Disunified Chassis Leasing System Exacerbates Port Congestion

The ongoing container shortage and port congestion is becoming old news. Freight income per TEU is higher than ever due to the COVID-spurred consumer demand for goods. The industry is seeing a large number of blank sailings, not for lack of cargo, but because the containers sit in waiting for so long, they lose their place in the rotation.

"If your product isn't in the U.S. by the end of October, you've hurt your ability to maximize holiday sales," FreightWaves Senior Retail Analyst Andrew Cox said.

The Port of Los Angeles tried to stick a Band-Aid on the problem with solutions like Return Signal ⁠— a visibility platform designed to help truckers know when and where to return empty containers, in hopes of increasing dual transactions.

In an interview with FreightWaves, the founder of Port X Logistics, Brian Kempisty, said that the problem with solutions like these is the lack of existing infrastructure and staffing. 

"The terminal has to have the space and the staff in order to accept those returns, but they haven't had the space or the staff," said Kempisty. "There's more demand than there is supply for various reasons and that's why things are not getting moved. It's not just that there's no drivers out there, but there's the chassis situation at major ports. They might buy 400 chassis but guess what? Chassis don't stack themselves and with nowhere to put them, we either have to go to the Inland Empire 60 miles away, which nobody wants to pay for, or you try to do the best you can in this money-constrained space."

Now move in-land to Chicago, for example. In less congested times, the containers would come off the rail ramp and quickly get onto a chassis, but now many containers are being put on the ground due to lack of chassis. If 1,700 containers are on the ground without a chassis in site and you're a BCO, the chance of moving your container from the bottom of that pile is about zero. 

The U.S. is unique in how it distributes chassis through pools and multipool agreements as opposed to truckers owning their own. Kempisty thinks the current structure is exacerbating the infrastructure and congestion problems. In Canada and Europe, drayage carriers own their own chassis. Kempisty said you never hear of chassis shortages in those places. 

"Here, the pools are not unified. This is what I believe we should do. The government's giving out $4 trillion, right? How about giving drayage providers grants to go get chassis and just put a fork in this pool system that hasn't worked. The major lease companies who provide chassis to the pools are not looking out for the interest of the BCOs or the ports. They're just trying to make the most money. Also, consider who maintains the pool equipment. Maintenance is a big and costly issue, as much of it is done with ILA/ILWU labor at the terminals. I think we need to squash the whole thing and start over."

Kempisty believes government grants would be necessary, since a high majority of drayage operators  in the U.S. are owner-operators or small businesses that don't have the funding to purchase 300 chassis at a time. Giving chassis ownership to the drivers would inevitably improve the upkeep of chassis, which currently leaves a lot to be desired.

"If you want a long haul dray to go from LA to El Paso, some of the tires are nearly bald, the lights barely work and the wiring is terrible," he said. "You don't want to be taking these things 2,000 miles on a round trip. If you're an owner-operator and you've got your own truck, who do you think changes the brakes, greases it and makes sure that it's running appropriately? It's the trucking company and the driver that are doing that maintenance."

This kind of creative problem solving is necessary to resolve the current supply chain chaos ⁠— a cacophony of siloed interests without a unified platform for visibility and communication. Kempisty said that if Hamilton Beach, General Motors, Ford and Frito-Lay are paying double for their imports versus what they paid years ago, the consumer is going to end up paying. Logistics providers are therefore having to work overtime to provide that visibility service and unification, which requires shippers to plan ahead. 

"We're working out some integrations to track the inbound containers, but that doesn't always give you the data. Sometimes we have to go to the steamship line site, and other times we go to the rail site or to the terminal site. Sometimes we go to all three. It's really having the stakeholders care about the entire supply chain and not just their own individual silos, but that's a tall task."

The shippers whose supply chains are running more smoothly than others are those that preplan and provide Port X their container numbers at the time of departure from Asia. Port X can then track the vessel and container availability, as well as pay any fees on their behalf. Because of its growth and success as a company, Port X can be more particular about which customers it takes on ⁠— giving preference to those that play by the rules.

"The people that we've seen failing on the manufacturing end are the ones that think that they can be nimble in this environment. They are making way too many last-minute changes. If you think you're just going to pull a hazmat driver out of the air at the last minute and get this thing delivered, you're sadly mistaken."