Intermodal Chassis Provisioning and Supply Chain Efficiency: Equipment Availability, Choice, and Quality (2024)
Chapter: Executive Summary
Executive Summary
This study by an independent committee was conducted at the request of Congress and sponsored by the Federal Maritime Commission (FMC) to review existing approaches in the United States for provisioning intermodal chassis for the drayage or short-distance movement of shipping containers. Most general cargo in international commerce moves in standardized, 20-ft, 40-ft, or 45-ft steel box containers. Designed and sized specifically for transporting these containers on the highways, chassis are truck trailers consisting of a frame, two or three axles, and mechanisms for locking the container in place. Chassis are used by motor carriers to transport imported containers arriving at seaports and rail terminals to their final destinations. They are also used to transport containers used for exporting containerized cargo from their origins to railroad terminals and international gateway ports.
Container shipping was brought to a near standstill following the onset of the COVID-19 pandemic in 2020, but the demand for containerized cargo surged later that year and during 2021 and 2022 as the economy rebounded. Additional logistics capacity could not be brought online fast enough to meet the increased demand, and chassis were among the many transportation assets in short supply and out of position.
The pandemic put an unprecedent strain on the supply chain infrastructure that cast a spotlight on some of its weaknesses. In the case of chassis, however, certain features of how this equipment is provisioned had been a subject of concern and frustration for many years prior to this crisis, especially among the motor carriers that provide drayage services. A
longstanding feature of the provisioning process in the United States is that most of the chassis used for container drayage are supplied by intermodal equipment providers (IEPs) for short-term use rather than by motor carriers themselves, as common elsewhere in the world. Sometimes these chassis are provided directly by the IEPs, and sometimes they are provided by managers of pooled fleets of equipment contributed by multiple IEPs. Motor carriers, whose drivers cannot work efficiently when they must search for satisfactory chassis, have long complained about the inconsistent availability and quality of this tendered equipment along with restrictions by ocean carriers on the chassis that can be used for individual drayage moves. Furthermore, because the maintenance of roadworthy chassis is not the responsibility of the motor carriers operating the equipment, the Federal Motor Carrier Safety Administration (FMCSA) had taken notice more than a decade ago and introduced regulations specifically intended to compel IEPs and pool managers to establish systematic repair and maintenance programs. These rules were accompanied by processes for verifying and enforcing compliance through FMCSA “roadability reviews.”
This report synthesizes the views on chassis provisioning practices offered by dozens of consulted participants in the intermodal container shipping enterprise, including ocean carriers, railroads, motor carriers, IEPs, pool managers, and shippers of containerized cargo, known as beneficial cargo owners (BCOs). The purpose of the consultations was to inform the study committee’s identification of key advantages and disadvantages of alternative approaches for chassis provisioning and fleet management when taking into account different drayage market circumstance and conditions, such as port size, geography, traffic activity, and operational complexity. The goal was to evaluate whether the approaches have aligned incentives with regard to equipment ownership, management, maintenance, and provisioning that promote supply chain efficiencies.
The fulfillment of all elements of the study charge proved complicated by the diversity of practices used for chassis provisioning, the heterogeneity of the country’s drayage markets, and the inherent problem of not knowing the details of the private contractual agreements among transportation service providers and BCOs that underly many of the provisioning practices. However, one fundamental difference observed among the alternative practices used for chassis provisioning is the degree to which incentives exist for the vigilant repair and maintenance of equipment and investment in new and advanced chassis features. While motor carriers, IEPs, and pool managers may each have incentives to maintain their equipment in reliable and safe working order, the nature of these incentives differs fundamentally, with the operating motor carrier having the most direct and unambiguous incentives because they must operate the equipment on the road.
Data analysis presented in this report suggests that longstanding concerns about non-motor carrier–controlled chassis and motor carrier–controlled chassis not being maintained to the same standard remain valid. The committee’s analysis of the FMCSA roadside inspection records shows a consistent pattern of poorer performance by the chassis owned by non-motor carriers than chassis owned by motor carriers. This analysis comports with the complaints that the committee heard from motor carriers about inconsistent equipment quality and the observations made by IEPs themselves about limited incentives to contribute higher-quality chassis to the pooled fleets. Furthermore, the analysis suggests that the protocols in place for drivers to self-report chassis deficiencies when picking up and returning chassis may not be working as intended, and/or the cameras and other technologies deployed at terminal and depot gates may not be adequate for detecting all serious problems. The resultant inconsistent quality in the chassis available for container drayage services not only negatively affects the efficiency of the supply chain but could also create road hazards.
The gap in inspection performance appears to be about the same today as it was nearly 15 years ago when FMCSA introduced the new safety requirements for intermodal chassis. This finding suggests that more thorough and regular monitoring of the inspection records is warranted and that FMCSA’s compliance verification and enforcement mechanisms may need to be revisited and informed by a deeper understanding of chassis provisioning practices.
While ensuring the safety of chassis used on the nation’s roadways is an imperative, equipment availability and impacts on the operational fluidity of drayage services are also an important factor for the efficient functioning of the container shipping industry that serves all manner of businesses involved in exporting and importing in the United States. The committee was asked to evaluate the incentives that chassis provisioning practices create for employing efficiency-enhancing communications, information sharing, and knowledge management practices. Although it was not able to detect differences in these incentives among individual chassis provisioning methods, the committee feels strongly that the functioning of the chassis supply system specifically, and the container shipping enterprise more generally, would be strengthened by improvements in the visibility and forecasting of container traffic activity and the communication of information across the entire supply chain.
Inasmuch as chassis and drayage services are the most downstream and dispersed elements of the supply chain for containerized cargo imports, they are the most susceptible to being neglected or underprioritized on the information pathway, but are no less important. Key to that efficient functioning, both for chassis and drayage services specifically and for the container shipping enterprise generally, is providers of transportation services—up and
down the supply chain—having access to timely and sufficiently detailed information on container volumes and movements.
The committee learned about several public- and private-sector initiatives underway, and which are noted in this report, to expand and strengthen the sharing of information among the many participants in the intermodal container shipping industry and across the international supply chain more generally. Significantly, in April 2023, FMC Commissioner Bentzel recommended the establishment of the Maritime Transportation Data System (MTDS), which would harmonize available data so that information on international shipping container traffic activity would be accessible online. To further this initiative, FMC is seeking comments about the data elements that should be included and communicated to promote the interest of supply chain efficiency, presumably including efficiencies in the provision of container chassis and drayage services.
RECOMMENDATIONS
FMC’s recognition of the importance of, and intentions to promote, information sharing for the efficient functioning of the international supply chain are welcome developments. FMC is well positioned to play a lead role in spurring such efforts and ensuring that the efficiency benefits extend across the full supply chain to include container drayage. FMC’s interest in the efficiency of the supply chain must also be attuned to its individual elements and to phenomena detrimental to their efficient functioning. Chassis quality assurance is a longstanding and chronic problem, not only for supply chain efficiency but for public safety on the highways. Hence, FMC’s efforts to address the chassis quality problem should be accompanied by a commitment to work with FMCSA to assure chassis roadworthiness for highway safety.
For the purposes of furthering these public interests in a reliable, efficient, and safe functioning supply chain, the committee recommends the following:
Recommendation 1: The Federal Maritime Commission should assume a lead role in promoting, and coordinating as necessary with the U.S. Department of Transportation, the sharing of data on intermodal shipping container traffic across all elements of the supply chain, including its beginning and end points that require efficient drayage services. The commission should ensure that any such system, such as the proposed Maritime Transportation Data System, helps create a process for the capture and timely provision of container traffic information up and
down the supply chain to include the providers of drayage services and equipment.1
Recommendation 2: The Federal Maritime Commission (FMC) should consult regularly with the Federal Motor Carrier Safety Administration (FMCSA) about the quality, condition, and roadworthiness of intermodal chassis. Ongoing monitoring of chassis inspection performance and compliance with standards is warranted and would benefit from FMCSA having a strong understanding of the chassis provisioning system and how its segments operate. FMC should help FMCSA gain this understanding and regularly convey the feedback it receives about chassis condition, including complaints from motor carriers.
Recommendation 3: With the Federal Maritime Commission’s support and guidance, the Federal Motor Carrier Safety Administration should undertake a comprehensive analysis of its roadside inspection records to determine whether the intermodal chassis on the road are meeting federal safety standards at acceptable rates and whether there is variability in compliance among equipment providers, including regional variability.
Recommendation 4: Informed by its roadside inspection records, and with monitoring and due consideration of complaints raised by the motor carriers and others about chassis quality, the Federal Motor Carrier Safety Administration (FMCSA) should reassess the suitability of its current intermodal equipment safety monitoring and oversight processes. FMCSA may want to consider whether its targeted roadability reviews are sufficient or would benefit from more comprehensive company safety reviews and fitness ratings. Those reviews and ratings, along with the results of roadside inspections, could be used by the Federal Maritime Commission to monitor the quality of the chassis fleet and enable users of chassis to make better decisions about equipment sourcing with safety in mind.
With regard to the study’s remit to evaluate whether alternative chassis provisioning practices lead to supply chain efficiencies, the committee found that many features of the provisioning system that are viewed as disadvantages by some transportation service providers are viewed as advantages by others. Significantly, the consultations caused the committee to realize that even focused efforts to identify best practices for specific market
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1 This text was changed after release of the prepublication version of the report to clarify that the Maritime Transportation Data System is a proposed initiative.
scenarios would be problematic because of the heterogeneity of drayage markets. An important takeaway is that chassis provisioning practices are varied not only because of the diverse conditions that exist among drayage markets but also because of the diversity in BCO interests and preferences. Another related insight is that the efficiency and effectiveness of the chassis provisioning system is best considered from the standpoint of the customer BCOs and with respect to the functioning of the larger container shipping enterprise that serves BCOs and, by extension, the public. Not to be neglected, however, are the external impacts that the system can have on the public, such as by introducing risks to public safety and environmental harm through unnecessary motor vehicle traffic and unsafe equipment operating on the roads.
Considering these insights, the committee believes that policy interventions that seek to fine-tune the functioning and efficiency of the chassis provisioning system would be difficult to design in a manner that would be responsive to the circumstances of the country’s highly varied drayage markets and to the changing dynamics of the marketplace. There is data analysis in this report, for instance, suggesting that motor carrier–controlled chassis are accounting for an increasing share of container drayage moves, but this pattern may differ across individual markets. Designing policy interventions that are robust and adaptive to conditions that are varying by location and changing over time is a perennial challenge but especially challenging in this instance and may not be a practical endeavor. Instead, it is the committee’s conclusion that increased information sharing and analyses, and better enforcement of current regulations, are the best next steps to ensure the long-term functioning of the chassis market.
