Shipping Container Chassis in the U. S.

The University of New Orleans Transportation Institute (UNOTI) examined the issues surrounding the current state of international chassis utilization in the United States (U.S.). The international chassis system in the U.S. is unique compared to global chassis utilization where the motor carriers, the freight customers, or off-site terminals provide chassis. However in the U.S., the divestment of international chassis by ocean carriers, which began in 2009, resulted in three major international chassis leasing companies linked to the foreign carriers. These lessors are the American shippers’ predominant provider of international chassis. The extra cost associated with the lack of international chassis lessor competition profits the foreign ocean carrier lines while raising costs for domestic consumers. This situation is compounded by the fact that Direct Chassis Leasing International (DCLI) acquired the domestic fleet of one of the other two major international chassis lessors, TRAC Intermodal in January of 2018. Since then DCLI has also been investing in data analytics to improve chassis repositioning to meet demand. This means that chassis are located where they are needed rather than idling. The company has also added 11,000 more pieces to its chassis pools (DCLI 2018), further consolidating the chassis provision and limiting competition.

The lack of true market competition in chassis pricing, where truckers would be able to choose based upon a combination of cost and availability, has led to artificially high rates for motor carriers as well as unnecessary congestion at marine terminals. Truckers, in many cases, have to make extra turns at port facilities to secure a chassis linked by a major provider to a foreign ocean carrier in order to complete a container acquisition. Thereby, shipper stakeholders want the ocean carriers to be fully separate from the international chassis link of the supply chain (Federal Maritime Commission Bureau of Trade Analysis, 2015). The control of the leasing options by the ocean carriers means that many truckers are locked into using the international chassis leased by whichever intermodal equipment provider (IEP) is “legacy-linked” to the ocean carrier for whom they are making any given leg of their journey. There is no choice for these truckers (Mongelluzzo 2017c). Generally, a motor carrier with permission to pick up a container from one ocean carrier would not have permission to use another ocean carrier’s chassis to do so, despite complete physical interchangeability.

Presently, from a national perspective, there is no overarching management solution to chassis pooling or chassis ownership. It is the legacy of contracts controlled by the ocean carriers which has led to ever-more vigorous calls for open choice of chassis on the part of truckers. Open choice refers to motor carriers and truckers being free to choose their own chassis based on market rates and convenience rather than following legacy contracts (Connors, 2017). Despite this problematic situation, chassis is not at the forefront of the freight trade or academic literature.

This report is an effort to expose the challenges associated with this unique U.S. chassis provision. First, we outline key chassis regulations, focusing on those associated with the Ocean Carriers Equipment Managers Association (OCEMA), a U.S. association of 15 main ocean carriers who oversee the operational safety of U.S. intermodal ocean freight transportation. Second, we discuss the anti-trust issues related to the chassis legacy contracts. Third, we consider the topic of environmental sustainability as it relates to the current chassis dilemma. Fourth, we examine the subject of chassis regarding disaster resilience. Fifth, we review the concerns of time and money involved with chassis as it presently operates in the U.S. Finally, the

operations of chassis globally and in the U.S. are compared. To understand how this situation came into being, it is necessary first to understand the history of containerized shipping.