Maersk Selling Its Chassis Unit; Charged Truckers Fees for Use

Maersk Inc., owner of the largest ocean carrier, has agreed to sell its chassis rental unit to private investment firm Littlejohn & Co., marking the latest step in the ownership of the chassis that drayage truckers use to deliver containerized cargo.

Maersk, which triggered the shift in ownership of chassis away from ocean carriers in 2009 to stem chassis-related losses, announced the sale in a statement, saying the unit didn’t fit into its long-term strategy. No financial details or terms were announced for the sale of Direct Chassis Link, the subsidiary Maersk set up to own and rent chassis. Direct Chassis charges an $11 daily rental, changing the previous ocean carrier practice of providing chassis to truckers for free.

“This is a logical progression,” said Dan Smith, a principal at the Tioga Group, a Philadelphia consulting firm that completed a study of port trucking last year. “I don’t think Maersk ever intended to be in the chassis business for the long term. I don’t think any [ocean] carriers ever want to be in the chassis business. Maersk is leading the exodus. The exodus is a positive move to improve the economics of the world shipping industry.”

The sale was announced as truckers, chassis owners and lessors are watching two developing equipment pooling options that are meant to provide a dependable long-term supply of chassis as other ocean carriers individually try to exit the business.

One option is Consolidated Chassis Management, Budd Lake, N.J., the co-operative pool affiliate of the Ocean Carrier Equipment Management Association trade group, based in Washington, D.C. The other prospect is a trucker-owned pool that’s being evaluated by American Trucking Associations’ Intermodal Motor Carriers Conference (1-16, p. 1).

“This [chassis] is a business in transition,” said Curtis Whalen, executive director of the motor carrier group. “The word has been out for some time that DCLI [Direct Chassis Link] is for sale. Maersk rolled out this program quite successfully after a bump in the beginning. It was an established entity in an otherwise swirling group of companies that are trying to adapt to the changes.”

Maersk said the unit’s sale will have no effect on 2012 earnings. The ocean carrier hasn’t divulged results for Direct Chassis Link since it was created to rent chassis in the New York port area. Since then, the unit has expanded to 129 locations and maintains a fleet of 66,000 chassis.

“As an independent company, we look forward to supporting DCLI’s management team to grow the business organically and target strategic acquisitions that will further expand its national network,” said Edmund Feeley, Littlejohn’s managing director. “The company maintains a strong industry reputation by providing its customers with the highest level of fleet equipment quality, the broadest national network of start-stop locations and a competitive cost structure.”

Littlejohn, through its public relations agency, declined to provide additional information about the transaction.

“The fact there is a market for chassis providers is interesting, but it would be more interesting if I knew what the money was,” Whalen said. “I would have been concerned if nobody could put a deal together.”

Whalen said he was concerned initially that Littlejohn would focus solely on what he called “bottom line accounting,” rather than both operating the business and controlling costs. He said some DCLI officials he’s spoken with believe Littlejohn will provide adequate financial backing to allow managers to react and adapt quickly to market conditions.

“We have been pleased with the business levels, the profitability and the quality of management at DCLI,” J. Russell Bruner, CEO of Maersk Inc., said in the statement. “It is, however, a provider of chassis, and it does not fit in our long-term strategic focus. The sale will allow the group to reallocate resources to the strategic focus areas within shipping, energy and related activities.”

Smith also said he believed the move would add flexibility to industry operations because the new owners will want to maximize utilization of equipment.

He added that the chassis changes will force drayage carriers to act more like other truckers, who have to factor in and manage their equipment costs.