipment to the gray pool according to their projected need each month, and they are billed according to their usage. For example, if Provider "A" contributes 1,000 chassis and ends up using 1,200 units, it is charged for 200 extra chassis. If Provider "B" contributes 1,000 units but uses only 800 that month, it is credited for 200 chassis. The benefits of this arrangement are many, Wojcik said. Chassis shortages have been largely eliminated. Billing is simpli- fied. Split moves are not a problem. There is 100 percent interoperability in the pool, so a trucker can pick up a chassis in one location and deliver it to another. The environmental benefits are obvious. This arrangement also has resulted in a significant decrease in the number of costly chassis that are needed to serve a port commu- nity. The Georgia Ports Authority went from having 8,000 chassis to 2,400, Wojcik said. Although the CCM model works well in the South Atlantic and at inland loca- tions, however, it probably won't work at the nation's three largest ports, which are landlord ports. The South Atlantic ports are operating ports. They can influence all chassis provid- ers using their facilities to join the gray pool. Los Angeles, Long Beach and New York- New Jersey lease their facilities to terminal CHASSIS 'GRAY' MATTER Large-volume landlord ports struggle to deal with chassis provision, M&R transition "There are so many issues that make Los Angeles and Long Beach unique. You must start with a clean sheet of paper."

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