Tag Archives: chassis pools

Consolidated Chassis Management Prepares for SACP 3.0 Launch with New Office

Posted on March 9, 2023 by | Leave a comment

Consolidated Chassis Management (CCM), a leading cooperative chassis pool manager, announced it has opened a new, expanded office in Savannah, GA, to accommodate the growing South Atlantic Chassis Pool (SACP) 3.0 team. Launching in October 2023, SACP 3.0 will offer a new chassis provisioning solution that utilizes a single provider pool model.

Chassis pools have made a big difference in the availability of chassis for containers. Pooling chassis is a standard way of covering a varying demand with a lower investment in inventory. If the maintenance is performed to a good standard, the pools will be popular with drivers, because of the standardized agreements for pickup and dropoff.

According to CCM’s CEO Mike Wilson, “SACP 3.0 will revolutionize chassis provisioning in the United States.As we get closer to launch, we are building our teams, expanding our office space and enhancing CIT, our fleet management platform — all to provide the support necessary to ensure SACP 3.0 reaches its full potential.”

With more than 75 sites across Alabama, Florida, Georgia, North Carolina, and South Carolina, SACP 3.0 will continue to be the nation’s largest fully interoperable chassis pool. It will increase and upgrade the existing South Atlantic Chassis Pool with new and refurbished intermodal chassis from major regional port and key intermodal inland hubs.

The South Atlantic region has been a productive location for a chassis pool, with the serious expansion of service to these areas by major container shipping lines. Pools have also played a role on the West Coast at Los Angeles/Long Beach.

SACP 3.0 will transition from the current multi-contributor chassis pool to a single provider utility
type pool, and it will offer over 50,000 chassis to truckers, beneficial cargo owners, ocean
carriers and other port users. The pool is being established cooperatively by The Ocean Carrier
Equipment Management Association (OCEMA), Georgia Ports Authority (GPA), Jacksonville
Port Authority (JaxPort), North Carolina State Ports Authority (NC Ports) and Consolidated
Chassis Management LLC (CCM).

“We are committed to ensuring SACP delivers on its promise, so we will continue to build in our
team and make investments that deepen our presence in the Southeast. The new office is not
only larger, but it is also more conveniently located, bringing us closer to GPA as well as other
members of the supply chain community, including steamship lines and BCO’s,” said Mr.
Wilson.

Some years ago the ocean carriers decided to divest themselves of chassis in the US. They claimed to do this because of American laws that made chassis owners responsible for damage from accidents where they were found to participate in the fault. These liability laws were seen as threats to the liner firms. So CCM was created. As you can see, while independent, it’s related to the Ocean Carrier Equipment Management Association, which is closely allied to the ocean carriers. It’s a liability shifting scheme.

The fact is, ocean carriers must be able to provide chassis for their customers. In the US, it’s not a good business decision for truckers and trucking firms to own their chassis. Customers have different needs, and the chassis has to be chosen for the specific load. A study showed that with economic conditions in the US, a trucker would need to have 90% confidence that customers would want a chassis, to afford owning it. The fraction is nowhere near that.

So the pools and CCA help fulfill that function. It’s a good strategy, and results in considerable savings. I’m glad to see that it is taking off in the Southland of the US.

Liability is also related to maintenance. If maintenance is high quality, a trucker will pick up a good chassis that is not likely to fail on her route. The trucker must bear the immediate expense of a repair on the route, which delays her cash flow. The pool offers a chance for high-quality maintenance. In California, the pools established near LA/Long Beach were required to hire union mechanics, which may have improved the quality of the maintenance. With the CCA pools there is a specific firm to hold responsible for maintaining the chassis.

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Intermodal truckers secure win against ocean carriers

Posted on February 8, 2023 by | 1 comment

The chassis world is always coming up with a new twist.

Two large chassis pool operators, in Chicago, LA/Long Beach, Memphis, and Savannah, have to allow truckers to use a provider of their own choosing.

The formation of chassis pools about 10 years ago was sparked by ocean carriers’ desire to stop providing chassis. The reason given was that US rules on who is responsible for damages if there is an accident placed the burden on the chassis owner. To escape, the ocean carriers decided to leave the chassis business in the US. That’s typical worldwide; for instance, in Europe most chassis are owned by trucking firms.

But how do ocean carrier customers in the US get chassis to move the containers once they are off the boat? A game theory analysis (Hartman, Bruce and Christopher B. Clott, 2014) showed that truckers would not buy chassis unless they were virtually certain (over 90%) that the shipper would use their chassis rather than deal with the ocean carrier for one. Cargo gotta move — so the ocean carriers needed to find a way.

The answer was ‘chassis pools’. Ocean Carrier Equipment Management Association (OCEMA) developed Consolidated Chassis Management(CCM) to form and manage pools of container chassis at various ports to insure that chassis would be available for cargoes.

Clearly the pools were an advance. Pooling always allows demand to be satisfied with smaller inventory; it’s essentially a newsvendor situation. One big issue, however, is maintenance. A trucker expects to be given a chassis that is in good repair, and will probably not need maintenance during the trip. In the US, the trucker is responsible for on-the-road maintenance. So the question arises— how diligent will pool operators be in maintaining chassis that are turning over quickly?

That question alone was the spark of a putative strike at the LA/Long Beach pool. The union wanted to have control over workers at the pool yard, who were doing the maintenance. It became a big deal in the union negotiations. And the union won– union workers were hired to staff the yards. This went some distance to resolve the problem since the quality of the workforce was controlled by the union and not the owners of the yard.

All this sounds good so far. But issues can arise when individual carriage contracts are made. To what extent can carriers specify what equipment is used, and where it must be delivered when empty? What rates will be set for the use? And can contracts be altered while the chassis is moving, to specify return at a different place, or somewhere well off the route of the trucker?

In this case, the Administrative Judge ruled that motor carriers cannot be forced to use pool chassis; they may use their own chassis source. It’s a victory for truckers. There’s a tricky question of ‘default chassis provider’ when the contract does not specify the chassis source, but it’s clear now that the Judge wants truckers to be free to use their own provider.

That’s a win because it puts truckers in control of their chassis source, and frees them from potential hassles over contracting and repairs they might get into with CCM. They can manage their chassis choice themselves.

It’s interesting that over 9000 pages of documents were filed in this proceeding. Clearly both sides felt there was something to argue.

John Gallagher·Monday, February 06, 2023

Intermodal truckers secure win against ocean carriers – FreightWaves

FMC Summary Decision Text

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Your ‘chassis deal’ – and terms – may be costing you

Posted on September 30, 2022 by | 1 comment

Obtaining a chassis from a pool is a good idea for some truckers. But beware the terms and conditions. The article indicates that pools, often owned by leasing companies and investment houses, have a goal of making money. I believe the biggest risk of renting from a pool is that the pool may be cheating on maintenance, so the chassis you pick up may have deficiencies that show up during the trip. In that case, the trucker must fix it at her expense. It’s always true that who is in possession of the chassis is required to pay for fixing the problems that occur on the trip.

Some pools, such as the one in SoCal connected with the ports, have union workers doing the maintenance. There’s probably less risk of under-maintaining chassis there. But privately operated pools have an incentive to cheat on the maintenance, because they can lay it off on the truckers.

And there is information asymmetry. There are few figures on the incidence of repairs for chassis from various pools. Such real data would inform everyone whether a pool is doing enough preventative maintenance. But without such data, it’s just a gamble for the trucker.

The article claims carriers are better off purchasing their own chassis. But I’m not convinced. Owning the chassis requires an upfront expense, or a lease, which is money out the door. If you buy the chassis you will need to put it to use often to recover your investment plus your profit. You now have to do all the maintenance. And chassis vary for different needs; a chassis for forty-foot ocean cargo won’t fit twenty-foot ocean cargo; or you might need a reefer-compatible chassis. Unless you have high predictability, you are better off taking what you need for each load.

My understanding of the situation in Europe was that chassis were mostly owned by the large drayage firms. That prompted the movement several years ago by ocean carriers in the US to divest themselves of chassis, to try to get the truckers to own them as in Europe. But as the author points out, most drayage drivers in the US are owner-operators, and don’t work for a large firm. They can’t support the capital expense of a chassis unless they are convinced that they will be able to employ the chassis for money on most loads. We did a paper on this in 2014. They would need to believe that they could almost always get paid for using the chassis. But that isn’t the way it is; somewhere around 40% of all cargoes come with a chassis provided by the ocean carrier. And that is going up nowadays, with ocean carriers getting into last-mile and end-to-end delivery promises.

So I wonder. But there should be ways to make maintenance data more visible, and make it easier for truckers to dispute charges for chassis repairs if the repairs should have been done at the pool first. I’m afraid that will be quite a while coming, though.

Ashley Coker Thursday, September 29, 2022

Your ‘chassis deal’ – and terms – may be costing you – FreightWaves

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