| Off and on, the chassis needed to move ocean containers on land at terminals and ports become a big issue, generally related to shortages.
Those issues in many cases relate to the structure of the chassis supply chain, which has undergone significant change in recent years.
Supply Chain Digest Says...
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The two sides have for many months conduted on-and-off negotiations over the price, availability and condition of chassis. |
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Ocean container carriers owned 51% of chassis in 2009, but that share fell to just 17% by 2013, as ownership moved to chassis leasing companies. The share of chassis owned by ocean carriers in the US has actually now fallen to zero, according to a new complaint issued by the American Trucking Associations a week ago to the Federal Maritime Commission (FMC) against the Ocean Carrier Equipment Management Association (OCEMA), a collection of leasing firms, and 11 of the largest ocean carriers.
That has led to monopolistic type practices by the leasing companies that cost carriers and thus shippers billions of dollars, the complaint alleges. The complaint alleges the current set-up requires carriers to use specific chassis providers and denies truckers the right to select the chassis it wants to use to moves containers.
"Foreign-owned ocean shipping lines engaged in unjust and unreasonable conduct in violation of the Shipping Act," the ATA complaint alleges. "Their unlawful actions have overcharged truckers and their customers for intermodal container chassis at ports and inland terminals throughout the United States," the ATA filing added.
There are some 400,000 to 500,000 chassis in used at US ports, owned and primarily managed by just three leasing companies, with limited competition. In some cases, only one leasing company serves a container terminal .
And the carriers also use chassis from the same overall pool, generally in very favorable arrangements versus those truckers are subject to, the complaint alleges.
In a press release related to the complaint, Bill Sullivan, ATA's executive vice president for advocacy, says that "For more than a decade, these foreign-owned companies have worked together to take advantage of hard-working American trucking companies."
Sullivan adds that "By denying truckers choice of equipment providers at port, American truckers and American consumers subsidized their costs to the tune of nearly $1.8 billion over the last three years alone."
The complaint outlines a number of on-going violations of legislation called the "Shipping Act" and is seeking injunctions in the form of multiple cease and desist orders against OCEMA and the shipping lines.
More specifically, the complaint says the carriers and leasing companies are violating the law by:
• Adopting and enforcing CCM Pool Rule 5.7, giving ocean carriers ultimate control by mandating their power of "consent" over chassis choice by truckers.
• Systematically denying consent to motor carriers' chassis choice, including through posted carrier policies that expressly disallow choice when a motor carrier is billed for chassis usage.
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• Adopting and enforcing ocean carrier "box rules" affecting containers in ports that have a certain set of chassis pool rules, such as in Los Angeles/Long Beach, that prevent chassis choice, even when leasing company rules would permit motor carriers the freedom of chassis choice.
 • Withdrawing from those same rules regarding pools and designating single-provider chassis pools as the default provider for all container movements.
• Soliciting proposals for and entering into leasing company contracts in which the ocean carrier designates a leasing company as its default provider for haulage of containers when a motor carrier is billed for usage, while awarding the contract based on the price of haulage when the ocean carrier is billed for chassis usage.
• Exploiting these regulations and practices that compel leading companies to undercharge the ocean carrier for carrier haulage movements while overcharging for chassis usage for merchant haulage, without fear that the overcharge will cause the motor carrier to use the services of another leasing company, which precludes the benefits of chassis choice and price competition to truckers to the benefit of the ocean carriers.
OK, that's a lot of legalese. In summary, the two sides have for many months conduted on-and-off negotiations over the price, availability and condition of chassis. While possible solutions emerged during those talks, negotiations ultimately broke down.
"This must end, and after several attempts to come to a mutually beneficial resolution, we are now asking the FMC to resolve it," Sullivan said.
The Ocean Carrier Equipment Management Association has not made any public statements on the suit.
You can find the full complaint here.
Does the ARA complaint have merit? Let us know your thoughts at the Feedback section below.
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