Intermodal Chassis Provisioning and Supply Chain Efficiency: Equipment Availability, Choice, and Quality (2024)
Chapter: 2 Background on the International Supply Chain and the Role of Chassis
2
Background on the International Supply Chain and the Role of Chassis
The intermodal transportation system in the United States is critical to the nation’s economy and consists of a complex and heterogeneous network of private and public means and transportation infrastructure that include ports, terminals, railways, and highways. This chapter provides background on the ocean container shipping enterprise in the United States, how a container moves from its place of origin to its destination, and the role chassis play in this movement. The chapter begins by reviewing how and where chassis are used, before discussing the evolution of chassis provisioning system in the United States and how this system differs from systems in Europe and other regions in the world. The chapter ends with a brief discussion of the pandemic’s impact on the supply chain and chassis provisioning.
SHIPPING AND CONTAINERIZATION
Ocean container shipping has become critical to international trade and the functioning of the global supply chain. Introduced during the mid-1950s by Malcolm McLean, the standardized shipping container revolutionized the marine freight industry by introducing the means for efficient loading, unloading, and movement of goods across multiple transport modes, which greatly improved the efficiency of freight handling and distribution.1 The use of shipping containers greatly reduced the amount of labor required to
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1 Rodrigue, J.-P. 2024. The Geography of Transport Systems, 6th ed. New York: Routledge. https://transportgeography.org/contents/chapter5/maritime-transportation/evolution-containerships-classes.
load and unload freight, reducing shipping costs significantly. This benefit became especially apparent when containerized cargo had to move from ports to railroads to highways.2 Ocean carriers at the time decided to support truck operations by investing in their own fleets of chassis and incorporating chassis provisioning into their business model as part of this developing form of intermodalism.3 Because ocean carriers owned the chassis, the cost of the chassis was included in the cost of the ocean freight charged to customers when domestic trucking companies moved containers to or from their container terminals. Moving the container on a chassis is commonly referred to as an intermodal drayage move, or drayage. Figure 2-1 shows the steps in the movement of intermodal containers from warehouse door to warehouse door.
As containerization spread to the rest of the world in the late 1960s and early 1970s, its benefits had already been demonstrated in the United States and other early-adopting markets. As a result, it was not necessary for ocean carriers to invest in chassis outside of the United States, as motor carriers invested in the equipment themselves. For this reason, ocean-carrier ownership of chassis remained a unique characteristic of containerization in the United States, where this provisioning model became standard practice.
Containers used for international trade come in standardized sizes, typically 20 or 40 ft in length, and are made of steel or aluminum that serves as a protective shell for the cargo inside.4 Containerized freight volumes are now measured in 20-ft equivalent units (TEUs) and 40-ft equivalent units (FEUs). During the last 50 years, global container throughput has grown from less than 10 million TEUs in 19705 to nearly 800 million TEUs in 2020.6
The key stakeholders in the container shipping enterprise are listed in Box 2-1.
CONTAINER AND CHASSIS BASICS
The chassis market in the United States exists to support container movements and thus support trade and commercial flows. The demand for
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2 Ibid.
3 See Levinson, M. 2006. The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton, NJ: Princeton University Press; and Transportation Research Board of the National Academies. 2012. Guidebook for Assessing Evolving International Container Chassis Supply Models. Washington, DC: The National Academies Press. https://doi.org/10.17226/22682.
4 45-foot containers also exist but are less common.
5 Ducruet, C., and T. Notteboom. 2012. The worldwide maritime network of container shipping: Spatial structure and regional dynamics. GaWC Research Bulletin.
6 Data from https://unctadstat.unctad.org/datacentre.
SOURCE: Adapted from GAO-23-106072.
BOX 2-1
Key Stakeholders in the Intermodal Transportation Chain
Ocean carriers are shipping companies that provide maritime transportation services for the shipment of goods and materials by sea. These carriers, also known as steamship lines or vessel operating common carriers, are often multinational corporations that own or charter a fleet of ships and contract with businesses (or shippers) to transport goods in intermodal containers on regular routes and schedules for an established rate or price. Carriers can also operate marine or container terminals through subsidiaries and arrange with other providers to transport containers inland to final destinations.
The beneficial cargo owner (BCO), the importer, exporter, consignee, buyer, shipper, supplier, or vendor, is the ultimate owner in the shipment in the container. The BCO books the shipments either directly or through the services of a third-party provider and takes possession of its own imported goods at a point of destination.
Non-vessel operating common carriers (NVOCCs) are ocean carriers that do not own or operate their own vessels. An NVOCC leases cargo space from an ocean carrier and then sells this space to customers, acting as a middleman between the ocean carrier and cargo owners.
Freight forwarders are third-party companies that arrange the movement of intermodal shipments or provide other transportation services on behalf of the shipper or BCO but do not own the equipment used to move it.
Ports are transportation hubs and links in the global supply chain that handle activities associated with the movement of containerized cargo between the maritime segment and inland points. Ports are managed by a port authority—a public or semi-public organization—that either operates or administers the land, facilities, and adjacent bodies of water where the cargo arrives and is transferred between different modes.
Terminal operators provide a set of facilities and equipment at a port to ocean carriers for the storing, handling, transferring, or transporting of containers to and from vessels. A port authority can operate its own terminals or lease the terminal space to an independent operating company.
Rail carriers provide service from port facilities. They also own and operate intermodal terminals that transfer cargo between modes.
Motor carriers are entities that use chassis to transport intermodal containers between multiple destinations, including to and from marine terminals, rail hubs, and other inland facilities. This service is referred to as drayage.
Intermodal equipment providers (IEPs) own and procure chassis for a fee and may also lease chassis under long-term contracts. IEPs also can provide products and services that support the business of intermodal operations.
chassis depends on the demand for container shipping, which depends, in turn, on the demand for goods shipped across long distances, especially by sea. The demand for goods is prone to demand shocks and adjustments, and so is the demand for chassis. As a result, chassis providers must regularly adjust the location and number of chassis in different locations so chassis fleets match with regional container volumes.
The container and chassis markets are separate but interdependent. In a container market, containers are owned by shipping lines and container leasing companies and are moved over long distances and across international boundaries. The container is interoperable and transferable across transportation markets, including the movements involving empty containers (i.e., containers being moved empty to reach a location where they are needed).
In a chassis market, the chassis may be owned by IEPs, ocean carriers, rail carriers, motor carriers, or BCOs and are used to facilitate regional and local movement of containers by a truck. Chassis also can be used for both port and rail terminal operations, such as moving containers from loading areas to the yard and yard storage. Although the chassis can be interoperable, the provisioning and use of chassis tends to stay in regional drayage markets.7
Haulage Arrangements
The movement of shipping containers typically involves one of two general types of logistical and financial arrangements. The first is known as carrier haulage, where a shipper contracts with an ocean carrier to provide door-to-door transportation of its containerized cargo. This transportation would include the maritime portion and any land moves from the port to the final door destination using a motor carrier nominated by the shipping line. In some cases, large shippers can nominate and use a motor carrier of their choice, which is built into the contract. The ocean carrier accepts claims, liabilities, or damages that occur during the move, and the terms and conditions of that arrangement are part of the confidential contract between the shipping line and the BCO.
The second general type is called merchant haulage, where the shipper contracts with the ocean carrier to deliver the containerized cargo over water to a port, and separately contracts with a motor carrier nominated by the shipper to provide the land moves from the shipper facility to the port and from the port to final destination (e.g., a warehouse). The ocean
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7 Notteboom, T., A. Pallis, and J.-P. Rodrigue. 2022. Port Economics, Management and Policy. New York: Routledge. https://porteconomicsmanagement.org/pemp/contents/part8/containers-and-ports.
carrier, in this case, does not accept responsibility for claims, liabilities, or damages that occur before delivery to the outgoing port or after delivery to the port of destination.
Options for Chassis Ownership and Usage
A motor carrier has several options for obtaining a chassis for drayage in the United States:
- Full ownership: The motor carrier has full ownership and is entirely responsible for the maintenance and storage of the chassis while not in use. The capital must be provided upfront (purchase).
- Long-term lease: The motor carrier leases chassis from an IEP over a long period with maintenance subject to specific terms of the lease. No upfront capital is needed, but the motor carrier may elect to take care of the maintenance or contract the maintenance to a third party approved by the IEP. The motor carrier is responsible for storage for the duration of the lease.
- Spot rental: Through a reservation, the motor carrier leases a chassis for a specific haul based on short-term availability from the IEP, who is responsible for maintenance and storage. The motor carrier picks up and returns the chassis at designated locations.
- Contract rental: The motor carrier enters into a contractual agreement with an IEP to have a defined number of chassis made available for its exclusive use for a specified period of time. The IEP is responsible for maintenance and storage.
Common Fees Associated with Container and Chassis Use
Fees associated with the use of a chassis and certain other fees may be charged that are specific to the shipping container it is transporting.
- Detention fees: Fees are charged by equipment providers for the use of containers and/or chassis beyond the specified free time8 allocated for the use of the equipment.
- Demurrage: Fees are charged by facility and/or equipment owners for use of the facility and/or equipment that remains at the port or terminal beyond the specified free time for onsite storage.
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8 Free time is the allotted period for using the container and/or chassis during which no demurrage or detention charges apply and is generally built into the contracts between the ocean carrier and the BCO.
- Flip lift or chassis flip: A “flip” happens when a container needs to be transferred from one chassis to another chassis. A chassis flip may be needed for several reasons, such as a container placed on a chassis that turns out to be defective, a container on one IEP’s chassis that should be on another, or if a motor carrier brings their own chassis to a terminal and the container to be moved is already mounted on a different chassis.
- Chassis split: When the container and chassis are located in a different place or if there is not an available chassis where the container is located, a motor carrier may assess a chassis split fee to cover the cost of picking up the chassis and taking it to the container yard. This fee could also occur if the motor carrier must drop off the chassis at a different location than the container delivery location.
- Street turns: Some ocean carriers charge an administrative fee for “street turn,” namely a situation in which a motor carrier delivers a container, then uses the empty chassis to pick up new cargo— potentially from a different shipper—and brings the full container back to the port. Street turns contribute to efficiencies in cargo movement as they reduce the miles driven with empty containers.
CONTAINERS AND CHASSIS IN THE SUPPLY CHAIN
Intermodal Container Facilities
Gateway sea ports are important transportation hubs and key links in the global supply chain and handle various activities associated with the movement of cargo. Ports are typically managed by a port authority that can be a public or semi-public organization, or a private entity that either owns or administers the land, facilities, and adjacent bodies of water where cargo is transferred between different modes. A port authority promotes overall port efficiency and is authorized to administer, develop, manage, or operate port land and infrastructure, as well as to coordinate other port activities.9
Within a port, the terminal has assigned areas for equipment to load and unload cargo and space for staging and storing cargo until it is loaded on a vessel or transferred to other modes of transport, such as rail and trucks. Depending on its overall size, a port may contain multiple terminals. Among terminal types, container terminals specialize in the shipment, handling, and temporary storage of shipping containers between two or more modes of transportation. The overall size and footprint of container
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9 Notteboom, T., A. Pallis, and J.-P. Rodrigue. 2022. Port Economics, Management and Policy. New York: Routledge. https://porteconomicsmanagement.org.
terminals can be quite large to accommodate the array of intermodal equipment necessary to manage and move the large volume of containers. The movement of containers typically involves the three main elements of maritime operations, yard and auxiliary operations, and inland distribution.
During maritime operations, the container ship docks at the terminal berth, where a massive ship-to-shore gantry crane is used to load and unload containers.10 A container ship is a type of cargo vessel that transports shipping containers internationally.11 The overall size and capacity of container ships have grown considerably, allowing for a more cost-effective and efficient means for moving a large range of non-bulk commodities.12
Once containers are off the ship, other pieces of equipment are used to move them away from the docking area and stack them within the terminal area. Depending on the size of the terminal, equipment is used to move and stack containers within the terminal yard during yard operations, as containers are temporarily stored while waiting for pickup.13 Outbound containers (those for export) are also stored temporarily since they are not loaded onto the ship immediately. Terminals also have areas where repair and maintenance are performed and where empty chassis are stored while waiting to be used to move containers. The final segment of container terminal movements involves how containers are distributed inland (see Figure 2-2).
At the terminal, the stored container could be moved to an onsite (or on-dock) rail yard, where the chassis is loaded on a rail car for transport to a nonlocal destination. The container could also be loaded onto a chassis where the truck will then drive it out of the terminal gate to a near-dock rail terminal, an off-dock rail terminal, a transloading facility or warehouse, or a local destination.14
Intermodal container terminals—for both port and inland terminals— have three major configurations that can impact chassis operations:
- Wheeled terminal operations: With wheeled operations, containers are stored in the yard on chassis often parked in parallel. This is efficient in that containers are usually transferred with one move,
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10 Examples of a ship-to-shore container crane: https://porteconomicsmanagement.org/pemp/contents/part3/container-terminal-design-equipment/portainers-ship-to-shore-container-cranes.
11 For an example of a container ship, see https://www.worldshipping.org.
12 For a more in-depth discussion of the evolution of containerships, see Rodrigue (2024). https://transportgeography.org/contents/chapter5/maritime-transportation/evolution-containerships-classes; and Notteboom et al. (2022). https://porteconomicsmanagement.org/pemp/contents/part1/ports-and-container-shipping/largest-available-containership-teus.
13 Examples of conventional intermodal port terminal equipment used to move containers: https://porteconomicsmanagement.org/pemp/contents/part3/container-terminal-design-equipment/conventional-intermodal-port-terminal-equipment.
14 Notteboom, T., A. Pallis, and J.-P. Rodrigue. 2022. Port Economics, Management and Policy. New York: Routledge. https://porteconomicsmanagement.org.
SOURCE: Rodrigue, 2024.
- from ship directly to chassis, but these operations require a larger chassis fleet and more land for storage. They also require flips if a motor carrier wants to use its own chassis.
- Grounded terminal operations: With grounded operations, containers are stacked three to five high in the terminal yard, yielding much higher storage density than what wheeled operations can achieve; however, grounded operations require two moves per handled container, from ship to ground and then from ground to chassis. Additional moves are required to extract a container if it is not on top of the stack.
- Hybrid terminal operations: Occasionally, a terminal will offer a combination of grounded and wheeled operations, which is more common for rail terminals.
U.S. Coastal and Inland Intermodal Facilities
U.S. ports and intermodal facilities play an important role in our nation’s economy, serving as critical transportation hubs that enable the movement of containerized goods to and from companies in local and regional as well as worldwide markets. The extent of this intermodal transportation system can be seen by the number and location of port and inland intermodal facilities in Figure 2-3. As explained in the sections that follow, all these facilities are connected to other transportation nodes, such as rail and highways, that allow for the movement of containers from ports to inland destinations often using chassis.
In just the last 20 years, container throughput at U.S. ports has more than doubled, increasing from just under 29 million TEUs in 2000 to more than 60 million TEUs in 2022.15 When looking at container volumes by individual U.S. ports, the top 12 ports made more than 90 percent of the
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NOTES: Operations based on visual inspection of satellite images. On-dock facilities excluded.
SOURCE: Rodrigue, 2024.
container moves in 2022, and the top three ports (Los Angeles, New York and New Jersey, and Long Beach) handled nearly 50 percent of the containers in 2022.16
U.S. Terminals and European Terminals
Intermodal terminal operations in the United States began as wheeled operations, making the chassis a cornerstone of container terminals. As discussed subsequently, this was not the case in Europe (see Box 2-2), where grounded operations are the norm.
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16 Data from https://www.bts.gov.
BOX 2-2
How Europe Is Different from the United States
When containerization arrived at European port terminals in the 1960s, the lack of available space encouraged a model where the motor carrier provided the chassis. Land availability constraints impose a more limited spatial footprint for terminals and a push for higher density operations. While European port and rail terminals could be converted to containerization, they often had fewer expansion options than their North American counterparts. If land was abundant, containers could be stored on chassis for quick movements between the container yard and the ships or their next destination, but this system was quickly replaced by stacking operations. Thus a chassis management model that minimizes the use of space at terminal facilities and where chassis are owned and provided by the drayage companies—thereby requiring no space at the terminal—represented the most suitable option. By the time European ports developed new intermodal facilities at suburban locations, the chassis management model was already well established and simply replicated at new terminal operations.
As a result of space constraints, the European chassis model is based on individual trucking companies owning the chassis, and providing a chassis is considered part of the drayage service and, therefore, part of the transport cost.
Many European ports, particularly those along the Mediterranean Sea, serve a transshipment function, where containers are unloaded at the terminal and reloaded on a departing ship. In such cases, chassis are not used since the cargo is not bound to the port’s hinterland. Transshipment, however, is not a function that is performed in North America.
The development of inland terminals in Europe has been based on two main modal options complementing trucking: rail and barge. Still, trucking is considered an effective competitor to rail and barge services as the distances are relatively short. The relatively short hinterland distances serviced by European ports are reflected in a modal split where trucking tends to dominate over rail and barge traffic.
Within Europe, the distribution of chassis varies according to the respective terminal volumes of containers. Many large port authorities and terminal operators are attempting to encourage a modal shift from truck to rail or barge services to grow hinterland transportation. There are, however, limitations to inland economies of scale in Europe because intermodal train lengths and the number of barges in tow are limited on most of the shipping corridors.
Rail Terminals and Railroads
Rail freight terminals tend to have dedicated facilities for either loading or unloading specific commodities. For rail intermodal terminals, operations allow containers to be transferred to other modes of transportation. These terminals engage in three main types of interdependent operations: rail track operations, storage yard operations, and gate operations (see Figure 2-4).17
For rail container terminals, the typical layout of the yard combines most or all of the following five elements:18
- Intermodal yard: This is the core of the terminal where containers are loaded on and unloaded from trains by equipment such as rubber-tired gantries or rail-mounted gantry cranes.19
- Storage area: This element acts as a buffer between the road system (drayage) and the intermodal yard. As discussed previously, container storage at rail terminals can be wheeled (where containers are moved and stored directly on chassis), grounded (where containers are stored by stacking them on one another), or hybrid (a combination of both). Similar to port terminals, grounded operations allow higher storage density but require additional container moves to load the container on a chassis. For wheeled operations, containers are directly transferred to a chassis and stored in the rail yard waiting to be picked up, requiring only one move but also more space for storage.
SOURCE: Adapted from Rodrigue, 2024. https://transportgeography.org/contents/chapteré/rail-terminals/intermodal-rail-terminal-configuration.
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17 Rodrigue, J.-P. 2024. The Geography of Transport Systems, 6th ed. New York: Routledge. https://transportgeography.org/contents/chapter6/rail-terminals.
18 Ibid.
19 For examples, see https://porteconomicsmanagement.org/pemp/contents/part3/container-terminal-design-equipment/conventional-intermodal-port-terminal-equipment.
- Gate: This is where the truck driver presents proper documentation for pick up or delivery of a container. Inspection of container and chassis occurs, often remotely, to ensure that the correct container is matched with the correct driver. Typically, terminals have separate entry and exit gates and dedicated lanes for empty container or chassis returns. As discussed later in the chapter, the truck driver is responsible for reporting issues with the chassis upon its return.
- Chassis storage: Area where empty chassis are stored, sometimes stacked, while waiting to be allocated to a truck or yard equipment. Some of these areas are within the rail terminal, while others are nearby.
- Repair/maintenance: Area within the rail terminal where inspection and regular maintenance activities occur on much of the terminal’s equipment, including chassis.
The United States freight rail network has more than 600 freight railroads that operate on almost 140,000 route miles. These railroads are divided into three classes, according to operating revenue thresholds set by regulation. The six Class I freight railroads20 move a majority of the intermodal containers, generally over long-haul routes that may face competition from other shipping modes, such as trucks and barges. The Class I railroads often move containers in coordination with the more than 500 Class II and III railroads (known as short line and regional railroads) that provide connections to ports and other Class I networks.21
The 1980s saw growth in investments and types of infrastructure favoring containerization, such as cranes and equipment for moving shipping containers, as lower price/rate structures between modes were realized due to the major statutory changes that occurred at the beginning of the 1980s.22 Intermodal rail is the movement of shipping containers and/or truck trailers by rail. It has been the fastest growing segment of intermodal freight transport over the past 25 years in the United States.23 This growth was in large part due to an increased use of container well cars,24 namely
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20 In April 2023, the two smallest Class I railroads, Canadian Pacific Railway and Kansas City Southern Railway, merged to form CP-KC (see https://www.railstate.com/the-ultimate-guide-to-railroad-classes-defining-class-i-class-ii-and-class-iii-railroads).
21 For a map of the primary corridors for Class I Railroads in the United States, see https://railroads.dot.gov/rail-network-development/freight-rail-overview.
22 Levinson, M. 2006. The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton, NJ: Princeton University Press.
23 See Rodrigue, J.-P. 2024. https://transportgeography.org/contents/chapter5/rail-transportation-pipelines/intermodal-rail-traffic-united-states.
24 For an example of double-stack container on well rail cars, see https://www.transportation.gov/freight.
rail cars with a container-sized depression, or well, in the middle of the car allowing for double stacking of containers while reducing the overall height of the stacked containers.25
As cargo is moved across the United States, the largest concentrations are on routes between the Pacific coast ports and Chicago and Texas, and then between Chicago and New York.26 Many of the U.S. railroads terminate in or around the Chicago area, which serves as a centralized distribution point for containerized freight. Once the freight arrives at a rail terminal, motor carriers require chassis to transfer containers to other rail terminals or to their final destinations. The growth of container transport by rail has increased the need for available motor carriers and chassis at inland terminals.
Highways and Trucking (Drayage) Operations
The Interstate Highway System has been instrumental in moving freight and connecting other freight nodes. The Primary Highway Freight Network27 is critical to the U.S. freight transportation highway system and is strategically important to the overall performance of the country’s freight system by providing access for trucks to move freight between major ports or other intermodal rail and truck facilities.28
The movement of containers by truck, referred to as drayage operations, is an important component of the international supply chain and how most containers are either transported from their place of origin or delivered to their final destination.29 Trucks and chassis are needed to move intermodal containers between ports and marine and rail terminals, and to and from inland distribution centers, all this along the existing road infrastructure. Along with the National Highway System (NHS) and the Interstate Highway System, this infrastructure includes the Strategic Highway
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25 Levinson, M. 2006. The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. Princeton, NJ: Princeton University Press.
26 A figure representing the tonnage moved on intermodal railcars can be found at the following site: https://www.bts.gov/product/freight-facts-and-figures.
27 For a map of the National Highway Freight Network of the Primary Highway Freight System, see https://ops.fhwa.dot.gov/freight/infrastructure/nfn/index.htm.
28 National Academies of Sciences, Engineering, and Medicine. 2019. Renewing the National Commitment to the Interstate Highway System: A Foundation for the Future. Washington, DC: The National Academies Press. https://doi.org/10.17226/25334.
29 Transportation Research Board of the National Academies. 2011. Truck Drayage Productivity Guide. Washington, DC: The National Academies Press. https://doi.org/10.17226/14536.
Network, intermodal connectors, and MAP-21 principal arterials.30 NHS connectors are those public roads that link major intermodal terminals to the larger highway network, and they are a key component of the overall transportation system.31
Most drayage carriers are small businesses and/or independent owner-operators that operate close to marine and inland terminals within a regional area and are typically associated with the first and last mile of moving the intermodal container. All drayage drivers must obtain a commercial driver’s license, and motor carriers must register their drivers in the Intermodal Driver Database (IDD). IDD is a system that is used to verify driver information, and the registration of a driver is a requirement for this individual to access many intermodal facilities.32 The Uniform Intermodal Interchange & Facilities Access Agreement (UIIA)33 is a standard industry agreement that governs the interchange of (or act of providing)34 intermodal equipment (i.e., containers, chassis, and trailers) between equipment providers and intermodal trucking companies. Most equipment providers (e.g., ocean carriers, railroads, and equipment leasing companies) operating in the United States use the UIIA and require motor carriers to sign it as a condition of doing business.35 More than 14,000 motor carriers and 60 equipment providers are registered in UIIA, and it is reported that UIIA is utilized for approximately 95 percent of all North American intermodal equipment interchanges.36 This agreement covers areas such as access to a facility, procedures for equipment exchange, equipment usage rules, liability and insurance requirements, administrative processes, and dispute resolution.
While some of the procedures may vary between different ports and terminals, the process for a motor carrier picking up or delivering a container is generally the same for both inbound and outbound trips. When
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30 See https://www.bts.gov/geography/geospatial-portal/national-highway-system-intermodal-connectors-and-principal-arterials. The Strategic Highway Network (STRAHNET) includes a network of highways that is important to the U.S. strategic defense policy, and MAP-21 (Moving Ahead for Progress in the 21st Century Act) includes rural and urban roads serving major population centers not already categorized.
31 See https://ops.fhwa.dot.gov/freight/freight_news/nhs_connectors.htm.
32 The Intermodal Driver Database (IDD) is administered by the Intermodal Association of North America (IANA). See https://intermodal.org/uiia/intermodal-driver-database.
33 The Uniform Intermodal Interchange & Facilities Access Agreement (UIIA) is administered by IANA. See https://intermodal.org/uiia.
34 See https://www.fmcsa.dot.gov/faq/what-are-definitions-terms-intermodal-equipment-provider-iep-regulation-73-fr-76794.
35 See https://www.intermodal.org/documents/FMC_UIIA_White_Paper_Mar_2019.pdf.
36 See https://intermodal.org/uiia/uniform-intermodal-interchange-facilities-access-agreement.
first entering a facility, the identity of the driver and the driver’s firm are verified. Next, the facility verifies that the transaction is legitimate (i.e., the correct container is available and cleared for pickup). After confirming the transaction, the driver must then locate, inspect, and test the condition of the outbound chassis to ensure roadability, before issuing an Equipment Interchange Report (EIR). If inbound equipment is returned and inspected and found to be undamaged, another EIR is issued. Once the EIR is issued, the exchange of the equipment within the facility is complete. The EIR is important as it documents the transfer of responsibility (and liability) for the chassis and container (and its contents, if any) between the facility and the motor carrier.37 One aspect not reflected in the EIR is damage that occurs to the chassis while it is at the terminal or railyard, such as damage that can occur due to the stacking of chassis.
CHASSIS PROVISIONING IN THE UNITED STATES
Provisioning Prior to 2010
Although moving containers was a promising business opportunity, motor carriers were reluctant to invest in and acquire chassis fleets. As many motor carriers were small or independent owner-operators, the capital required to purchase chassis was prohibitive. To help incentivize motor carriers to engage in drayage, ocean carriers provided chassis. This practice of ocean carriers owning and providing the chassis was unique to the United States because the required investments had to be made prior to establishing the important benefits of containerization.38 With chassis owned by ocean carriers, the ocean carriers did not charge shippers and motor carriers separately for the chassis, instead including the rate to use the chassis equipment as part of the negotiated freight rate between the customer and the ocean carrier. Once this practice caught on, it grew entrenched, even after, in nearly every other country, the trailer chassis became part of the equipment supplied by a forwarder, logistics company, or the trucking firm itself.
Some ocean carriers viewed providing chassis as a competitive advantage, while others viewed it as a necessary cost of doing business. Because
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37 Transportation Research Board of the National Academies. 2011. Truck Drayage Productivity Guide. Washington, DC: The National Academies Press. https://doi.org/10.17226/14536.
38 O’Brien, T., T. Reeb, and A. Kunitsa. 2016. Mitigating Urban Freight Through Effective Management of Truck Chassis. METRANS Research Project, February, 1–45. https://www.metrans.org/assets/research/2-2%20Chassis-OBrien%20final.pdf; and O’Brien, T., et al. 2019. Examining Collaborative Chassis Management Practices at the Ports of LA & LB. https://cdn.agilitycms.com/csulb-cpie/documents/citt/Chassis%20Management.pdf.
ocean carriers had little physical control over the use of their chassis, they often viewed chassis as an administrative and maintenance burden. Yet at the same time, motor carriers complained about the condition of the provided chassis, believing that they lacked leverage to refuse a chassis in poor condition. In addition, truckers experienced inefficiencies in this model, as it required them to return or reposition the carrier-owned chassis empty to a port or terminal after having dropped off a container, impacting the number of trips or turns per day for the truck driver.39 While during the 1990s some ocean carriers agreed to share chassis at certain ports to reduce congestion and create greater efficiencies and availability, other issues, such as chassis repositioning and legacy agreements between ocean carriers and shippers, still remained.40
Some ports, including the Ports of New York and New Jersey, the Virginia Port Authority, the Georgia Ports Authority, and the South Carolina Ports Authority, experimented with combining fleets of chassis, sometimes referred to as chassis pools, throughout the 1990s and early 2000s.41 By 2005, as a step to becoming more efficient, the Ocean Carrier Equipment Management Association (OCEMA), an organization that includes major international ocean common carriers, created Consolidated Chassis Management (CCM) to develop, own, and operate chassis pools on the ocean carriers’ behalf.42 CCM would combine ocean carrier chassis fleets into
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39 Ibid.
40 Stich, B., et al. 2019. Chassis: The unsung linchpin in the global supply chain. In Building a Sustainable Transportation Infrastructure for Long-Term Economic Growth. https://www.igi-global.com/gateway/book/206552; and O’Brien, T., et al. 2019. Examining Collaborative Chassis Management Practices at the Ports of LA & LB. https://cdn.agilitycms.com/csulb-cpie/documents/citt/Chassis%20Management.pdf.
41 FMC. 2015. U.S. Container Port Congestion and Related International Supply Chain Issues: Causes, Consequences and Challenges. https://www.fmc.gov/wp-content/uploads/2019/04/PortForumReport_FINALwebAll.pdf; Stich, B., et al. 2019. Chassis: The Unsung Linchpin in the Global Supply Chain. In Building a Sustainable Transportation Infrastructure for Long-Term Economic Growth. https://www.igi-global.com/gateway/book/206552; and O’Brien, T., et al. 2019. Examining Collaborative Chassis Management Practices at the Ports of LA & LB. https://cdn.agilitycms.com/csulb-cpie/documents/citt/Chassis%20Management.pdf.
42 Stich, B., et al. 2023. The Changing Legal Landscape of Intermodalism: Supply Chains in Crisis: An Assessment of Chassis Availability and Intermodal Goods Movement at Inland and Ocean Ports in the U.S. March 2021–December 2023. https://rosap.ntl.bts.gov/view/dot/73987; and Transportation Research Board of the National Academies. 2011. Truck Drayage Productivity Guide. Washington, DC: The National Academies Press. https://doi.org/10.17226/14536.
a single pool with a higher level of asset utilization, meaning that CCM-managed pools would be interoperable.43
Changes to Provisioning
Confronted with an economic downturn in 2008 and an increasing government focus on chassis safety and roadability (explained subsequently), international ocean carriers grew concerned about the high costs of providing chassis as part of a bundled service in the United States. As chassis were never a part of their core business, ocean carriers decided to divest themselves of their chassis to reduce costs. Starting in 2009 and continuing into 2010, the ocean carrier Maersk stopped providing chassis and began selling chassis to leasing companies or intermodal equipment providers (IEPs),44 who would lease the chassis back to the ocean carrier, who in turn would then rent the chassis to motor carriers. Soon, other ocean carriers began to sell their chassis to privately funded IEPs.45
Despite the sale of the chassis to IEPs, CCM, created by the Ocean Carriers, remained involved in the provision of chassis, operating six interoperable pools in the United States from 2005 until August 2020, when the Chicago and Ohio Valley Consolidated Pool (COCP) and the Gulf Coast Consolidated Pool (GCCP) closed as IEPs reportedly pulled their equipment from these markets in favor of different arrangements.46 Effective May 1, 2024,47 CMM closed the Midwest Consolidated Pool (MWCP) and the Mid-South Consolidated Chassis Pool (MCCP) for similar reasons, no longer supplying chassis in Kansas City, Missouri; St. Louis, Missouri; and Memphis, Tennessee. As of May 2024, only Denver Consolidated Chassis Pool (DCCP) and South Atlantic Regional Chassis Pool (SACP 3.0) remained open for CCM.48
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43 As explained below, an interoperable pool is managed by a single neutral party and includes multiple chassis owners that contribute chassis into a single pool based on the number containers the chassis owners expect from ocean carriers.
44 The three major intermodal equipment providers (IEPs) include Direct Chassis Link (https://dcli.com), TRAC Intermodal (https://www.tracintermodal.com), and FlexiVan (https://flexivan.com). Another third-party chassis provider includes North American Chassis Pool Cooperative (https://www.nacpc.org).
45 Stich, B., et al. 2019. Chassis: The Unsung Linchpin in the Global Supply Chain. In Building a Sustainable Transportation Infrastructure for Long-Term Economic Growth. https://www.igi-global.com/gateway/book/206552.
46 See https://www2.fmc.gov/readingroom/docs/20-14/20-14%20Order%20(Public%20Ver).pdf.
47 See https://www.joc.com/article/cooperative-chassis-pools-folding-three-us-cities-amid-loss-business_20240429.html.
Moreover, wanting guarantees that chassis purchased from the ocean carriers would be used, IEPs put in place contracts with the ocean carriers to ensure this usage. These exclusive contracts—sometimes called legacy contracts—often led to cases where the ocean carrier would dictate the use of a specific IEP, despite the ocean carrier not owning the chassis.49 This practice where containers are assigned to chassis from specific IEPs, known as “box rules,” refers to the operational restrictions on the physical use or sourcing of chassis based on the identity of the ocean carrier controlling the container, or “box.” In another interpretation, “box rules” can refer to an invoicing mechanism used by certain interoperable chassis pools to facilitate the assignment of usage and billing responsibility among the contributors of assets to those pools. “Box rules” are in place in some port and inland rail facilities and require motor carriers to use the ocean carrier’s designated IEP, whether from a proprietary pool operated by the IEP or from a pool managed by a third party such as CCM. In other pool models, such as the pool of pools in the Los Angeles/Long Beach area, different ocean carriers contract with various IEPs to make chassis available in the pool. While any available chassis in the pool can be used to move any container, under “box rules” the IEP that invoices for the chassis use is determined by the ocean carrier’s contract with its IEP, regardless of which IEP owns the chassis that was actually used to move the container.50
In some situations, what constitutes “box rules” is apparent, but the underlying reasons for how they may be implemented or how current conflicts have developed may not be fully understood. To help explain the issues, Box 2-3 provides several hypothetical scenarios describing who pays and chooses the chassis.
FMCSA Chassis Inspection Requirements
Roadability Rule for IEPs and Motor Carriers
The Federal Motor Carrier Safety Administration (FMCSA) is responsible for regulating and providing safety oversight of commercial motor vehicles. Its mission is to reduce crashes, injuries, and fatalities involving large trucks and buses. In carrying out its safety mandate, FMCSA published new requirements in 2008 for chassis roadability.51 The new regulations would make chassis owners subject to FMCSA regulations and called for a shared safety responsibility among chassis owners, motor carriers, and drivers. The
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49 Stich, B., et al. 2020. Shipping Container Chassis in the U.S. December 2017 to December 2019. https://martrec.uark.edu/research/completedprojects/uno_chassis_final_accessible.pdf.
50 GAO-21-315R. https://www.gao.gov/products/gao-21-315r.
51 See https://www.govinfo.gov/content/pkg/FR-2008-12-17/pdf/E8-29254.pdf.
BOX 2-3
Scenarios for Sourcing and Paying for Chassis
The primary contract of sale in any transaction between seller and buyer, through the Incoterms chosen, establishes the responsibilities of each party in all international transactions. The Incotermsa are a set of 11 rules issued by the International Chamber of Commerce (ICC) that determine who will pay for and manage the shipment, insurance, documentation, customs clearance, and other logistical activities. Each Incoterm rule defines the tasks to be taken care of at each stage, the costs that each party will cover, and whether the associated risks will be borne by the seller or buyer.
Once the finalized contract of sale has established the responsibility for all trade arrangements, a beneficial cargo owner (BCO)—or a freight forwarder acting on the BCO’s behalf—will seek a quote for a set of services from an ocean carrier (OC) that will include transport arrangements, including the chassis. The OC will quote services that could involve a door-to-door move, a port-to-port move, a door-to-port move, or a port-to-door move.b Other than the port-to-port move, the OC will usually subcontract other companies to provide the services sought by the BCO, such as local transport of goods. Depending on the type of move, the party responsible for choosing the chassis may be working for the BCO, the motor carrier (MC), the rail company (RR), or the OC—if drayage and the chassis are included in a bundled price. Regardless, this contract for the carriage of goods (the transport) is subordinate to the primary contract of sale (trade). Following are scenarios when the OC’s quote includes inland move costs and choice of chassis.
Import Scenarios
- The BCO has chosen a port-to-port move. In this scenario, merchant haulage (MH) rules should apply, which means that the BCO pays for and controls the drayage and chassis choice by directing the MC to coordinate the pickup and delivery of the container once it reaches the destination port. The vendor is responsible for moving the container from its warehouse to the origin port, where the BCO takes possession. Potential conflict: Depending on its contract with the MC, the BCO may dictate a preferred chassis provider or pool. Otherwise, the MC should be able to select the chassis (either its own or from a specific IEP’s or other pool).
hope was to establish an audit trail and to hold chassis owners responsible for maintaining chassis to FMCSA standards. The Final Rule called for the following:
- Each chassis would be identified by a single owner or intermodal equipment provider (IEP);
- IEPs would establish a systematic inspection, repair, and maintenance program to ensure the safe operating condition for each chassis;
- The BCO has chosen a port-to-rail (or inland destination) move but not a final destination. In this situation, the BCO has named and paid for a rail or inland destination, so carrier haulage (CH) applies to the inland destination and MH applies to the final leg controlled by the BCO, who, for that leg, contracts with an MC to pick up and deliver the container using its own chassis or one from a pool of its choosing. Potential conflict: Because there is a switch between CH to MH, the MC may wish to change from the original chassis used for CH but may experience pressure from the CH chassis provider to use the same chassis for the MH move.
- The BCO has chosen a port-to door (final destination) move. The BCO has named and paid for the container to be delivered to its final destination, so the OC has coordinated rail and drayage delivery as part of a negotiated price (i.e., this is a CH move). Under this scenario, the contracted MC is paid by the OC and uses the OC’s preferred chassis provider. If the BCO is large enough, it also may specify a preferred MC during negotiations with the OC. Potential conflict: Under carrier haulage, the OC pays for the drayage and chassis and dictates the chassis provider. The MC could find this arrangement problematic if specified chassis are not easily available and MC experiences extra costs of search or delays.
Export Scenarios
- The BCO has chosen a door-to-port (foreign) move: Depending on the contract terms between the exporting BCO and the foreign buyer, the buyer will either specify the drayage and chassis arrangements (MH) or contract with the OC for the transport service (CH). However, the exporting BCO, in its contract terms with the buyer, could dictate and pay MC to transport its container to the export port (MH). Potential conflict: There could be a dispute between MC and BCO on the terms of MH, or between OC and MC if the BCO negotiates a bundled price from door to foreign port.
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a https://www.trade.gov/know-your-incoterms.
b https://www.advancedontrade.com/2016/09/port-to-port-and-door-to-door-shipments.html.
- IEPs would document and maintain recordkeeping programs;
- IEPs would provide a means to respond to driver and motor carrier reports about chassis mechanical defects and deficiencies; and
- All chassis must obtain U.S. Department of Transportation (USDOT) identification numbers.
When procuring a chassis for a transaction, drivers are required to perform two types of inspections: (1) Prior to operating the chassis, drivers are required to perform a pre-trip inspection that ensures chassis components,
such as brakes, lighting devices, wheels, rims, tires, air line connections, and hoses are in good working order as specified in FMCSA regulations. If defective components are found, the IEP, or its agent, must repair them before drivers can use the chassis. (2) After chassis are returned, drivers are required to perform a post-trip inspection and identify and report any known damage, defects, or deficiencies in equipment. Before a chassis is used again, the chassis owner must repair the reported damage or certify that the repairs are unnecessary.52
Oversight System for Chassis Safety
To oversee safety and compliance with current regulations, FMCSA employs several inspection methods for commercial vehicles and/or drivers. For chassis, these include the following:53
- Annual inspections must be performed by qualified staff of IEPs or motor carriers on each of their chassis. Equipment to be inspected is listed in FMCSA’s regulations;
- Roadside inspections are examinations on chassis by certified inspectors, often state police officers, using standard procedures. An inspector determines if equipment is in compliance and may issue one or more violations during the inspection, or the inspector can deem a chassis to have one or more “out-of-service” violations, which require that repairs be made before the equipment can be put back in service; and
- Investigations, by FMCSA staff or trained state and local officials, of IEP’s overall compliance with safety regulations occur twice per year. Staff typically review an IEP’s compliance with safety regulations and whether the IEP is performing annual inspections on all chassis.
Chassis Provisioning Models in the United States
As explained in GAO-21-315R,54 motor carriers can procure chassis through one of four standard models, namely single chassis provider, motor carrier–controlled, gray or cooperative/interoperable pool, and the pool of pools. These chassis model arrangements are unique to the United States as
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52 See https://www.ecfr.gov/current/title-49/part-396. See also GAO 2021, 14. https://www.gao.gov/products/gao-21-315r.
53 See https://www.fmcsa.dot.gov/safety/data-and-statistics/commercial-motor-vehicle-facts. See also GAO 2021, 14. https://www.gao.gov/products/gao-21-315r.
compared to other countries—where the motor carriers, shippers, or offsite entities tend to provide chassis.55
Single Chassis Provider
The single chassis provider model is where an individual IEP owns and manages the entire fleet of chassis available at a particular location and is responsible for their maintenance and repair. This model is also known as a proprietary, private, or neutral pool. There could be multiple single chassis providers at a particular location, much like a rental car business model, where an IEP provides chassis to a shipper or motor carrier by charging a posted daily rate or through an individually negotiated rental agreement. The IEP can provide dedicated chassis to a specific shipper or to a motor carrier that serves multiple customers. The motor carrier must pick up and return chassis to locations designated by the specific IEP. Single chassis provider pools are present in the Northeast within ports such as New York and New Jersey, the Midwest (Chicago and Memphis), and the Gulf Coast (Houston).
Motor Carrier–Controlled
With a motor carrier–controlled model, the motor carrier owns the chassis or leases them long-term from an IEP and is responsible for maintenance and repair, including those chassis under long-term lease. Providing the chassis becomes part of the transportation service that the motor carrier can offer to its customers.
Gray or Cooperative/Interoperable
A cooperative, interoperable, or gray pool includes multiple IEPs or other chassis owners that contribute chassis into a single pool. The operations and management of the pool are overseen by a single pool manager, often a third party created for this purpose, that establishes the operating rules for the pool. As mentioned earlier, CCM has operated several gray pools over the last 20 years. The pool manager oversees the maintenance and repair of chassis within the pool, the costs of which are reimbursed by the chassis owners. A gray pool can offer chassis at multiple start and stop (i.e., pickup and drop-off) locations, while the manager handles the repositioning of the chassis from one location to another to reconcile chassis supply and
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55 Notteboom, T., A. Pallis, and J.-P. Rodrigue. 2022. Port Economics, Management and Policy. New York: Routledge. https://porteconomicsmanagement.org/pemp/contents/part8/containers-and-ports/types-chassis-pools.
demand. Ultimately, a motor carrier may choose any chassis in the pool to move a shipping container, regardless of the chassis owner. Regardless of the actual physical chassis used by the motor carrier, the IEP with which the customer has a leasing arrangement will bill the customer and receive the rental revenue associated with its customer’s utilization of the gray pool chassis.
Pool-of-Pools Model
Found only at the Ports of Los Angeles and Long Beach in San Pedro Bay, the pool-of-pools model was formed in 2015 through a cooperative agreement between the three largest chassis providers. The goal of this unique arrangement, in part, was to address several logistical concerns that existed given the large size of the port complex, which has 11 major marine terminals and four major intermodal rail terminals. These concerns included the need to address traffic congestion and increased vehicle emissions, but also the need to match a specific provider’s chassis to a specific ocean carrier’s container. Unlike the other models, the pool-of-pools model allows a more fluid provisioning of chassis in a large market with such substantial demand for containers and chassis. While each chassis provider or IEP manages its own fleet of chassis in terms of operating rules, maintenance, and repair, all the available chassis in the pool-of-pools are interoperable, allowing motor carriers to use any chassis for any container and to pick up and drop off chassis at any IEP pool location.
Characteristics of Regional Chassis Markets
Chassis markets in the United States employ a variety of chassis provision models, which are related to regional differences derived from fundamental and operational characteristics of the ports and terminals.
Fundamental characteristics are related to the regional economic structure, including logistical functions such as transloading, consolidation, and deconsolidation. For instance, a major port gateway will require the drayage of large quantities of containers to import warehouses and transloading facilities, usually located near port facilities, and the return of empty containers to port terminals and the return of empty chassis to pools. There are important variations in the regional economic structure, with some regions having a more pronounced manufacturing and distribution orientation, while others rely more on commodity exports. The regional trade balance, which is reflected in container and chassis flows, dictates the positioning and repositioning of chassis.
Operational characteristics are mainly the outcome of commercial decisions in terms of facility location and business models. The number and
distribution of intermodal terminals and their accessibility to the road transport system will have a direct impact on chassis flows. Moreover, each chassis market is serviced by a variety of intermodal rail facilities, which impact chassis provision. Finally, some markets have a mix of yard operations, between grounded and wheeled, creating substantial operational differences in the use of chassis. Chassis pools tend to be located adjacent to grounded terminals. However, in markets with a mix of grounded and wheeled facilities, an IEP may elect a location that favors a particular terminal. Regional variations in the level of chassis ownership by motor carriers are notable; unsurprisingly, higher motor carrier levels of ownership occur in those markets with more merchant haulage.
Federal Maritime Commission’s Agreement and Complaint Processes
Originally created in 1961, the Federal Maritime Commission (FMC) is an independent agency that oversees the U.S. international ocean transportation system and ensures a competitive and reliable system that supports the U.S. economy and protects the public from potentially illegal, false, or misleading practices. FMC’s regulatory focus is described further in its mission statement and strategic goals.56 Under the Shipping Act of 1984, as amended, ocean common carriers and marine terminal operators can engage in various activities through agreements filed with the FMC.57 Instructions for filing agreements and the types of agreements permitted can be found on the agency’s website.58
FMC also supports the resolution of complaints and disputes related to ocean transportation activities.59 In August 2020, the Intermodal Motor Carriers Conference (IMCC), an affiliation of the American Trucking Associations (Complainant), filed a complaint with FMC against the Ocean Carrier Equipment Management Association (OCEMA),60 Consolidated Chassis Management, LLC (CCM),61 and 11 different ocean carriers62 (Respondents). In the complaint, IMCC alleged that the Respondents had “adopted and imposed unjust and unreasonable regulations and engaged in unjust and unreasonable practices by requiring the use of OCEMA member default chassis providers and denying motor carriers their right to select the chassis provider for merchant haulage movements,” all in violation of U.S.
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56 See https://www.fmc.gov/about-the-fmc.
57 See https://www.law.cornell.edu/uscode/text/46/40301.
58 See https://www.fmc.gov/about/bureaus-offices/bureau-of-trade-analysis-bta/how-to-file-carrier-mto-agreements.
59 See https://www.fmc.gov/complaints-and-assistance/#about.
60 See http://www.ocema.org.
61 See https://ccmpool.com.
62 Docket 20-14. https://www2.fmc.gov/readingroom/proceeding/20-14.
Code (46 U.S.C. § 41102(c)). All Respondents filed an answer denying the allegations and raising affirmative defense.63
In February 2023, an administrative law judge granted, in part, IMCC’s motion for summary decision. As a part of the decision, the judge ruled that OCEMA’s practice of designating an exclusive chassis provider for merchant haulage and using merchant haulage volume to obtain discounted carrier haulage rates where motor carriers have no choice of chassis providers is unreasonable and does violate 46 U.S.C. § 41102(c). The Respondents appealed, asking the five FMC commissioners for review. In February 2024, the commissioners issued a ruling affirming the administrative law judge’s initial decision and ordered ocean carriers to cease requiring cargo owners and their motor carriers to use specific chassis on merchant haulage shipments.64
In June 2024, FMC initiated the non-adjudicatory investigation in response to reports that chassis providers are not complying with the cease- and-desist order of the ruling earlier this year. The February 2024 ruling established the right of shipper and trucker choice in chassis provisioning for merchant haulage in the four key U.S. markets of Savannah, Georgia; Los Angeles and Long Beach, California; Memphis, Tennessee; and Chicago, Illinois.65
The Supply Chain, Chassis Provisioning, and the COVID-19 Pandemic
Many supply chains are designed to work under a “just-in-time” principle, where inventory is kept at a minimum and monitored continuously, and materials and inputs generally are ordered on an “as needed” basis. Through a complex network of transportation services, businesses move supplies between countries for processing before they are shipped as final goods. Containerized shipping is the primary means of transport used for this purpose, and interruptions can lead to delays in the processing of final goods. Thus, this type of supply chain management, where production processes are divided into different segments across multiple countries, can be vulnerable to disruptions when demand patterns or supply conditions suddenly change.
During routine port operations, a number of factors can slow down the movement of containers and cause disruptions. Improving efficiency and eliminating congestion at ports and at other points in the nation’s intermodal
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63 See https://www2.fmc.gov/readingroom/docs/20-14/20-14%20Initial%20Decision%20Partially%20Granting%20Summary%20Decision.pdf.
64 See https://www2.fmc.gov/readingroom/docs/20-14/20-14%20Order%20(Public%20Ver).pdf.
65 See https://www.fmc.gov/articles/fmc-investigating-possible-failure-to-comply-with-chassis-provisioning-order.
system have been and remain important issues. Congestion sometimes results from events and practices that have developed over many years and under distinct conditions. Terminal congestion can arise due to larger ships carrying more containers, the bunching of vessels trying to unload containers, staffing shortages and/or limited equipment availability at the terminal, or an insufficient supply of chassis.66 To minimize congestion, the volume of containers coming off the vessels must correspond to the terminal’s ability to move containers out of the yard and onto other modes of transport. For example, as incoming containers are being unloaded, without an adequate supply of chassis (and truckers and tractors to move them), the containers begin to accumulate. Stacks of containers can lead to further delays as terminal workers shuffle containers while looking for a trucker’s assigned container. As congestion builds, the entire process is slowed and in-terminal dwell67 time increases, which essentially reduces the existing size of the chassis fleet and decreases the number of potential drayage trips for the trucker.
In contrast to congestion during standard port operations and minor disruptions in the supply and transport chains, the COVID-19 pandemic was global in scope and associated with disruptions across multiple factors, including demand patterns, manufacturing and warehousing labor shortages, maritime and terminal operations issues, and container distribution across locations. In March–April 2020, the sudden lockdown and work-at-home directives led to a sudden shift in consumer behavior, as the demand for a large share of certain retail goods dropped. Likewise, a large part of the service sector experienced a large reduction in demand.68 With less trade between the United States and its partners, in conjunction with a slowdown of Chinese manufacturing, ocean carriers decreased overall capacity and the number of scheduled shipments between Asia and North America. This also decreased the demand for shipping containers and the overall number of containers in circulation. By mid- to late 2020, rising consumer demand and increased economic activity led to an upturn in trade activities.69 While major retailers limited orders of nonessential goods,
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66 FMC. 2015. U.S. Port Congestion & Related International Supply Chain Issues: Causes, Consequences & Challenges. https://www.fmc.gov/2014-public-port-forums/#summary-of-port-forums.
67 Dwell refers to the amount of time containers and chassis spend waiting for transport; it can be associated with the length of time a vessel or terminal spends unloading/loading containers or the time containers sit on chassis once outside the terminal gates, often referred to as street dwell time.
68 Rodrigue, J.-P. 2022. A Review of Public Policy Responses to Supply Chain Pressures: An International Assessment. http://dx.doi.org/10.13140/RG.2.2.32037.47848.
69 U.S. International Trade Commission. 2021. The Impact of the COVID-19 Pandemic on Freight Transportation Services and U.S. Merchandise Imports. https://www.usitc.gov/research_and_analysis/tradeshifts/2020/special_topic.html.
pausing almost all new orders, those goods deemed to be essential saw a dramatic increase in demand. Suppliers and manufacturers faced a surge in orders, and as this output entered the distribution system, many ocean carriers were taken by surprise and slow to restore capacity.70 The pandemic also created labor shortages up and down the supply chain in mid-2020, as infection rates increased and travel restrictions and quarantine measures took hold, preventing workers from reporting to their jobs. Yet by late 2020, manufacturers began to fill orders, and an increasing number of vessels began arriving at U.S. ports; however, containers were not moving out of the terminals as fast as they were being unloaded from the ships, creating severe backups at ports.
As container vessels arrive at a port, they are directed to a berth to unload their cargo. If a berth is unavailable, vessels generally wait anchored outside of the port until a berth becomes available. Normally, this wait time can be as short as several hours or as long as several days. During the pandemic, the wait time at some ports lasted weeks. Disruptions and delays at one port complex can propagate throughout the supply chain, delaying the distribution of cargo to inland terminals and final destinations. For example, during fall 2019 at the Ports of Los Angeles and Long Beach, container vessel arrivals averaged 15–19 per week, and only two to four vessels per week were at anchor within 25 miles of the ports (see Figure 2-5). By fall 2020, the average number of vessel arrivals had doubled to 40–45 per week, and 10–15 vessels per week were at anchor. At the height of the congestion in fall 2021, the average number of container vessel arrivals exceeded 100 ships, with more than 75 vessels at anchor at some time.
During the pandemic, shortages of port workers and drayage drivers were a factor in the severe port congestion and disruptions at the Ports of Los Angeles and Long Beach, yet other factors included the lack of available chassis and the lack of available warehouse space. Even if a driver could find a chassis, the driver might not be able to deliver the container to a final destination and unload its contents. Often the container was left on the chassis at a warehouse or a customer’s location, preventing the efficient use of the equipment. The result was massively increased street dwell time that impacted chassis availability, worsened congestion and disruptions, and led to a greater need for equipment to achieve the same level of service.
CHAPTER SUMMARY
Containerization and the resulting development of intermodal transportation systems started in the United States and spread to overseas markets
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70 Rodrigue, J.-P. 2022. A Review of Public Policy Responses to Supply Chain Pressures: An International Assessment. http://dx.doi.org/10.13140/RG.2.2.32037.47848.
SOURCES: Rodrigue, 2024. Vessel data from Marine Exchange of Southern California. Freight rates from United Nations Trade and Development/Clarkson Research.
as the benefits of improved efficiency and reduced costs became apparent. The intermodal supply chain in the United States is critical to the nation’s economy and is comprised of multiple stakeholders who are a part of a vast, complex, and heterogeneous system. At the center of this system is the intermodal shipping container, which is interoperable and transferable across modes to move freight over long distances and across international boundaries. Facilitating this movement is the intermodal chassis that is used by trucks for the regional and local movement of containers.
Prior to 2010 in the United States, ocean carriers owned and operated chassis and incorporated chassis provisioning as part of their product offering, with the cost of the chassis included in the door-to-door price that the ocean carrier charged customers. From 2010, ocean carriers began selling chassis to leasing companies, who leased the chassis back to the ocean carrier or to motor carriers.
In 2008, the Federal Motor Carrier Safety Administration (FMCSA) published new requirements for chassis roadability that would make chassis owners subject to FMCSA Regulations and called for a shared safety responsibility among chassis owners, motor carriers, and drivers. The Final Rule required all chassis to obtain a USDOT identification number and to have a single chassis owner. Chassis would now be subject to roadside inspections by certified inspectors, who could issue violations during the inspection, including possible “out-of-service” violations. Chassis in the U.S. are provided to motor carriers through one of four standard models, including motor carrier ownership. This is unique to the United States, as motor carriers in other countries tend to own their chassis, and trucks and chassis are treated as one unit.
The COVID-19 pandemic was global in scope and associated with disruptions across multiple factors, including demand patterns, manufacturing, maritime and terminal operations, and container distribution. The increase in street dwell time resulted in a decrease in available chassis and the inability to move containers throughout the U.S. supply chain.
The next chapter reviews the advantages and disadvantages of the chassis provisioning options as identified by stakeholders. Based on these consultations, the chapter focuses on issues related to contractual agreements for sourcing chassis.
