Two Ship Lines to Force Truckers to Provide Chassis for Drayage

This story appears in the May 17 print edition of Transport Topics.

Two ocean carriers for the first time have told U.S. truckers to provide their own chassis for highway deliveries, a change that eventually could force them to obtain their own equipment to move 20 million international loads a year.

Italy-based Atlantic Container Line announced it would begin to pull out of the chassis business on June 1, while Orient Overseas Container Line, Hong Kong, began that practice on May 1 on a smaller scale in Boston and Miami.

Neither company is among the world’s 10 largest container lines, but larger rivals, such as Evergreen Marine Corp., are watching what happens as they decide what to do with 850,000 chassis used on U.S. roads. Truckers must provide their own chassis everywhere else in the world.

“We are giving out a $7,000 asset with zero control over it,” said Brian McBride, vice president of Atlantic Container Line, known as ACL, in Iselin, N.J.

“A chassis is a tool of the road transport process, and logically, we should not have to provide part of the tool for the drayage company to execute their delivery,” McBride said in an e-mail to Transport Topics. His company expects to save about $2 million annually by disbanding its fleet of 2,500 chassis.

Orient Overseas Container Line Ltd., better known as OOCL, declined to give details about the size of its chassis fleet or planned savings.

The world’s largest ocean carrier, Maersk Line, Copenhagen, Denmark, last year opened the door to changes in the free chassis use policy by starting to charge truckers to use the equipment.

“I have no doubt that this approach is going to spread,” said Dan Smith, a principal in the Tioga Group, a Moraga, Calif., consulting firm that specializes in intermodal shipping. “The ocean carriers are better off getting out of the chassis business. In the long run, the truckers will be better off.”

Robert Leef, vice president of Containerport Group, a Cleveland-based drayage carrier, told TT that “Controlling chassis gives us the ability to manage the equipment better,”  by reducing empty moves and improving utilization.

Leef explained that controlling the chassis is good for the drayage carrier because it can improve efficiency, including a reduction in time spent matching ocean carriers’ chassis and containers at ports.

“I do hope at some point it helps to improve turn times in rail facilities and ports,” he added.

“From a safety standpoint, we can maintain the equipment so that we know we have a safe, roadworthy piece of equipment,” Leef said. “It makes a lot more sense for motor carriers to be in control of chassis” as new U.S. chassis safety rules take effect next month.

Those rules, sought by truckers for a decade, are designed to improve the condition of ocean carriers’ chassis.

Other ocean carrier officials said they are closely monitoring the situation.

Chassis policy “is a big deal,” said Howard Finkel, executive vice president of trade in Secaucus, N.J., for China Ocean Shipping Co., one of the 10 largest container lines. “It’s not something you can take lightly. We’ve made no decision. We are watching what’s going on.”

“Evergreen continues to study the actions taken by all other carriers who are moving in this direction,” said a spokesman for the Taiwan-based cargo line, Evergreen Marine Corp. (Taiwan) Ltd.

“We are still reviewing the issue; we don’t have any comment at this time,” said Tim Pajak, corporate communications specialist in Lombard, Ill., for Mitsui OSK Line, a Japanese carrier.

“We are studying the facts,” said Dennis Messing, North American equipment control manager in Norfolk, Va., for Zim Integrated Shipping Services, based in Israel.

ACL will take two different approaches as it exits the chassis business.

If ACL itself is arranging the drayage, truckers won’t be given chassis after June 1.

If a shipper arranges its own drayage after June 1, ACL chassis can be used unless the shipment moves through Boston, Miami or the Ohio Valley. Eventually, ACL will stop providing chassis for shipper-arranged moves everywhere in the United States, McBride said, though there is no date for that transition.

OOCL spokesman Frankie Lau said the company decided no longer to supply chassis in Boston and Miami to create a more efficient process for trucking companies. He said that the company would decide after reviewing the results in those cities whether to expand the program.

McBride said ACL decided to start its program for shipper-arranged moves in areas where its freight volume was lower than in such major ports as New York/New Jersey. That decision allowed the company to make sure the process worked properly before expanding it.

He also said chassis assets, maintenance, liability exposure and insurance are “not something we should be involved with.”

“We applaud Maersk for stepping forward with their program,” McBride said. “Our program goes one step further.”