North American Chassis Pool Cooperative (nacpc) Activities Update nacpc provides Chassis Information to the fmc
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- Uniform Intermodal Interchange and Facilities Access Agreement (UIIA)
- North America Chassis Pool Cooperative, LLC. (NACPC
- NACPC Completes Initial Chassis Equipment Acquisition
- Motor Carriers Establish Chassis Pool Cooperative
| North American Chassis Pool Cooperative (NACPC)
Activities Update NACPC Provides Chassis Information to the FMC As part of an IMCC port congestion briefing of the Federal Maritime Commission (FMC) June 18, 2014, the following background information was provided which discusses NACPC and the rapidly evolving chassis ownership and deployment model and the ensuing port drayage related problems and challenges that are now impacting port congestion. Background The chassis as an intermodal utility is essential to the movement of freight supporting U.S. global container commerce. Since the introduction in 1956 of containerized intermodal shipping in the United States, foreign based ocean carriers providing regularly scheduled liner service have generally provided chassis for importers and exporters and their motor carrier transporters that pick up and deliver container cargo at ports and inland intermodal terminals. This U.S. model is/was unique in that the ocean carriers - not motor carriers, terminals or shippers- were the primary suppliers of chassis. Terms and charges for the use of the container and chassis historically were specified in liner tariffs and/or service contracts between the ocean carrier and the shipper. For motor carrier transport, most ocean carriers utilized the intermodal industry’s standard interchange agreement- the Uniform Intermodal Interchange and Facilities Access Agreement (UIIA) with added addendums covering specific terms for free time and per diem filed by individual ocean carriers when their terms and charges differed from the standard UIIA provisions. In this standard chassis provisioning model motor carriers utilized ocean carrier provided chassis and were not charged daily chassis rental fees. Beginning in 2009 / 2010, however, ocean carriers began to individually announce that, as of a date certain they would no longer furnish chassis for cargo shipments. One ocean carrier thereafter split off its chassis operation and began charging motor carriers a daily rental fee for chassis use. Other ocean carriers issued releases advising motor carriers that its chassis were sold and henceforth motor carriers should use chassis provided by the specific purchaser. These “getting out of the chassis supply business” announcements were and continue to be made in a random fashion and include many operating and rate exceptions by geographic locations, trade lanes, common carriage, contract carriage, store door service, intermodal and port to port service. In this evolving new chassis ownership and deployment marketplace shippers and motor carriers are now confronted with a widely varying and confusing array of transport terms for cargo movement that is complex, expensive and makes planning and billing accountability very difficult and operationally inefficient. Moreover, motor carriers often are confronted with no realistic options to obtain/provide their own chassis because in many wheeled locations (container is already mounted on a chassis when the trucker arrivers) flipping the container to your own chassis instead of taking it already mounted on another chassis provider’s equipment is costly/time consuming/not practicable. In addition, providing your own chassis is often not practicable because most intermodal motor carriers competing for cargo shipments are small or medium size firms that do not have the capital or resources necessary to acquire their own chassis. As a result of this “No Trucker Choice” chassis supply reality, in many areas and intermodal facility locations daily rental charges are subject to little or no competitive rate pressures. In order to proactively address the otherwise limited options available to motor carriers in the emerging chassis supply model, the North America Chassis Pool Cooperative, LLC. (NACPC) was incorporated on October 3rd, 2012. The Company formed by a group eleven U.S. motor carriers received approval from the U.S. Surface Transportation Board (STB) on January 22nd, 2013, to commence operations as a joint venture chassis pool cooperative. With its STB authority NACPC has begun to acquire or lease intermodal chassis from ocean carriers and or chassis leasing companies and contribute these chassis into various existing chassis pools in the U.S. NACPC’s mission is to establish an effective chassis supply utility that will be implemented on a national basis to support the U.S. intermodal container network with efficient chassis supplies, a modernized chassis fleet and a transparent set of economics and terms of use that will benefit all users. An important objective of NACPC is to preserve the existing “gray pool” low cost chassis pool model previously established by the ocean carriers under their FMC approved agreement with the Ocean Carrier Equipment Management Association, Inc. (OCEMA). These open pools are managed by Consolidated Chassis Management (CCM) a pool management company owned by OCEMA. Shippers, ocean carriers, railroads and motor carriers all have benefited from this initiative, which included CCM pool management services which are assessed on an “at cost” pass through basis and serve to moderate the overall cost of containerized freight transport. Contributory “gray pools” such as those managed by CCM allow users to draw any chassis from the pool regardless of ownership. The contributory pool model thus eliminates duplicative costs and maximizes the use of limited space at port and/or inland intermodal locations by obviating the need for a contributor to have its own chassis storage facility. It also ensures an adequate supply of chassis for all users. CCM manages the chassis in the pools (including logistics, billing, inventory supply, maintenance, repair and the repositioning of the chassis) but usage arrangements are determined between the chassis contributor and its users. CCM pools thus foster competition by allowing motor carrier users the ability to choose from more than one chassis provider in a particular pool i.e. to have “Trucker Choice”. As the evolution in the new chassis supply model has progressed, however, there is now cause for concern that this successful gray pool model is being eliminated and replaced by unregulated chassis providers whose growing dominant control of equipment supply and interchange terms is serving to stifle the introduction of competitive chassis supply alternatives. Indeed, ocean carrier chassis sales in the past 24 months have been aggressively pursued by only a few well financed leasing companies and the resulting post-sale motor carrier chassis leasing terms are now highly restrictive with daily rental charges most often being dictated - not negotiated. It is important to note that even though ocean carriers have decided to sell their chassis, they still need to secure chassis to support their continuing activities at marine terminals, intermodal rail operations and their own carrier haulage. As a result, ocean carriers are securing, as a part of their sales negotiations and arrangements with leasing companies or other buyers, a contractually assured supply of chassis for what is often very favorable or even below market terms. While from a business point of view this may appear to be a reasonable goal in the ocean carrier transition activities, motor carriers and shippers are concerned that the cost for these below market on terminal services are or will in fact transfer the differential costs indirectly to the motor carriers or other supply chain participants by increasing the daily chassis use rates thereafter charged to motor carriers who are forced to rely on the dominant leasing companies who now deploy the ocean carrier equipment. Indeed, as referenced above, in some recent ocean carrier announcements motor carriers are advised that future chassis transport of their ocean containers must be with the leasing company / buyer designated by the ocean carrier at a rate already set in the purchase contract. Motor carriers that now must deal with these directives in most instances have no practical opportunity to select their chassis provider or shop for more competitive charges and terms. What is needed to correct the noncompetitive chassis choice problem is an oversight initiative undertaken by the FMC that could help define and guide the new chassis supply and deployment model. The chassis, as an intermodal utility, is essential to the movement of containerized freight in U.S. commerce but the evolving multimodal chassis ownership and deployment model presents federal jurisdictional challenges due to the non-traditional and cross functional nature of the new chassis deployment system. FMC could help bridge the jurisdictional issue by providing the forum for chassis oversight activities bringing ocean carriers, chassis leasing and management companies, motor carriers and potentially the STB together to facilitate system development and ensure that the emerging model(s) do not cause substantial increases in transportation costs or decreases in transportation services. Daily chassis rate competition can be sustained by ensuring that motor carriers at all times have the ability to select their chassis provider and that the transfer of the chassis fleet from one mode to another is accomplished in a manner that provides fair treatment for all stakeholders in the container transport sector. NACPC Completes Initial Chassis Equipment Acquisition The North American Chassis Pool Cooperative, LLC (NACPC) announced February 27, 2013 that it had completed its first agreement to acquire intermodal chassis from a major international ocean carrier - China Ocean Shipping Company (COSCO). “As a result of the approval of our the operating authority by the U.S. Surface Transportation Board (STB) last month, NACPC, working with COSCO and Direct Chassis Link, Inc. was able to successfully complete negotiations to buy or lease chassis equipment from COSCO to be used and contributed into the Mid-South Consolidated Chassis Pool” said Dave Manning, NACPC chairman and president of TCW and Tennessee Express based in Nashville. This agreement covers over 1300 chassis and is one of several contracts actively being pursued by the company. NACPC, the only chassis pool company owned by motor carriers, was formed last year with the goal of establishing an effective chassis supply utility that will be implemented on a national basis to support the U.S. intermodal container network with efficient chassis supplies, a modernized chassis fleet, and a transparent set of economics and terms of use that will benefit all users. Motor Carriers Establish Chassis Pool Cooperative On January 22, 2013 the U.S Surface Transportation Board (STB) announced the approval of the cooperative chassis pool agreement submitted December 4 by the North American Chassis Pool Cooperative (NACPC). NACPC is a limited liability company currently comprised of a small group of motor carrier companies that are also members of ATA’s Intermodal Motor Carriers Conference (IMCC). NACPC becomes the first motor carrier entity to seek and gain approval to operate within the evolving chassis pool marketplace. Under federal law, STB approval also means motor carrier participants in NACPC are generally exempt from the antitrust laws in their operation of NACPC. NACPC was formed in October 2012 to establish an effective chassis supply utility that can be implemented on a national basis to support the U.S. intermodal network with efficient supply levels, a modernized chassis fleet, a transparent set of economics and terms of use that benefit all users and shippers. An important objective of NACPC is to preserve-not only for its members but for all others using NACPC chassis-the existing “gray pool” low cost chassis pool model previously established by the ocean carriers. By pooling resources, NACPC believes it will be able to achieve important cost savings with respect to not only the acquisition and leasing of chassis but also on requisite insurance costs and the costs of long overdue chassis modernization and refurbishing. NACPC will operate on a non-profit basis, with charges for daily chassis usage based on covering its ordinary and necessary expenses, including expenses associated with future chassis acquisition. The chassis modernization and refurbishing program will consist of replacing bias ply tires with radial tires, installation of auto-inflation devices, installation of self-adjusting brakes and improved lighting. These equipment improvements are expected to reduce long-term maintenance costs and improve FMSCA Roadability safety compliance. Further, modernized chassis will increase driver productivity by reducing time delays – repair waiting time drivers must now often endure before they can safely leave the intermodal terminal and transport container freight to their customers. NACPC member companies are California Multimodal, LLC; Containerport Group, Inc.; Devine & Son Trucking Co., Inc.; Eagle Systems, Inc.; G & P Trucking Company, Inc.; Intermodal Cartage Co., Inc.; Reliable Transportation Specialists, Inc.; Tennessee Express, Inc.; Tri-Modal Distribution Services, Inc.; Farruggio's Express; and Triple G Express, Inc. NACPC membership is open to qualified motor carriers.
During our spring meeting in Florida, Tioga Group reviewed and discussed the results of carrier interviews regarding member opinions on establishing a motor carrier controlled chassis pool and identified the areas of consensus and disagreement among interview participants on the project needs and challenges. The board then voted unanimously to proceed to the next project phase and a small working group of conference members was formed and will meet in Chicago in August to begin work on putting together a Business Plan for the venture. Recall that the strategic goals of the project are to
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