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February 1, 2021 9:00 AM, EST

Intermodal Council Scores Win in Latest Round of Ongoing Case Against Ocean Carriers

Containers at Port HoustonIMCC alleges in its $1.8 billion lawsuit that OCEMA violated the Shipping Act of 1984 by inflating intermodal chassis prices at dozens of the nation's ports. (Patrick T. Falloon/Bloomberg News)

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The Federal Maritime Commission judge overseeing the $1.8 billion case between the Intermodal Motor Carriers Conference of American Trucking Associations and the Ocean Carriers Equipment Management Association has rejected OCEMA’s appeal to have the case stayed.

Judge Erin Wirth on Jan. 29 issued her nine-page ruling indicating the case should move forward.

In 2020, IMCC and OCEMA were involved in negotiations to resolve what IMCC charged were high-priced and inferior quality chassis at many of the nation’s ports. The sides bargained for several months trying to reach a compromise. When that failed, IMCC filed a lawsuit with FMC’s judicial division.

IMCC alleges that OCEMA and 11 international ocean carriers violated the Shipping Act of 1984 by inflating intermodal chassis prices at dozens of ports. IMCC said this has cost the trucking industry $1.8 billion over the past three years.

Ruling in OCEMA Appeal of IMCC Lawsuit by Transport Topics on Scribd

Wirth ordered IMCC and OCEMA to file a response to her ruling by Feb. 18 and submit a joint status report by March 1.

In its appeal, OCEMA argued that ocean carriers should be “free to structure their relationships with shippers and chassis providers as they see fit.” When the group filed the motion to dismiss the case, its general counsel, Jeffrey Lawrence, told Transport Topics that OCEMA believed FMC was not the proper legal venue for the claimand that the agency’s jurisdiction does not apply to transportation activities between trucking companies and ocean carriers.

Wirth said in her ruling OCEMA did not make a strong enough case for dismissal and that FMC was the right place for the case to be heard.

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“The commission has jurisdiction over respondents, who are regulated entities. The commission also has subject matter jurisdiction over the OCEMA and CCMP agreements, which authorize the operating rules at issue. Moreover, to the extent that agreements between regulated entities implement regulations and practices regarding the receiving, handling, storing and delivering of property that are shown to violate the Shipping Act, the commission has jurisdiction over those claims.

“There is not a substantial difference of opinion regarding the extent of this jurisdiction, and an appeal would not be likely to resolve the proceeding. Accordingly, this factor does not support granting leave to appeal this ruling.”

The Consolidated Chassis Management Pool (CCMP) was formed in 2005 to address “industry needs to develop a more efficient model for operating chassis.”

Last year, IMCC announced its displeasure with leasing arrangements for chassis at ports and suggested legal action could follow. It alleged trucking companies were being overcharged for chassis and that shipping companies were leasing inferior, outdated equipment.

In May, IMCC issued a warning and a deadline to OCEMA, and the sides began negotiations. After talks concluded with no agreement, the claim was filed. At most major ports, ocean shipping companies have historically controlled the chassis-leasing business under the Uniform Intermodal Interchange and Facilities Access Agreement, which is administered by a 10-member group of industry representatives. At these ports, trucking companies are directed toward chassis available for rent and the rates being charged.

 

Last October, IMCC formed a subcommittee to study the issue of what it calls “chassis choice.” Committee members said one entity controlling all of the chassis at a facility results in a monopoly, which keeps prices artificially high.

In May, IMCC said it cost upward of $27 a day to rent a chassis at the Port of Charleston and the Port of Savannah, but ocean carriers’ costs are estimated to be 50% of that amount.

ATA Deputy General Counsel Richard Pianka told Transport Topics now that the judge has dismissed OCEMA’s appeal, there still is an opportunity for the two sides to negotiate an equitable settlement before the case goes to trial, possibly later this year.

Richard Pianka, deputy general counsel for American Trucking Associations

Pianka

“If I were them, knowing our legal theories have legs, I would certainly want to consider that further discussions were valuable, but obviously you’d have to ask them if that’s something they are interested in doing” Pianka said. “Certainly the IMCC’s position has been that we’re looking for reasonable operating procedures.

"Our goal has never been to litigate this, as our first choice. IMCC chose to do so, only when other, more collaborative efforts proved fruitless. I think the IMCC would remain open to working out something that made sense from an operational standpoint, of course. But we’re not interested in going in circles.”

Pianka said it’s possible the case could go to trial by the end of the year if no agreement is reached and a final decision announced by the judge in early 2022.  

For years, ocean carriers owned and leased chassis and other intermodal equipment to trucking companies that truck drivers use to move containers from ports to inland locations. About 10, years ago, ocean carriers began working with third-party leasing companies to reduce their cost of managing and owning containers.

Trucking companies have long complained about the quality of chassis at ports, especially related to tires, brakes and and lighting. Some chassis distributors have upgraded their equipment by replacing older chassis or refurbishing them and adding radial tires, disc brakes, and LED lighting.

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