Snow and ice aren’t the only things causing shipping delays this winter. Changes in the ownership and management of chassis has been creating significant problems and delays for truckers picking up cargo containers at marine terminals.
High cargo volumes combined with a harsh winter that has affected cargo movement across the continent have done enough to frustrate truckers with long wait times at ports and shippers with delays in receiving their cargo. So how about one more hiccup in the process?
Hiccup may be a bit of an understatement. Bill Mongelluzzo, Senior Editor for the Journal of Commerce wrote an excellent article on this problem titled Chassis Crisis at LA-LB. The chassis problem is a crisis?
What is this chassis crisis?
Is there a shortage? No. Are there new regulatory requirements to which the industry has to adjust? No. And why is this crisis specifically happening at the Ports of Los Angeles/Long Beach?
The problem is change of chassis ownership. Carriers used to own the chassis used in international shipping. But over the last few years carriers have been exiting the chassis business, selling off chassis.
Mongelluzzo’s article outlines how the carriers gradually sold off chassis at locations around the nation toleasing companies, chassis pool operators and other third-parties, but waited on selling the chassis in Southern California because of the complexity of the operations there.
The wait is over. Carriers are selling the chassis and the result according to the JOC article is “unusually long turn times because marine terminals do not have the types and quantities of chassis that truckers need. ‘The chassis are not being positioned where they are needed,’ said Vic LaRosa, CEO of TTSI, a Southern California drayage company.”
This is a big problem. According to Bruce Wargo (quoted in the JOC article), president of Pier Pass Inc., which manages the Los Angeles-Long Beach extended gate time program on behalf of the terminal operators, the chassis problem is a more important issue than turn times. “In fact, chassis are a big part of the turn-time problem.”
After facing huge losses in the billions of dollars, it made sense for carriers to sell off chassis, allowing other companies to handle that aspect of the international shipping business. Liquidating the chassis created cash flow for them and allowed them to focus on the more profitable aspects of international shipping, freight rates and filling their shipping lines with cargo containers.
But the situation created in the ports of Los Angeles/Long Beach is not good for shippers, not good for truckers, and ultimately, not good for the carriers.
“Congestion at the marine terminals is not only causing terminals to shut out truckers, but in one extraordinary case, a terminal operator was forced to tell a shipping line not to dock its vessel because the terminal did not have enough chassis on hand to handle the containers that would be discharged,” reported Mongelluzzo.
No one seems to want to pay for moving chassis to where they are supposed to be and the problem is unfairly falling to truckers. They are often being instructed to move chassis for free when they should be hauling a cargo load.
With the Port of Los Angeles/Long Beach being the biggest in the nation in terms of shipment volume that goes through it, this chassis issue is serious. Calling it a crisis may not be an overstatement.
The same reasons that make this a critical problem mean that the chassis problem will be solved.
The Port of Long Beach has a Chassis Operations Group searching for a more efficient chassis supply model. Ocean carriers, terminal operators, beneficial cargo owners, trucking companies, railroads and the International Longshore and Warehouse Union are all represented in the group. All these parties have strong interest in solving the problem.
The Chassis Operations Group’s webpage includes meeting minutes, a guidebook on chassis supply models, and a white paper on the problem if you want to read more on this issue.