In 2009 Maersk told the supply chain and logistics industry they were stepping aside from chassis provisioning. Here to forward Independent Equipment Providers (IEP’s) would supply chassis to intermodal carriers. This was a dramatic shift for the American drayage market. Unlike the European model, whereby obtaining chassis was the responsibility of the motor carrier or hauler, SS Lines servicing the United States’ ports and rails had been including chassis with their door to door FCL pricing.
Maersk formed, DCLI or Direct Chassis Link Incorporated, to manage their massive marine and inland intermodal chassis inventory. In time, each SS Line followed suit, all selling the bulk of their fleet to a multitude of IEP’s. This paved the way for a charge all of us, whether drivers, motor carriers, beneficial cargo owners, NVOCC’s, have come to see on each drayage invoice, the chassis rental fee. Instead of the SS Line providing chassis for the container drayage traffic, us, the local trucking companies, would now be responsible for putting wheels underneath the boxes.
This shift, or transition precipitated a massive ongoing debate. And the debate continues to this day, with many companies such as ourselves, Port X, taking a common blended approach to chassis, utilizing a combination of our own acquired through purchase, and rentals from the various IEP’s. This particular talk, hopefully brief and insightful, was born out of our recent purchase of six additional standard 40’ two-axle chassis. The total cost of those six chassis, approached nearly $80,000.
To rent or to buy, that is the question, right? Based upon our experience, it is in our customer’s best interest if we continue to expand and maintain a growing fleet of our own chassis both standard and tri-axles, this gives us flexibility and allows us to be free from the burden of many of the difficulties that go along with chassis rental.
Fiscally it is quite impossible to match the total number of chassis owned with the total number of loads to cover, therefore supplementation and rental from IEP’s is a necessity.
Let’s look at what at the two largest epicenters for marine chassis rental and how they are attempting to service the needs of the drayage market in order to make chassis rental
NY/NJ and LAX/LGB ports have formed what are known as “gray” pools to establish a key buzz word heard throughout chassis discussions and that is “interoperability”. The LAX/LGB ports even refer to it confidently as “The Pool of Pools”. It is the goal of the big three, Flexi-Van, Trac Intermodal (Metro) and DCLI, purportedly to allow drivers to choose from their inventory, then henceforth, grab and go, and instead of returning the chassis from where it was originally picked up, give the user the opportunity to deposit the chassis at a location convenient to them. Thus, decreasing chassis splits and reducing extra drive time for the driver.
Theoretically, interoperability sounds marvelous. But why are drivers not 100% sold on the idea of these “gray pools” and the “Pool of Pools”? What still compels companies such as ourselves to give in to the clamoring of many drivers and purchase our own private chassis fleet?
Although, by listening to the gripes and applause of drivers throughout the years there are a couple of reoccurring issues that compel us to grow our chassis fleet.
1) Alliances between SS Lines and IEP’s. Although SS Lines have spent the last few years ridding themselves of chassis assets, they have cleverly included chassis rental pricing in some of their ocean pricing contracts that pigeonhole a driver into utilizing one particular IEP, if there is a shortage of let’s say DCLI chassis, and only TRAC chassis are available and the driver was instructed to pick up a DCLI chassis because it is included in the price of the ocean freight and an additional charge will be incurred if the driver elects to go with another IEP, he is in quite a quandary. Does he wait for DCLI chassis to become available? Or does he choose a chassis that’s ready to be hooked up and get him on his way to have the box mounted in a timely manner?
2) The benefit of chassis ownership is being able to circumvent waiting lines at the “Pool of Pools” or other chassis pools throughout the country. There is a certain amount of control that comes along with owning your own chassis. However, as aforementioned, what if a customer has already paid the SS Line for chassis rental? Again, the driver is in quite a quandary.
As promised, this topic is short, and its mission is to continue the debate. Is it best to own or rent? And it seems a bit odd how in 2009 all lines were all too happy to shed the responsibilities of chassis ownership, yet still in 2018, they are finding a way to profit from the assets they sold off years ago.
I don’t hold a degree in supply chain or logistics, nor do I have any fiscal analytics to propagate any type of argument that supports the lines are profiting from these chassis inclusion ocean pricing contracts, so I cannot even call the reading “an educated guess”. All my information comes from drivers, dispatchers, coordinators, those of us that work day to day to fulfill the requests and needs of our customers. As many of you may have seen the show Dragnet, whenever I write a piece, especially one such as this which is a little incriminating of the mighty SS Line industry, I stay true to the shows infamous opening narration, “Ladies and gentlemen: the story you are about to hear is true. Only the names have been changed to protect the innocent.”