New chassis business model would cut costs, trucker says

From the Journal of Commerce –

Long Beach – Truckers and beneficial cargo owners (BCOs) could save almost 50 percent on daily rental fees for chassis if the industry would agree upon a common model that allowed the party paying for chassis use to choose the equipment provider, according to a national trucking representative.

Dave Manning, president of TCW trucking in Nashville, Tennessee, and incoming chairman of the American Trucking Associations, said, for example, that his cost for use of a chassis from the trucker-controlled North American Chassis Pool Cooperative, of which Manning is president, is $12-14 per day. However, if a trucker is instructed by a shipping line to use a chassis from an intermodal equipment provider (IEP) it designates, as often happens when carriers are involved in the transaction, the daily rental fee can be $20.

“If you are paying for the chassis, make sure you can pick the provider of your choice,” Manning told the annual Agricultural Transportation Coalition conference Thursday in Long Beach.

Probably the main obstacle standing in the way of a smooth chassis regime is the decision by most carriers to stay tangentially involved in equipment decisions for container moves they control through their ocean contracts with BCOs. In those moves, the shipping line includes the cost of the chassis in the all-in charge for ocean move plus delivery of the container to the customer’s door.

In the United States, there was basically one chassis mode from the beginning of containerization in the 1950s until 2009 – ocean carriers owned the chassis, stored them at marine terminals, and provided them to BCOs along with the containers. In 2009, Maersk Line announced its decision to exit the chassis business. It formed a new company known as Direct ChassisLink Inc. to own, maintain, and provide chassis to customers.

Other carriers over the ensuing years began to pull out of the chassis business, and then on March 1, 2015, the three major IEPs in Los Angeles-Long Beach formed a neutral, or “grey” pool of pools with about 80,000 chassis that are interoperable, meaning a chassis can be picked up or dropped off at any location by users of the pool. Other pool arrangements have been formed over the years at different locations throughout the United States.

Truckers generally agree that of all the models, the grey chassis pool is the most versatile in the options it offers and the operational inconveniences it eliminates, and therefore preferable, at least in meeting their needs. “We believe this is the answer,” said Donna Lemm, executive vice president of IMC Companies in Memphis.

In reality, though, the gradual exit of about 20 ocean carriers from the chassis business since 2009 has not gone smoothly. Arrangements vary from region to region, and chassis shortages and surpluses occur too frequently in major harbor complexes. Truckers complain that the national fleet, which Lemm estimates as having an average age of 19, has too many unsafe or out-of-order chassis. “This thing is a mess,” she said.

The problem with the current system, from the prospective of truckers, is that for moves controlled by a particular shipping lines, truckers must use only the chassis owned by the equipment provider with which that shipping line has a business relationship. That equipment works against truckers that own or lease their own chassis, which is becoming more popular in the industry. In another common scenario, the shipping line instructs the trucker to use a particular IEP-owned chassis, but the terminal where the inbound load is located may not have that IEP’s chassis on hand, so the trucker has to go to another site to retrieve an acceptable chassis, sometimes without compensation.

Manning said another residual impact to truckers is that each carrier has a business arrangement with an IEP that provides the shipping line with a discounted price for the door moves that it controls. To compensate for lost revenue, the IEPs increase the price of other chassis that are used in “merchant haulage” in which the BCO controls the move. “The shipping lines continue to increase their merchant haulage rates,” he said.

There is no single solution to this condition as long as ocean carriers choose to remain at least partially in the chassis business, but Manning advised truckers to begin by approaching the carriers directly and explaining the inconveniences and extra costs their policies are creating. He said that in many instances carriers will respond with an acceptable arrangement.

If that does not work, truckers, possibly through their associations, can approach the Federal Maritime Commission or the Department of Justice. Manning said Congress may also be interested in the issue as it reviews the Shipping Act. Truckers can also tell their story publically to the press, or, if needed, consider lawsuits.

In Southern California, another strategy is being considered. Weston LaBar, executive director of the Harbor Trucking Association, said the ports of Los Angeles and Long Beach are actively exploring the feasibility of encouraging the removal of chassis from marine terminals, which would free up more land for cargo-handling. This could happen if the ports are able to locate enough parcels in the massive port complex for establishment of common chassis storage depots. If enough suitable properties can be repurposed for these start-stop operations, sufficient chassis from all of the IEPs in the pool of pools could be made accessible for truckers within the general harbor area.

Managing Pinch Points

Last year was a tumultuous year for the furniture industry’s supply chain, and more disruption could be on the way in terms of ocean-carrier contracts and distribution of goods stateside.

Pinch points exist all along the line of getting goods from plant to consumer. Container shippers continue to figure out how they can make money in a market with excess capacity, and a tightened delivery infrastructure stateside with consolidation among trucking companies geared toward furniture doesn’t help.

To read more visit Furniture Today.

New ocean carrier alliances pose challenge for logistics manager’s “cargo connections”

Ocean carriers are “bleeding cash” as they rush to stem the flow by aligning themselves in new alliances, says a prominent industry analyst. But will that mad dash be enough for some of the most desperate cases?

“It’s a bit too early to tell,” admits Chas Deller, CEO and Chairman, of 10XOCEANSOLUTIONS, Inc.

To read more visit Logistics Management.

After 38 Years, David Formella is Still Trucking

When David Formella started driving at age 20, he couldn’t imagine he’d stick with trucking for nearly 40 years. His tenure is evidence that anyone dedicated to learning a new career can succeed in it for a lifetime. Case in point – when he started, he didn’t even know how to drive a truck! With time — and driving lessons –he discovered a career (and a company) that he’s loved for decades.

“With the number of changes I’ve seen over the years in the trucking industry, one thing has remained the same: the freedom and beautiful scenery you experience on the open road.” – David Formella

With help from DNJ owner Joe Tovo, Jr., David was able to get a handle on maneuvering big rigs. Over the next four decades, he witnessed he company’s expansion across the Midwest and the growth of technology in the cabs he’s driven. “Back when I started, you didn’t have phones or computers in your truck with you. A payphone was your best friend.”

Now, drivers communicate more easily and quickly, thanks to cell phones. What’s more, dispatchers monitor weather and traffic to determine the best route for a driver’s destination. They also utilize in-truck technology to keep track of deliveries via satellites and GPS.

This also allows the driver’s focus to stay fixed on the road ahead, which David says is most important for a lasting career in trucking.

“As a driver, you must be mindful of others on the road and always try to expect the unexpected. Safety is key, especially if you want to drive for as long as I have.”

His commitment to staying safe on the road has allowed him to go home every night for as many years as he’s dedicated to DNJ.

Memphis firm IMC Companies hires executive vice president of national sales

IMC Companies has named its first executive vice president of national sales, a move that company officials say reflects recent growth beyond Memphis and the South.

The Memphis-based company announced it has hired Donna Lemm, former vice president of sales and marketing for Mallory Alexander, for the position. To read more, visit The Commercial Appeal.

Technology is essential to the future of drayage

IMC Companies’ Chairman Mark H. George spoke to JOC.com in late 2016 about the future of drayage as the industry faces major change on the ocean carrier side and the importance of technology investment as well as his company’s Northeast expansion plans. To view this interview visit the Journal of Commerce.

Conversation With…Mason George of IMC Global Solutions LLC

Mason George, a native Memphian graduated from Memphis University school in 2005 and went on to earn his undergraduate degree from Samford University in 2009. He married his wife, Malaney, and moved to Kansas City to open a container drayage terminal for the company of his father, Mark George: Intermodal Cartage Co. Inc (IMC).

In 2013, after having found success in the Midwest, the couple moved back to Memphis, where Mason George started an international freight forwarding division for IMC Cos. To read more, visit the Memphis Business Journal.

DCLI to Raise Chassis Fees; Trucking Response Mixed

Direct ChassisLink Inc. will raise daily chassis rates it charges truckign companies to haul contianers from ports in the Southeast, Gulf Coast and Midwest beginning Dec. 15, following similar increases from Trac Intermodal and Flexi-Van Leasing Inc. this summer.

DCLI will raise rates 50 cents in the Southeast and Gulf Coast to $19 and $19.50, respectively, and 75 cents in the Midwest to $20.

To read more, visit Transport Topics.

Lawmakers Working to Boost Local Logistics, Transportation Sectors

Lawmakers representing the Memphis area on both the state and federal levels are taking steps to help the area’s transportation and logistics sectors in 2017 – from a second swipe at a federal grant to redevelop Lamar Avenue to the resubmission of a state bill that would incentivize companies for reducing wait times for truck drivers.

Democratic U.S. Rep. Steve Cohen is working on the second attempt at the FASTLANE Grant after the U.S. Department of Transportation turned down the state’s first application in June. The $180 million would have gone toward the $300 million redevelopment of the Lamar Avenue corridor of U.S. 78, which remains constricted for trucking flow.

To read more, visit The Daily News.

Trans-Pacific cargo rolled on spot rate strength and late peak-season surge

US importers are riding an increase in rolled cargo, as trans-Pacific eastbound spot rates hold at levels at twice that of some contracted prices and vessel utilization inches up on a late peak-season surge.

While the increased freight rates provide a measure of relief to an ocean carrier industry that is expected to loose as much as $10 billion globally this year, it is uncertain how much longer the current peak-season conditions in Asia-US trade will last. Some carriers are telling shippers that cargo will keep getting rolled through the month, while others are warning to expect spot rate cargo to gain preference over contracted cargo into November, a handful of US importers told JOC.com.

To read more, visit the Journal of Commerce.