Guidebook for Assessing Evolving International Container Chassis Supply Models (2012)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 | 75 Appendix A: Alternative Chassis Supply Model Case Studies A.1 Co-op Chassis Pool: Chicago Ohio Valley Consolidated Chassis Pool, LLC (COCP) CCM cooperative chassis pool serving Great er Chica go and Ohio Valley area Background: Consolidated Chassis Management LLC Consolidated Chassis Management LLC (CCM) operates nearly one in four marine chassis within its pools, making it the largest co-op chassis pool operator in the U.S. CCM operates six cooperative (c o-op) chassis pools th roughout the U. S., covering a significant amount of the intermodal geography. Each pool serves a majority of the OCEMA carriers, though in each area some shipping lines have chosen a different model. Each pool also ha s non-OCEMA members, either as chassis contributors in a UPC capacity, or as chassis users. The chart below provides a summary statistical profile of the CCM pools. Pool Na me Chassis Count List of Cities Total Locations Served N umber of Members Num ber of Non-Ocean Carrier Members COCP 29,517 Chicago, Cincinnati, Cleveland, Columbus, Detroit, Georgetown, Grand Rapids, Indianapolis, Louisville, Marysville, Milwaukee, Peoria 88 13 2 DCCP 3,668 Denver, Salt Lake City 12 14 4 GCCP 28,590 Dallas, El Paso, Houston, Laredo, Mobile, New Orleans , San Antonio 63 13 2 MCCP 15,136 Huntsville, Memphis, Nashville 33 16 1 MWCP 9,653 Kansas City, Omaha, St. Louis 23 14 2 SACP 42,245 Atlanta, Birmingham, Charleston, Charlotte, Jacksonville, Savannah, Tampa, Wilm ington 58 21 2 CCM does not operate pools in the No rtheast, West Coast, and Norfolk, as alternative chassis pools had already been establishe d in those areas. Each individual CCM pool above is a limited liability company and is considered the intermodal equipment provider (IEP) of the chassis it operates. The basic governance, contractual and operational structure of the CCM co-op model i s exhibited below.

76 NCFRP Report 20 | Guidebook for Assessing Evolving International Container Chassis Supply Models | 76 Source: CCM CCM is overseen by an executive committee of OCEMA members, and has appointed a president to manage the business. While each pool has its own governance committee for rule implementation and enforcement, there are also on-site staff to execute supply, logistics, and maintenance and repair oversight. CCM has contractual hosting agreements with terminals in its pools that determine operating and storage rules, and contracts with third-party companies to perform maintenance and repair. Currently CCM operates five out of its six pools, and is planning to incorporate the last one into its own management structure this summer. Over 100 people are employed to manage the five CCM-managed pools. CCM has developed its own operating systems, through which it tracks chassis, updates movements, manages maintenance and performs accounting functions. CCM’s development and growth has likely altered the U.S. chassis model landscape for good, as ocean carriers, terminal operators and motor carriers have reported productivity and efficiency improvements through the chassis pool structure versus the individual ocean carrier management model. As co-op pools have matured and stakeholders become accustomed to it, CCM is facing the challenge of responding to the next chassis model evolution, transitioning chassis responsibility to other stakeholders, most notably motor carriers. The COCP LLC Pool, one of the largest in CCM, is described below. COCP Pool Brief Description: The COCP, established in 2009, is a CCM cooperative chassis pool, 96% contribution by 11 OCEMA carriers and the remaining contribution from a non-OCEMA carrier and a leasing company. COCP operates in Chicago, Columbus, Cleveland, Detroit, Louisville, Cincinnati, Indianapolis and Milwaukee, and is CCM’s largest inland chassis pool, comprised of nearly 80 rail ramps and depots. CCM Pool Model CCM Chassis Pool Corporate Functions CCM Chassis Pool, LLC Local Board Governance Terminal OperatorM&R Vendor Ocean Carrier Contributors Chassis Leasing Company Pool Users M&R Contract M&R Services Contributed Equipment Logistics M&R Use of Equipment Facility Use Contract and Terminal Rules Executive Management Accounting Data Cleansing UPC Contributed Equipment Equipment Lease

Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 | 77 Chass is Ownership Structure : The ocean carriers contribute owned and leased chassis, the percentages of which are no t readily available . One leasing company, acting as a UPC, contributes its own ch assis, whic h is approximately 3% of pool assets. Chassis Control Structure: The COCP controls the chassis and is responsible for supply, logistics and maintenance, and the pool is considered the intermodal equipment provider (IEP). Total Chassis Count : The COCP contains 8,086 x 20’, 20,777 x 40’, and 722 x 45’ chassis, which represents an estimated slightly less than half of marine chassis in the served region. Chassis Pool Manager: Currently TRAC Intermodal, whose contract expires June 2012, after which CCM will assume direct management . Number of Contributors: 12 ocean carriers and one leasing company as UPC. Number of Users: 19 total companies are pool users, seven of which are represented by TRAC Intermodal in their capacity as UPC. The vast majority of users are ocean carriers, but there are other transportation entities, such as a railroad, motor carr ier and a logistics company that are non-contributing users of the CCM pool through the UPC structure. Terminal Op erating De scription: The COCP operates at nearly 80 locations of about equal number of rail ramps and container yards (CYs); over 90% of the traffic moves through wheeled terminals, with the rest being rail “live lift”/grounded. Chassis are stored at all-wheeled ramps (and CYs), but no storage is allowed on any of the live-lift facilities. There are a hi gh number of container yards included in the COCP to accommodate the various ocean carriers’ container storage requirements in the eight city locations covered by the pool. Generally in CCM pools, once a ch assis arrives at its commercial destination, the usage clock is stopped (labeled “start/stop” in the chart below). However, in COCP, because there are many CYs that only serve a single COCP customer, ch assis usage continues even inside those single-customer CYs. At these CYs, usage may be transferred to another pool user if it uses the ch assis, and so those locations are known as “swap” destinations. All chassis are subject to gate inspections. In the COCP, nearly all the rail ramps inspect ch assis at the in-gate using automated gate systems (AGS), in which a gate clerk inspects the chassis from a photographic image inside the terminal housing structure. All of the CYs perform physical in-gate inspections of the chassis. Maintenance and repair are performed by third-party maintenance companies at the rail facilities, and most of the CYs perform their own M&R. There is a union repair company servicing a single location in the COCP. Local/Intermodal Mix : As an inland chassis pool, all cargo by definition is intermodal. Cost Structure : COCP in cludes the fo llowing cost categories in their expense allocation to members: M& R Repositioning Administration General Operations – includes lifts/handling

78 NCFRP Report 20 | Guidebook for Assessing Evolving International Container Chassis Supply Models | 78 A.2 Neutral Pool Chassis Supply Model: Bay Area Chassis Pool (BACP) Neutral pool in Oakland, CA Brief Description: Established in 2010, the BACP is open to ocean carriers, motor carriers and other chassis users. The pool covers three marine terminals (Total Terminal Inc., the Oakland International Container Terminal, and Ports America Outer Harbor), the Union Pacific RR and two off-terminal container yards. Chassis Ownership Structure: Flexi-Van owns and contributes 100% of the chassis in the BACP. Chassis Control Structure: Flexi-Van controls 100% of the chassis, and is responsible for supply, maintenance and management; it is the designated intermodal equipment provider (IEP). Total Chassis Count: 4,800 marine two-axle chassis: 1,600 x 20’, 3,300 x 40’, 150 x 45’. Chassis Pool Manager: Flexi-Van. Number of Contributors: One (all Flexi-Van assets). Number of Users (defined as a paying entity): The BACP has 10 ocean carriers and 244 motor carriers as direct customers. Terminal Operating Description: Wheeled/Grounded Chassis Gate Inspection M&R/Union Chassis Storage TTI Mixed; No inspections PCMC/ ILWU On terminal; fixed number OICT Grounded No inspections SSA/ IAM On terminal, dedicated acreage; fixed number PA Outer Harbor Wheeled – 60-70% about 210 acres No inspections PCMC/ILWU On terminal, fixed number UP Wheeled No chassis inspection IMS/non-union On terminal, fixed number BN live lift Wheeled for BN pool, managed by FV (BN is only start-stop; about 500 units); but not the BACP In-gate on chassis Eagle/union N/A 2 Container Yards Grounded Full in-gate inspections CGI United intermodal On-terminal storage allocation

Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 | 79 Local/Intermodal Mix: Local: 65% Intermodal: 35% Carrier vs. Merchant Haulage: Estimated to be no different than other regions. Insurance Coverage: Liability covered under Flexi-Van corporate insurance policy. Cost Structure: The BACP includes the following costs in its rate: Cost of Chassis Asset M&R Repositioning – included for MCs, but not for OCs, which pay a separate repositioning charge Administration System Insurance Relationship with Ocean Carriers Exiting Chassis: Half the ocean carriers in the BACP have started the transition to Flexi- Van directly invoicing motor carriers for select chassis moves. Some ocean carriers are requiring the motor carriers to pay for all chassis moves; other ocean carriers are absorbing the chassis cost on carrier haulage. There continue to be a significant number of shipper exceptions to the stated ocean carrier chassis policies.

80 | 80 A.3 Terminal Chassis Pool: SSA Pacific Northwest Pool Terminal Chassis Pool, Seattle, WA Brief Description: SSA, one of the largest U.S. marine terminal companies, operates a terminal-controlled chassis pool at its two Seattle marine terminals (known as T-18 and T-30). SSA provides the assets, manages the chassis and performs the maintenance. Ocean carriers have the opportunity to co ntribute their assets to the SSA pool. SSA also provides billing service s for ocean carriers that are sub-leasing chassis to motor carriers through the SSA pool. Chassis Ownership Structure: Ocean carriers: 10% Leasing companies: 65% SSA: 25% SSA leases the majority of the chassis in their pool, but has recently pu rchased chassis from an ocean carrier that is in the process of exiting chassis ownership. For the purposes of this case study, the chassis for the two ocean carriers that contrib u te assets to the SSA pool are considered ocean carrier owned. Chassis Control Structure: SSA: 100 % SSA is fully responsible for supply, management and maintenance and is the desi gnated intermodal equipment provider (IEP). Total Chassis Count: 2,100 Chassis Pool Manager: SSA Nu mber of Contributors: Four – two ocean carriers, one leasing company and SSA Number of Users: Seven ocean carriers and 125 motor carriers are direct paying customers of the SSA pool. Terminal Operating Description: Wheeled/Grounded Chassis Gate Inspection M& R Chassis Storage SSA T-18 Grounded; wheeled if adequate space Out-gate only SSA/IA M 3 acres on terminal SSA T-30 Grounde d Out-gate only SSA/ IAM 3 acres on terminal UP Live-lift N/A N/A N/A BN Live-lift N/A N/A N/A Local/Intermodal Mix: Within the SSA terminals, approximately 55% of cargo is moved via rail, and 45% is considered “local”. On-terminal rail is used extensively at Terminal 18, without us ing pool chassis, whereas Terminal 30 rail cargo transi ts to the UP and BN facilities all by pool chassis. Drop and Hook vs. Live Unload: Similar to other West Coast regions – majority is drop and hook. Carrier vs. Merchant Haulage: Estimated to be no different than other regions. Insurance Coverage: By law, motor carriers must have at least $1 million. As IEP, SSA has $30 million in coverage and requires same from the ocean carriers that still get invoiced for chassis usage. NCFRP Report 20 | Guidebook for Assessing Evolving International Container Chassis Supply Models

Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 | 81 Cost Structure: SSA includes the following costs in its rate: Chassis asset M&R Repositioning Administration System SSA charges for each chassis transaction, so a single chassis making multiple out-gates in one day will be charged for each out- gate. Relationship with Ocean Carriers Exiting Chassis: Three ocean carriers have implemented programs within the SSA neutral pool to have SSA invoice truckers based on business rules established by the individual ocean carrier. SSA is managing the contract, invoicing and collecting process for two lines, while the third line is using an independent company.

82 NCFRP Report 20 | Guidebook for Assessing Evolving International Container Chassis Supply Models | 82 A.4 Co-op Terminal Chassis Pool: Hampton Roads Chassis Pool (HRCP) II Terminal-operated cooperative pool in Norfolk, VA Brief Description: HRCP II LLC was established in 2003 as the nation’s first port-wide cooperative chassis pool, connecting all the marine terminals and rail facilities in the Norfolk area. Under this cooperative arrangement, the ocean carriers contribute chassis to support their cargo requirements, and a third party manages the macro supply and maintenance. HRCP II is owned by Virginia International Terminals (VIT), the terminal operator of the Hampton Roads ports of Norfolk International Terminal (NIT), APM Terminals Portsmouth (APMT), and Newport News Marine Terminal (NNMT). The pool covers all VIT-operated terminals, as well as both Norfolk Southern and CSX Railroads, and is the only chassis pool operated in the geographic area. HRCP II has an oversight board to establish business rules, comprised of the ocean carriers and one member of VIT. For federal roadability purposes, the pool is considered the intermodal equipment provider. Chassis Ownership Structure (estimated, data gathered from surveys): Ocean carriers: 60% Leasing companies: 40% Chassis Control Structure: HRCP II: 100% The pool is responsible to ensure adequate supply and maintenance of chassis to service the ports and rails. Total Chassis Count: 11,400 Chassis Pool Manager: Virginia Intermodal Management, a subsidiary of VIT. (14 employees) Number of Contributors: 22 ocean carriers Number of Users (defined as a paying entity): 24 ocean carriers Terminal Operating Description: Wheeled/Grounded Chassis Gate Inspection M&R Chassis Storage Norfolk International Terminal Grounded Manual 3 vendors, all union Pool runs at 90% – storage can accommodate 1,000 assets APMT Grounded Automated 1 vendor, all union 400 assets PCY Grounded Manual 1 vendor, all union Storage up to 2,000 assets Norfolk Southern RR Wheeled Manual Non-union 100 assets CSX RR Wheeled Manual Non-union 75 assets Local/Intermodal Mix: Intermodal: 30% Local Truck: 70% Carrier vs. Merchant Haulage: Estimated to be no different than other regions.

Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 | 83 In surance Coverage: Pool possesses $30 million insurance; contributors must have $30 million insurance, M& R vendors also have $30 million and VIM has an additional $10 million. Cost Structure: HRCP II includes the following costs in its rate (per use-day): Repositioning – variable M& R – $4.29 Administration – $0.44 Liability and Insurance – $0.01 Relationship with Ocean Carriers Exiting Chassis: H RCP II’s intent is to offer the lines the choice of doing business as it is conducted today as well as offering an option for the lines that wish to divest themselves from the asset. For lines opting out , VPA/VIT/APMT will be the provider of chassis as well. All operational efficiencies gained will remain intact. The only differen ce is to whom the invoice will go for those members that are getting out of the chassis business. In essence the fleet will remain gray.

84 NCFRP Report 20 | Guidebook for Assessing Evolving International Container Chassis Supply Models | 84 A.5 Motor Carrier Chassis Supply Model: South Florida Region Brief Description: The South Florida region comprising the ports of Miami, Port Everglades and the FEC Rail terminals is the largest concentration of motor carrier-operated chassis in the U.S. However, there are several chassis models within the South Florida region: In addition to motor carriers controlling the majority of the chassis, some ocean carriers own and operate chassis, DCLI provides chassis to motor carriers on a daily rental basis, and the FEC operates a small terminal chassis pool. Within the FEC Miami facility, ocean carriers and even motor carriers may supply chassis for their own use. Chassis Ownership Structure (estimated, data gathered from surveys): Ocean carriers: 15% Leasing companies: 60% Motor carriers: 25% With the DCLI fleet now categorized under “leasing company” control, those entities have the largest ownership share in the South Florida chassis market, though their daily model does not. Local leasing companies (as opposed to the national brands of TRAC and Flexi-Van) have a large presence in the South Florida market, unique in the U.S. They serve the multitude of small drayage operators with flexible chassis leasing options that sometimes include maintenance. There are approximately a half dozen large motor carriers, each owning more than 200 chassis. These motor carriers also own facilities for cargo and equipment storage, and supply their own maintenance on chassis. Chassis Control Structure: Motor Carriers: 53% Ocean carriers: 20% Leasing Companies (DCLI): 25% Railroad: 2% The entity controlling the chassis is responsible for the asset supply and maintenance, also known as the intermodal equipment provider (IEP). The control demographic changes fairly significantly from ownership, as ocean carriers and motor carriers do operate chassis as lessees. DCLI is an IEP, and with its new classification as a leasing company is now designated as such under chassis control, though the fee per day of use model does not presuppose long-term relationships. The only chassis pool in South Florida is domiciled at the FEC Railway Miami, which are leased assets managed and controlled by the FEC. Total Chassis Count: 7,000 (approximate) Chassis Pool Manager: N/A, except for FEC’s 125-unit chassis pool, managed by FEC. Number of Contributors: Less than 10 ocean carriers; an indeterminate number of leasing companies and motor carriers. Number of Users: N/A, except for FEC pool, which has about a half-dozen ocean carriers. Terminal Operating Description: Miami has three marine terminals: POMTOC, South Florida Container Terminal, and Seaboard Marine. All three are grounded facilities; in 2010 the combined port TEU liftings were approximately 850,000 TEU. Port Everglades has five major container terminals: Port Everglades Terminals, Florida International Terminals, and terminals affiliated with liner businesses Crowley, Dole and Chiquita. The liner-operated terminals are wheeled; Crowley’s operation is a mix of ro-ro and lift on-lift off, while Dole and Chiquita operate wheeled terminals for their refrigerated container cargo. Port Everglades and FIT are grounded. In 2010 Port Everglades handled approximately 800,000 TEU. The Florida East Coast Railway operates two wheeled rail terminals, one in Miami and one in Fort Lauderdale. Chassis Storage: Grounded marine terminals store very few chassis on terminal, while wheeled facilities at the ports and railroad do. Motor carriers that operate chassis possess depots to store chassis; for smaller truckers the local chassis leasing companies provide chassis storage. Drop and Hook vs. Live Unload: It is estimated through surveys that 70% of cargo is live loaded/unloaded. The remaining drop and hook is predominately delivered to facilities located in very close proximity to the ports (within 20 miles).

Guidebook for Assessing Evolving International Container Chassis Supply Models | NCFRP Report 20 | 85 Carrier vs. Merchant Haulage : Estimated to be no different than ot her regions. In surance Coverage: Ocean carriers do not publish their third-party liabilit y coverage. By FMCS A, motor ca rriers must have at least $750,000 for non-hazardous cargo. Maintenance and Repair: Bo th unionized and non-unionized labor is used; marine terminals use union labor, as do some motor ca rriers that operate container/chassis yar ds. Other motor carriers and chassis leasing companies use non-union labor to maintain chassis. Cost Structure: Ocean carrier wheels: Provided free of charge. DCLI: $13 -15/day includes asset, M&R, and insurance; a single chassis may be used multiple times and be charged one day’s rental. Leasing company: market triple-net rate, depending on age, quality, and term of lease. Motor carrier wheels: Various, depending on asset and M&R expenses. Rela ti onship with Ocean Ca rriers Exiting Chassis: Most of the ocean carriers that service South Florida do not operate chassis. Maersk line had been supplying via DCLI, now divested, and now ro-ro operators, and specialty cargo (refrigerated) ocean carriers are the only ones providing chassis of significant qu antities. Motor carriers have a tradition of providing cha s sis, and from an economic perspective, the chassis cost is bundled into the dray rate. The operational conditions in South Florida are well-suited for motor carrier chassi s control. The marine terminals, which handle the vast majority of marine containers, are grounded, and the majority of the deliveries are live unload; the combination of these factors enables the chassis to stay connected to the truck and allow motor carriers full control over the asset.

Abbreviations and acronyms used without definitions in TRB publications: AAAE American Association of Airport Executives AASHO American Association of State Highway Officials AASHTO American Association of State Highway and Transportation Officials ACI–NA Airports Council International–North America ACRP Airport Cooperative Research Program ADA Americans with Disabilities Act APTA American Public Transportation Association ASCE American Society of Civil Engineers ASME American Society of Mechanical Engineers ASTM American Society for Testing and Materials ATA American Trucking Associations CTAA Community Transportation Association of America CTBSSP Commercial Truck and Bus Safety Synthesis Program DHS Department of Homeland Security DOE Department of Energy EPA Environmental Protection Agency FAA Federal Aviation Administration FHWA Federal Highway Administration FMCSA Federal Motor Carrier Safety Administration FRA Federal Railroad Administration FTA Federal Transit Administration HMCRP Hazardous Materials Cooperative Research Program IEEE Institute of Electrical and Electronics Engineers ISTEA Intermodal Surface Transportation Efficiency Act of 1991 ITE Institute of Transportation Engineers NASA National Aeronautics and Space Administration NASAO National Association of State Aviation Officials NCFRP National Cooperative Freight Research Program NCHRP National Cooperative Highway Research Program NHTSA National Highway Traffic Safety Administration NTSB National Transportation Safety Board PHMSA Pipeline and Hazardous Materials Safety Administration RITA Research and Innovative Technology Administration SAE Society of Automotive Engineers SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (2005) TCRP Transit Cooperative Research Program TEA-21 Transportation Equity Act for the 21st Century (1998) TRB Transportation Research Board TSA Transportation Security Administration U.S.DOT United States Department of Transportation