Chassis Rule Alters Drayage in Ways Unforseen By Fleets

This story appears in the Nov. 29 print edition of Transport Topics.

The world of drayage carriers has certainly changed since motor carriers finally convinced the federal government to establish that it was the owners of freight container chassis who are legally responsible for their maintenance. But the change has not at all come in the ways most fleets expected.

After Congress pushed the Federal Motor Carrier Safety Administration, the agency in late 2006 formally issued rules that said safety issues found on chassis were the responsibility of their owners and not the truckers who pull them. The trucking industry celebrated what it saw as a major victory.

It was assumed the ocean lines and railroads that owned most of the platforms would now have to maintain them. Up to that point, it was usually the trucker who got whacked by law enforcement when safety violations were found on the chassis, which are used to ferry freight containers from rail yards and docks to customers and back again. Many problems centered on broken lights, worn brakes and damaged or worn tires.

But, as was made clear here earlier this month during the 2010 TransComp/Intermodal Expo in Fort Lauderdale, Fla., that’s not exactly how things have worked out.

Rather, ocean carriers have been using the FMCSA ruling — known in industry shorthand as the “roadability” ruling — as a reason to exit the chassis business and change the business model to make truckers provide the chassis needed to move the boxes.

And that has prompted major changes for intermodal carriers, who have found themselves grappling with transition-related troubles ranging from tires to inadequate storage space to funding.

Seven smaller ocean carriers have followed industry leader Maersk Line in getting out of the container supply business, although Maersk shifted its containers to a new subsidiary it created to rent them to motor carriers, Direct Chassis Link.

Now, in order to move containers, intermodal freight lines must rent, lease or purchase them.

“We will not buy chassis; it would be cost-prohibitive,” said George Baima, vice president of sales and marketing for Pacella Trucking Express, Chicago. “I will rent them on a daily, monthly or weekly basis.”

Baima told Transport Topics he was particularly concerned about the handling of tire repairs on rented or leased chassis. Tire damage is a long-standing sore point for truckers who have been saddled with repair costs for substandard tires on some ocean-carriers’ chassis.

“It has been a huge hassle for years,” Baima said. “I want the tire issue to go away.”

Curtis Whalen, executive director of the Intermodal Carriers Conference of American Trucking Associations, said that the change in responsibility focused attention on “what we are going to do about equipment condition. The whole issue is about the responsible party being held to standards of safety, and for a long time that wasn’t done.”

Whalen said roadability has “spread the use of chassis pools,” which is good “because they maintain high reliability in the condition of the chassis” fleet.

Shinda Aheer, president of Cal State Express, South Gate, Calif., pointed out a different headache for truckers like his Los Angeles-area company: finding a place to store intermodal chassis.

“The infrastructure in California is not geared up for this,”  Aheer said.

“There will have to be a complete change in the way we see this business,” Aheer explained, because chassis historically have been left parked on the docks by ocean shipping companies.

Ron Guss, another California drayman, echoed Aheer’s concerns, saying, “The storage and ground costs are huge.”

In addition, Guss envisioned mounting inefficiency, longer lines at terminals and more air pollution from vehicles idling if carriers have to make extra moves between terminals to keep control of their chassis.

Guss, who is president of Intermodal West Inc., Pico Rivera, Calif., had still another concern: “If this [chassis shift] takes off, will the railroads say, ‘Why don’t we have the truckers supply the chassis?’ ’’

Frank Harder, principal of the Philadelphia-based consultant Tioga Group and a former intermodal executive, said there will be a more immediate rail-related problem: Truckers will have to manage chassis in and out of rail terminals, which have a different set of storage and check-in procedures.

Rental cost also was an issue for Harder.

“At $11 a day [the daily fee], it doesn’t take many days for a carrier to make a concrete decision to buy chassis,” he said. A used chassis typically costs about $4,000.

Ernie Durando, president of Direct Chassis Link, the Maersk chassis-rental venture, disagreed, saying the fee was sustainable.

“There is more to chassis than simply buying them,” he told TT. “They have to be maintained. That is extremely expensive and time-consuming. There are also expenses to comply with state and federal regulations,” such as marking the chassis with ownership details, Durando said.

“Our offer [to truckers] is, ‘We can get you out of that,’ ” Durando said. “Steamship lines are abandoning that model, and I am hard-pressed to see how the trucking industry will adapt to ownership of chassis.”

Mason Dixon Intermodal, which is part of Universal Truckload Services Inc., Warren, Mich., is one fleet that’s buying chassis, adding 400 to supplement its fleet of 500 already on hand.

“We are in procurement mode because we think going forward that the trucker will be the one to own the chassis,” Tim Phillips, president of Mason Dixon, said. “From a safety and availability standpoint, we would prefer to own rather than lease.”

“But we have to make sure we get remuneration,” Phillips added.

Tracy Davis, president of Acme Transport Co., Bedford Park, Ill., also is a believer in buying chassis as long as utilization of the equipment can be maintained. He said Acme will pass along chassis expense to its customers.