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N A T I O N A L C O O P E R A T I V E F R E I G H T R E S E A R C H P R O G R A M NCFRP REPORT 20 Subscriber Categories Freight Transportation ⢠Terminals and Facilities ⢠Vehicles and Equipment Guidebook for Assessing Evolving International Container Chassis Supply Models CPCS Transcom Limited Ottawa, Ontario, Canada i n a s s o c i a t i o n w i t h InterPro Advisory LLC Princeton, NJ Prime Focus LLC DePere, WI Jean-Paul Rodrigue Hofstra University Hempstead, NY TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2012 www.TRB.org Research sponsored by the Research and Innovative Technology Administration
NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM Americaâs freight transportation system makes critical contributions to the nationâs economy, security, and quality of life. The freight transportation system in the United States is a complex, decentralized, and dynamic network of private and public entities, involving all modes of transportationâtrucking, rail, waterways, air, and pipelines. In recent years, the demand for freight transportation service has been increasing fueled by growth in international trade; however, bottlenecks or congestion points in the system are exposing the inadequacies of current infrastructure and operations to meet the growing demand for freight. Strategic operational and investment decisions by governments at all levels will be necessary to maintain freight system performance, and will in turn require sound technical guidance based on research. The National Cooperative Freight Research Program (NCFRP) is a cooperative research program sponsored by the Research and Innovative Technology Administration (RITA) under Grant No. DTOS59-06-G-00039 and administered by the Transportation Research Board (TRB). The program was authorized in 2005 with the passage of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). On September 6, 2006, a contract to begin work was executed between RITA and The National Academies. The NCFRP will carry out applied research on problems facing the freight industry that are not being adequately addressed by existing research programs. Program guidance is provided by an Oversight Committee comprised of a representative cross section of freight stakeholders appointed by the National Research Council of The National Academies. The NCFRP Oversight Committee meets annually to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Research problem statements recommending research needs for consideration by the Oversight Committee are solicited annually, but may be submitted to TRB at any time. Each selected project is assigned to a panel, appointed by TRB, which provides technical guidance and counsel throughout the life of the project. Heavy emphasis is placed on including members representing the intended users of the research products. The NCFRP will produce a series of research reports and other products such as guidebooks for practitioners. Primary emphasis will be placed on disseminating NCFRP results to the intended end-users of the research: freight shippers and carriers, service providers, suppliers, and public officials. Published reports of the NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at: http://www.national-academies.org/trb/bookstore Printed in the United States of America NCFRP REPORT 20 Project NCFRP-43 ISSN 1947-5659 ISBN 978-0-309-25863-0 Library of Congress Control Number 2012950609 © 2012 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FTA, RITA, or PHMSA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not- for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the National Cooperative Freight Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the National Cooperative Freight Research Program do not endorse products or manufacturers. Trade or manufacturersâ names appear herein solely because they are considered essential to the object of the report.
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academyâs purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Boardâs varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org
C O O P E R A T I V E R E S E A R C H P R O G R A M S AUTHOR ACKNOWLEDGMENTS This Guidebook would not have been possible without the significant contribution of many study participants and contributors. The research team recognizes the significant time and input of the more than 80 stakeholders consulted for this study, particularly Consolidated Chassis Management, SSA Terminals, Flexi-Van, Direct ChassisLink Inc., and Virginia Intermodal Terminals for their contributions to the case studies. The team also gives a special thanks to China International Marine Containers Group Ltd. (CIMC) for their extensive contributions to the international research component of this Guidebook. Lastly, the research team wishes to thank the Transportation Research Board for the opportunity to undertake this important and timely research project. CRP STAFF FOR NCFRP REPORT 20 Christopher W. Jenks, Director, Cooperative Research Programs Crawford F. Jencks, Deputy Director, Cooperative Research Programs William C. Rogers, Senior Program Officer Charlotte Thomas, Senior Program Assistant Eileen P. Delaney, Director of Publications Scott E. Hitchcock, Editor NCFRP PROJECT 43 PANEL Freight Research Projects Monica M. Isbell, Starboard Alliance Company LLC, Manzanita, OR (Chair) Fred Johring, Golden State Express Golden State Logistics, Rancho Dominguez, CA Brian M. Kobza, Port Authority of NY & NJ, New York, NY Christopher P. Mazza, International Asset Systems, Oakland, CA Laurence Rohter, Illinois Institute of Technology, Riverside, IL J. Michael Zachary, Zachary Maritime Consulting, Burien, WA Deborah Freund, FMCSA Liaison Ann Purdue, TRB Liaison
F O R E W O R D NCFRP Report 20: Guidebook for Assessing Evolving International Container Chassis Supply Models describes the historical and evolving models of international container chassis ownership and management in the United States. It is intended to provide stakeholders, including beneficial cargo owners, public policy makers and planners, trucking companies, ocean carriers, and terminal operators with an understanding of the most salient issues and implications as the chassis supply market continues to evolve so they can make informed decisions going forward. The United States is unique in that international container chassis have conventionally been provided primarily by ocean carriers and, to a lesser degree, leasing companies, rail- roads, motor carriers, and other entities. For ocean carriers, it is a non-revenue-generating service. The global recession in 2009 resulted in large ocean carrier losses and ocean car- riers were forced to look for ways to reduce costs. Concurrently, in December 2008, the Federal Motor Carrier Safety Administration (FMCSA) released new requirements that made Intermodal Equipment Providers (IEPs) subject to FMCSA regulation. As a result of these new safety-focused chassis roadability rules, IEPs are required to establish a systematic inspection, repair, and maintenance program. These regulations and the ocean carrier chas- sis divestiture strategies are spurring new approaches to international chassis supply and management in the United States. Under NCFRP Project 43, CPCS Transcom Limited was asked to (1) describe the func- tions and uses of international container chassis in freight movement and the factors driving chassis supply model changes; (2) identify and describe the current chassis supply models by region and terminal operating mode used in the United States; (3) identify and describe the stakeholders and how they influence and/or are affected by each chassis supply model; (4) identify and quantify the positive and negative aspects of each chassis supply model for each stakeholder; (5) enumerate the cost elements and drivers for each element of the vari- ous chassis supply models and identify the key metrics to measure the performance of each chassis supply model; (6) describe methods to improve the implementation and operation of each chassis supply model; and (7) develop a matrix that guides each stakeholder through the evaluation of the various chassis supply models. By William C. Rogers Staff Officer Transportation Research Board
Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 vii | vii Table of Contents Summary ...................................................................................................................... ......................................................................... x Introduction .................................................................................................................. .......................................................................... 1 Chapter 1 Ocean Container Chassis 101 .................................................................................................. ........................................... 2 1.1 What is an Ocean Co ntainer Chassis? ........................................................................................... ................................... 3 1.1.1 Types of Ocean Container Chassis in the U.S. .................................................................................. .................................. 4 1.1.2 Notable Differences Between Ocean Container Chassis and Domestic 53â Intermodal Container Chassis .......................... 4 1.2 U.S. Chassis Fleet and Ownership .............................................................................................. ...................................... 6 1.2.1 Chassis Leasing in the U.S. ................................................................................................... ............................................. 8 1.3 The U.S. Chassis Supply Environment and Relevant International Differences .................................................... ............ 9 1.3.1 Ownership Structure ........................................................................................................... ............................................. 9 1.3.2 Road Weight Limitations an d Chassis Specifications ............................................................................ ............................ 9 1.3.3 Commercial (Bill of Lading) Terms ............................................................................................. ...................................... 9 1.3.4 Supply Chain Operation Preferences ............................................................................................ ................................... 10 1.3.5 Governmental Regulation ....................................................................................................... ....................................... 10 1.3.6 Terminal Labor ................................................................................................................ ............................................... 10 1.3.7 Liability Regimen ............................................................................................................. .............................................. 11 Chapter 2 Chassis Supply Chain Operations .............................................................................................. ....................................... 12 2.1 Role of Ocean Container Cha ssis in Freight Movement ........................................................................... ....................... 13 2.2 Chassis Operations at Terminals ............................................................................................... ..................................... 14 2.2.1 Wheeled Versus Grounded Terminals ............................................................................................................................. 14 2.2.2 On-terminal Versus Off-terminal Chassis Storage ........................................................................................................... 18 2.2.3 Difference between Marine Terminal and Rail T erminal Operations with Respect to Chassis ....................................... ... 20 2.3 Chassis Operations at BCO Facilities .......................................................................................... .................................... 21 Chapter 3 Chassis Supply Models ........................................................................................................ ............................................. 22 3.1 A Brief History of the Evolutio n of Chassis Supply in the U.S. ................................................................ ......................... 23 3.2 (Conventional) Ocean Carrier Chassis Model .................................................................................... ............................. 25 3.3 Regional Cooperative (Co-op) and Alliance Co-op Chassis Pools Supply Model .................................................... ......... 25 3.4 Neutral Chassis Pools Supply Model ............................................................................................ .................................. 26 3.5 Terminal Chassis Pools Supply Model ........................................................................................... ................................ 27 3.6 Motor Carrier or Logistics Company Owned (or Leased) and Operated Chassis Supply Model ........................................ 28 3.7 Chassis Billing Models ........................................................................................................ ........................................... 29 3.7.1 Competing Chassis Models Creating Confusion for Motor Carriers ................................................................ .................. 31
viii NCFRP Report 20 | Guidebook for Assessing Evolving Int ernational Container Chassis Supply Models Chapter 4 U.S. Chassis Supply: Regional Perspectives ......................................................................................................... ............ 32 4.1 Regional Variations in the U.S. Supply Models ................................................................................. ............................. 33 Chapter 5 Alternative Chassis Supply Mode ls: Stakeholder Perspectives .................................................................. ........................ 37 5.1 Different Stakeholders, Differe nt Interests and Needs ......................................................................... ......................... 38 5.2 Beneficial Cargo Owners ....................................................................................................... ........................................ 38 5.2.1 Commercial Needs and Intere sts vis-Ã -vis Chassis Supply ....................................................................... ........................ 39 5.2.2 Advantages and Disadvantages of Altern ative Chassis Supply Models for BCOs .................................................... .......... 41 5.2.3 BCOs and Chassis Su pply Transitions ........................................................................................... ................................... 42 5.3 Ocean Carriers ................................................................................................................ ............................................... 43 5.3.1 Commercial Needs and Intere sts vis-Ã -vis Chassis Supply ....................................................................... ........................ 43 5.3.2 Advantages and Disadvantages of Alternative Chassis Supply Models for Ocean Carriers .......................................... ..... 45 5.3.3 Ocean Carriers and Chassis Supply Transitions ................................................................................. ............................... 47 5.4 Motor Carriers ................................................................................................................ ............................................... 48 5.4.1 Commercial Needs and Intere sts vis-Ã -vis Chassis Supply ....................................................................... ........................ 49 5.4.2 Advantages and Disadvantages of Alternative Chassis Supply Models for Motor Carriers .......................................... ..... 51 5.4.3 Motor Carriers and Chassis Supply Transitions ................................................................................. ............................... 53 5.5 Terminal Operators (Marine and Inland) ........................................................................................ ............................... 54 5.5.1 Commercial Needs and Intere sts vis-Ã -vis Chassis Supply ....................................................................... ........................ 54 5.5.2 Advantages and Disadvantages of Alternative Ch assis Supply Models for Terminal Operators ...................................... . 56 5.5.3 Terminals and Chassis Supply Transitions ...................................................................................... ................................. 58 5.6 Other Chassis Stakehold er Perspectives ........................................................................................ ................................ 58 5.6.1 Leasing Companies ............................................................................................................. ........................................... 58 5.6.2 Labor Unions .................................................................................................................. ................................................ 58 Chapter 6 Implications of Evolving Chassis Supply Models f or Public Policy and Planning Organizations .................................. ....... 59 6.1 Public Policy and Pla nning Organizations ...................................................................................... ............................... 60 6.2 Implications of Evolving Chassis Supply Models for Public Policy and Planning Organizations ................................... ... 60 6.3 Specific Public Policy and Planning Issues Emerging from Evolving Chassis Supply Models ....................................... ... 62 6.3.1 Potential for Increased Truck Moves ........................................................................................... .................................... 63 6.3.2 Off-Terminal Land-Use Pl anning Implications ................................................................................... ............................. 65 6.3.3 What Should Public Agencies and Planni ng Organizations Do Going Forward? ...................................................... ........ 66 Conclusions ................................................................................................................... ......................................................................... 67 Validation of Guidebook Findings and Conclusions.................................................................................................................................69 Glossary of Terms .................................................................................................................................................................................. 71 Acronyms and Abbreviations ................................................................................................................................................................ 73 |viii
Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 ix | ix Appendix A: Alternative Chas sis Supply Model Case Studies ....................................................................................................... 75 A.1 Co-op Chassis Pool: Chicago Ohio Valley Consolidated Chassis Pool, LLC (COCP) ........................................................... 75 A.2 Neutral Pool Chassis Supply Mode l: Bay Area Chassis Pool (BACP) .......................................................... ...................... 78 A.3 Terminal Chassis Pool: SSA Pacific N orthwest Pool......................................................................... ............................... 80 A.4 Co-op Terminal Chassis Pool: Hampton Roads Chassis Pool (HRCP) II ........................................................ .................... 82 A.5 Motor Carrier Chassis Supply Model: South Florida Region ................................................................. .......................... 84
x NCFRP Report 20 | Guidebook for Assessing Evolving Int ernational Container Chassis Supply Models | x Summary International ocean container chassis supply, ownership, and manage ment in the United States (U.S.) are in transition. Ocean carriers have historically supplied, owned, an d managed ocean container chassis in the U.S., unlike every other region of the world where chassis are supplied largely by motor carriers. Due to a number of external and internal factors, including a desir e to cut costs, increasing liability relating to chassis, and a greater focus on their c ore competencies, ocean carriers are now exiting the chassis business. This is forcin g the provision, responsibility, and co st of chassis supply, ownership, and management onto other supply chain stakeholders. Thus, new and different ocean container chassis supply models are emerging in response to this shift. Howev er, a great deal of uncertainty remains about these evolving chassis supply models and their implications throughout the inte rmodal stakeholder constituency. The evolvi ng chassis supply landscape in the U.S. has resulted in a patchwork of different models, which vary by region and terminal. Adding to the complexity, each chassis stakeholder groupâfrom shippers to carriers and terminal op erators to public officialsâhas different interests and concerns with respect to chassis supply and varying levels of understa nding of the implications of evolving chassis supply models. The Transportation Research Board (TRB) as part of its National Cooperative Freight Research Program (NCFRP) initiated this Guidebook for Assessing Evolving Intern ational Container Chassis Supply Models (under NCFRP Project 43). This research effort was developed between October 2011 and Ap ril 2012, largely through consultations and primary data analysis, including a review of secondary research. Over 80 supp ly chain stakeholders were consulted, in cluding ocean carriers, motor carriers, shippers, terminal operators, railroads, ch assis leasing companies, public policy and planning agencies, and labor unionsâin short, the full range of supply chain stakeholders with an interes t, direct or otherwise, in evolving U.S. chassis supply. The purpose of this Guidebook is to inform chassis stakeholders, incl uding shippers and public offic ials, about the conventional an d evolving models of international container chassis supply in the U.S., and the factors unique to each model, in order to inform their decision making vis-Ã -vis chassis supply transitions. The fin dings in the Guidebook were su bject to a broad external validation process. Ocean Container Chassis 101 Ocean container chassis in the U.S. are gen erally designed to accommodate specific container sizes (40â, 20â, 45â) and have two axles; they are typically lighter than chassis in other countries, given lower U.S. national gross vehicle weight standards. Most ocean container chassis cannot accommodate 53â dome stic intermodal containers. The latter largely serve the rail-based intermodal container transportation market. There are over 700,000 chassis in the U.S, of which close to 80% are standard ocean container chassis. The balance are domestic intermodal chassis. As a ratio to loaded contain ers, the U.S. operates considerably more chassis than most comparable overseas jurisdictions. This is largely the result of the co nventional ocean carrier supply model in the U.S. in whi ch chassis asset optimization has historically not been a pr iority for the ocean carriers that have supplied chassis. Terminal operating models can have important implications for chassis management. The term inal storage function can be âgrounded,â which requires stacking containers, or âwheeledâ with containers stored on chassis. Wheeled operations, most typical in inland rail termin als, usually transfer containers to draymen with one lift, but re quire a larger fleet of chassis a nd more land to store bare chassis and container s on chassis. Conventionally, ocean container chassis in the U.S. have been stored (parked, stacked, or racked) and managed within the terminal gate. However, because of the need for additional acreage to increase container capacity, chassis are also sometimes stored outside the terminal gate. The chassis plays a critical role in supply chains and is invo lved in all first/last mile ocean container truck moves. Conventionally, ocean container drayage in the U.S. has typic ally been arranged by drayage firms which provide company Source: CPCS
Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 xi | xi drivers and also sub-contract se rvice to truck owner-operators to move contain ers to/from shippers or receivers. The chassis also has a storage function, largely unique to the U.S. At âwh eeledâ terminals, containers are staged on a chassis until ready for pickup. Chassis are also often left at shippersâ facilities for container loading/unloading (âdrop and hookâ operation), a practice uncommon outside the U.S. These ar e contributing factors to the relatively larg er chassis fleet in the U.S. compared t o most international markets. The age and safety of chassis are becoming a matter of public welfare. Approximately 40% of the international chassis were built before 1997. The Federal Motor Carrier Safety Administrati on's "roadability" rule was i ntroduced in 2005 and became effective on June 17, 2009. Thes e regulations made chassis provid ers subject to the Federal Mot or Carrier Safety Regulations for the first time, and established shared safety responsibility among intermodal equipment providers, motor carriers, and drivers. Chassis Supply Models The conventional chassis supply model in the U.S. is one in whic h the chassis are owned (or leas ed), operated, managed, and maintained by ocean carriers. In this model, chassis charges ar e imbedded in the shipping rate as part of the service delivery. There are four alternative chassis supply models in the U.S.: ⢠Regional Cooperative (Co-op) and Vessel- Sharing Alliance Co-op Chassis Pools Supply Model: Chassis fleets are shared between member contributors, who have the responsibility to manage or delegate the management of the operation. Ocean carrier co-op chassis pools were largely established to minimize chassis mismatches and balance requirements, to improve chassis utilizatio n, and reduce terminal storage space requirements. The largest example of such a co-op pool in the U.S. is Consolidated Chassis Management (CCM). ⢠Neutral Chassis Pools Supply Model: Chassis are provided and operated by a third party (typically a chassis leasing company), independent of ocean carriers and motor carriers, and users are charged a per diem rental rate. An example of this chassis supply model is Flexi-Vanâs Bay Area Chassis Pool, which supplies chassis to ocean carriers and motor carriers. ⢠Terminal Chassis Pools Supply Model : Several marine terminals control their own chassis pools to better manage and integrate the chassis operation as part of the entire terminal process. The terminal may prov ide the chassis (like a neutral pool) or just manage them (like a co-o p pool). The introduction of marine terminalâcontrolled chassis pools was largely the result of marine terminal land capacity constraints; pools helped reduce the chassis storage footprint at these terminals, thereby easing capacity issue s, and provided a more controlled chassis environment to maximize terminal efficiency. ⢠Motor Carrier or Logistics Company Owned (or Leased) Chassis Supply Model: This model is the international standard, although not well-established in the U.S. given the conventional ocean container chassis supply. Chassis owned by motor carriers in the U.S. are predominantly specialized (e.g., tri- axle) chassis used for the carriage of heavy cargo. With the exception of the motor carrier chassis supply model, all others are effectively unique to the U.S. Ocean Container Chassis Supply Market in the U.S., by Model Source: Adapted from IANA, on the basis of team research. There is a growing trend for ocean carriers working with third parties to invoice motor carriers for chassis usage charges in any of the supply models (except when they supply their own) Ocean Carrier 29% Co-op Pool 42% Terminal Pool 6% Neutral Pool 17% Motor Carrier 6%
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Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 | xiii Regional Differences in Chassis Supply Models in the U.S. The prevalence of different chassis supply models, and the size of related chassis fleets, differs greatly by region. The U.S. chassis supply landscape is heterogeneous and has been evolving in response to differ ent regional influences and operational characteristics. Nevertheless, all chassis supply models are in play in each region, albeit to varying degrees. The following figure provides an overview of the regional distributi on of active ocean container chassis in the U.S., by type o f chassis supply model (chassis that are laid up or otherwise not in use are not included). Figures include inland rail terminals insofar as they utilize marine container chassis, which is predominantly the case in the Midwest as only rail terminals are represented in this region. Source: CPCS estimate and mapping of various data sources collect ed by the research team, including through consultations with industry stakeholders Stakeholder Perspectives on Alternative Chassis Supply Models The wide range of supply chain stakeholders with a direct or indirect interest in ch assis supply includes BC Os, ocean carriers, motor carriers, terminals (marine and inland rail), public agencies and planning or ganizations including port authorities, chassis leasing companies, and unions responsible for chassis mai ntenance and repair. Each of these stakeholder groups has distinct interests vis-Ã -vis chassis supply and movement. Likew ise, each stakeholder group ha s different performance needs, expectations, and measures with respect to chassis supply and supply chain perfor mance. Often, these interests and performance needs are distinctly unaligned. For instance, BCOs expect deliveries to arrive on time and do not distinguish between containers and chassis, but in any case tend to prefe r a perennial supply of chassis to minimize any transit delay resulting from chassis-related s ervice failures. This is also the case for most motor carriers that want to increase driver productivity, maximize driver turn times, and minimize delays in sourcing chassis. On the other hand, marine and rail terminal operators want to minimize the am ount of chassis needed within the terminal to support container operat ions, as chassis tie up capital, and can be a poor use of scarce terminal capacity. Public agencies and planning organizations are particularly
xiv NCFRP Report 20 | Guidebook for Assessing Evolving Int ernational Container Chassis Supply Models | xiv interested in land-use, traffic and envi ronmental implications, among others, where as chassis leasing companies tend to be focused on maximizing a return on the chassis assets that they own and manage. For this reason, the perceived advantages and disadvantages of alternative chassis supply mode ls differ by stakeholder, as in many c ases do their respective preferred chassi s supply model. Beneficial Cargo Owners: Historically, chassis supply matters have only b een of concern to BCOs when chassis shortages or service problems affected their supply chain s. With respect to evolving chassis supp ly models, the BCOs consulted indicated that they are concerned the most about avo iding chassis-caused service failur es (i.e., a delay to the cargo transportation plan ). They also want to maintain current ch assis terms of delivery and chassis supply operati ons, including drop and hook and free time at their facility. From a cost standpoint, the evolvi ng chassis supply landscape is particularly salient with respect to merchant haulage as this may require BCOs to arrange and pay for their own chassis, when they did not previously. In every case, BCOs preferred the status quo to any emerging alternative chassis supply mode ls, which is not surprising given the specific BCO interests and their current chassis supply arrang ementsâminimum or otherwise understood service risk, good service terms, generally at no se parate explicit cost, no chassis- related capital and operating co sts, and so forth. BCOs expre ssed concern over changes in invoicing and operational impacts, which may be caused by a ch ange in chassis supply models. Ocean Carriers: Conventionally, most ocean carriers considered providing chassi s a cost of doing business in the U.S., although they have had differing attitudes towards chassis ownership, which led to different operating models. Some have historically preferred ownership of assets and operatin g control while others preferred the fl exibility of leasing assets and utilizing neut ral chassis pools to avoid the long-term commitm ent of ownership. Today, most ocean ca rriers are serious about exiting the chassis supply business and are at various stages of doing so, as exemplified by no new chassis purchases in recent years, transitions to pool models, and the recent sale of the Maersk chassis business to a private third party. Key considerations and interests with respect to evolving chassis supply models are minimi zing capital and operating costs and ensuring an adequacy of supply (chassis in the right place at the right time), among other issues. Major challenges to transitioning to alternative models include the disposition of owned assets and commercial considerations vis-Ã -vis the shipp er community, which tends to resist a departure from the status quo. Motor Carriers: The economics of the marine drayage business is based on maximizing the number of truck trips daily, since drayage rates, and driver compensation, are move-based. The motor carrier industry is highly sensitive to any operational or commercial factors that cause idle time while the driver is wor king within his/her hours of serv ice schedule. Turns (trips) per day and minimizing terminal dwell time were the two most imp ortant productivity measurements listed in the motor carrier survey responses. For the most part, the commercial needs and interests of motor carriers vis-Ã -vis chassis are in relation to the potential impact of chassis supply on motor ca rrier productivity. Roadability and equipment failu re are also inc reasing concern s for motor carriers. Chassis-related factors influencing producti vity include whether chassis are stored on the terminal or off the terminal, whether the terminal operatio n is wheeled or grounded, inspection, an d over-the-road repair, among others. Not surprisingly, from a motor carrier perspective, the âgrayâ chassis pools (not specific to individu al ocean carriers) were perce ived as a big efficiency improvement over the traditional ocean carri er-controlled model due to the flexibility to drop off chassis at more terminals covered by the pool, as well as the big decrease in chassis flips caused by terminal mismatches of containers and chassis. Nevertheless, approximately 85% of the motor carriers surveyed are sti ll unsure of their chassis strategies or are passively awaiting the market to sort it out. Concerns with moto r carrier chassis supply are mostly operational and include the need for chassis flips at wheeled terminal s, equipment age, quality and maintenanc e, capital and operat ing costs associated with chassis, and chassis storage requirements and associated costs. Terminal Operators: Apart from the cases of terminal -operated chassis pools, te rminal operators are less inclined to be concerned with chassis utilization rates so mu ch as cost control and supply liquidity. Terminals have an interest in keeping chassis managed properly to avoid shortages or delays that hurt a ll users, but all the while never having too great a surplus o f chassis occupying limited real estate. Most terminal operator s consulted prefer the motor ca rrier owned-operated model,
Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 xv | xv which would effectively move chassis storage off-terminal. None of those surveyed be lieved a significant transition to chassis supplied by motor carriers was realistic in the short term, as the barriers to wholesal e change are too numerous and too high t o undo the current chassis structure. These factors have been desc ribed previously, but include the many challenges in the transfer of assets from ocean to motor carr iers (capital, storage facilities, maintena nce, and administration), the conversion from wheeled to grounded terminal operations, commercial free time, and drop and hook delivery logistics. Source: Prime Focus LLC. Implications for Public Policy and Planning Organizations According to their different authorities, public agencies ar e responsible for building and maintaining the intermodal connections to state and interstate highway networks. They have responsibility for land use, zoning, and environmental impediments as well as for responding to lo cal concerns about congestion, road repair, and safety. Federal agencies have far- reaching regulatory control over public sa fety and the use of the nationâs highways. However from an operational pers pective, public agencies have limited direct influence over how chassis supply models will evolveâthis will largely be determined commercially among supply chain actors. Nevertheless, the implications are of conseq uence to public policy and planning or ganizations. The implications of evolving chassis models could include the potential fo r increased truck movements on roads to reposition, pick up, or drop off chassis, greater pressures on intermodal connector s, and increased land-footprint requirements for storage, among other issues. Other potential impacts within the purview of the public transportation over sight community are a host of externalities, including road congestion, pollution, road safety issues, and land-use challenges. A number of chassis supply scenarios could le ad to increased truck moves, either bobt ail moves (tractor without chassis), or bare chassis moves (chassis without container) . Chassis storage practices, in particular, could influence truck moves and relat ed land-use implications. Conventionally in the U.S., chassis have, for the most part, been stored at the terminal sites. Certain chassis supply models do involve, or could lead to, increase d off-terminal storage, which could impose new or changed pressures on land use both on and off terminal sites.
xvi NCFRP Report 20 | Guidebook for Assessing Evolving Int ernational Container Chassis Supply Models | xvi Public agencies will have different approach es to handling chassis depending on the nature of their involvement and the number of chassis in their respective regions. Since the transitio n to new chassis models could af fect regional traffic flows a nd land use, public officials and planning or ganizations may benefit from the following: ⢠Developing an inventory of chassis support facilities, equipment depots, and truc k parking needs and facilities within their region and keeping trac k of related traffic flows. ⢠Identifying how changes in the chassis models will affect truck traffic volume and congestion impacts on local roads and regional intermodal connectors. ⢠Reviewing land-use and zoning plans, particularly around intermodal terminals to address or mitigate any emerging issues resulting from changes in chassis supply practices. ⢠Engaging with public- and private-sector chassis stakeholder s, including port authorities, to stay informed of prevalent models in their region and of wh ich organizations are influencing change. ⢠Encouraging private-sector participation in public planni ng efforts, particularly with respect to the mitigation of negative externalities such as congestion. In short, public agencies and planning agencies should stay informed of any chassis-related developments in their respective regions, as chassis supply markets are bound to continue to change in the short/medium term. Conclusions The U.S. ocean container chassis supply market, which has differed from other regions around the world, is in a state of flux. As ocean carriers seek to exit the chassis supply business and the U.S. chassis enviro nment continues to evolve, the emerging question is: What will be the future form(s) of chassis supply in the U.S., and what are the im plications for chassis supply stakeholders? The answer to this question is unclear but the future of chassis supply in the U.S. is likely to be guided in large part by the same factors that shaped its recent evolution: ⢠The structural chassis supply context: Established BCO logistics practices, including the drop and hook chassis operations, chassis pool arrangements, and wheeled terminal operations are some of the factors that preclude a rapid and wholesale change to chassis supply and management practices. ⢠The heterogeneous nature of the chassis supply landscape: Terminal operators, mo tor carriers, and other stakeholder groups such as unions have a geographic jurisdicti on, and, as such, chassis model transitions will likely be forged in a manner that accommodates the commercial and operating practices of regional stakeholders. ⢠Multiple and often unaligned int erests of chassis supply stakeholders: Ocean carriers, motor carriers, BCOs, terminal operators, chassis leasing com panies, unions, and public policy organ izations, among others are all key stakeholders in chassis supply. Their indiv idual perspectives, interests, and perf ormance goals with respect to chassis supply differ, as do their perceived advantages and disadvantages of alternative chassis supply models. Because each stakeholder group is sign ificantly invested in the current ch assis supply modelsâeither financially or operationallyâno one faction will likely control or singlehanded ly influence the direction of the chassis supply transition in the U.S. Rather, the future evolution of U. S. chassis supply will be the result of th e interplay of various stakeholder interes ts, influences, and regional differences within the structural ch assis supply context that shaped the nationâs current chassis supp ly landscape.
Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 xvii | xvii Nevertheless, on the basis of co nsultations with stakeholders across the ocean container supply chains, chassis models in the U.S. will likely continue to evolve toward pooling in the short- to medium-term as stakeholders generally agree the supply from pools in one form or another is more efficient. The perc eived benefit of pooling includes increased chassis management efficiencies, utilization and adequacy/balan ce of supply, decreased risks of chassis-c aused service failure s and related delays to BCO cargo transportation plans, and a reduced on-terminal chas sis storage footprint relative to the traditional individual ocea n container chassis supply model. Whatever the outcome and the pace of the transition, public po licy and planning organizations should be aware of the evolving chassis supply models in the U.S. given potential im plications for the public. In particula r, increased truck moves/miles and land-use initiatives coul d result by moving chassis storage away from marine and rail terminals, where the majority of the ocean container chassis are st aged today. Changes in chassis storage pa tterns may have a significant impact on local congestion, traffic volume, and land use. Time will tell what the longer-term implications of the evolvi ng U.S. chassis supply environment will be. In the meantime, it would be in the interest of all chassis supp ly stakeholders to understa nd the broad implications of the evolving chassis supply environmentâboth from the perspectives of their own stakehold er group as well as that of othersâand the implications for broader U.S. ocean container supply chains. This Guidebook is inte nded to go some way in doing this, although it is recognized that more research will be required, and at the regional level, as chassis models evolve to promote a fuller understanding of the resulting implications for U.S. ocean container supply chains and public interest. âIt may take 10 years to sort it out. I support all arrangements, but whoever does it most efficiently will eventually take ov er, and the market will settle and we will make do in the meantime.â â Ocean carrier executive
