The Chassis Problem
At the beginning of March, I had the privilege of attending the Transpacific Maritime Conference (TPM 2014) in Long Beach, California. This is the premier event for shippers, carriers, and full service brokers and forwarders like Scarbrough to gather in one location to discuss industry challenges and successes. Scarbrough was pleased to see so many of our clients and Midwest businesses at the event. We are also very pleased to represent our Midwest clients that could not attend the event.
One of the hot topics continues to be the “Chassis Problem.” Why is it a hot topic? Well, even though some shippers have found their own solution, the “chassis problem” hasn’t been solved completely for the industry as a whole. The problem specifically was laid out clearly at the TPM by the team of Lowes, Flexi-Van Leasing and Atlantic Intermodal Services and is defined as follows:
- Ocean Carriers are releasing themselves of Chassis.
- Transferring Chassis burden and cost to Shippers or Truckers
- No uniform solution
- Existing “Chassis Pools” may have insufficient supply during seasonal periods or uncontrollable circumstances (i.e. weather, congestion)
- Existing pools carry high cost with unknown maintenance and repair needs.
In short, most carriers are no longer providing a bundled service of container and chassis. Therefore, the shippers (importers and exporters) are required to pay an additional fee for the use of a chassis. These fees include the cost of daily rental (on average $25-30/day). For the most part the chassis pools have been turned over to pool operators or truckers have established their own chassis pools. The fact that there is no permanent solution has led to chassis shortages being reported on the coasts in the larger ports. In many cases, trucks aren’t being dispatched until they have secured a chassis or trucks are hoarding chassis rather than returning them.
Lowes evaluated these problems with much concerns as they import thousands of containers yearly. They ultimately decided to invest in their own Chassis pools nearest to the ports where their distribution centers are located.
The largest problem here in the Midwest, thus far, has been the additional cost. I think it’s important to avoid thinking naively. Don’t just assume the problems on the coasts will not affect us here in the Midwest. As the new chassis owners or pool operators look to gain efficiencies in the ports, it is very likely that chassis could be pulled from our region to be re-positioned where the shortage is being reported.
Moreover, I think it is important to consider the following:
- Review our chassis requirements.
- Forecast timing and container volumes with as much accuracy as possible.
- Budget for the additional Chassis costs being placed on us.
Advanced planning might ensure that we have chassis available as our containers arrive into port. The chassis situation continues to be fluid as we look towards solutions that meet the demand and seasonality across all ports. I expect that the industry will look towards models in other countries where chassis have never been bundled with container delivery. Scarbrough will closely participate and watch as these solutions present themselves. We are always looking for the most cost effective way to facilitate trade for all of our clients and the trade community as a whole.