Chassis Shortage: Is there an end in sight?
“Shortage” has become a pretty ubiquitous term these days—and it applies to yet another factor adding to supply chain constraints: a shortage of chassis to move all those containers.
The shortage isn’t anything new. In fact, the U.S. Department of Transportation (DOT) opened a probe regarding the limited supply of chassis in September of last year.
There are various factors playing a role in the shortage—including the implementation of tariffs on chassis made in China; limited domestic production; and the difficulty getting parts to maintain chassis that could be placed back in service.
Then there are all the other supply chain complexities that have contributed to a persistent container-chassis mismatch at any given location or point in time.
Here, we’ll provide a brief overview of what some experts say about the current state of the chassis shortage and a few of the initiatives aimed at turning things around.
Current State of the Chassis Shortage
As with so many things related to the never-ending supply chain disruptions, some may hope the chassis shortage will be resolved sometime soon. But the Journal of Commerce (JOC) reported in early March that experts are predicting it will last into next year:
“There will not be enough marine chassis produced to make a dent in the supply shortage until 2023 because of rising volume, longer street dwells, and supply chain slowdowns affecting manufacturers, panelists told TPM22.”
Bring Your Own Chassis
On June 2nd, Transport Dive reported that TraPac’s chassis pit at the Port of Oakland had closed: “The chassis pit closure, amid demand far outstripping supply nationwide, follows repeated advisories from TraPac about limited availability in Oakland since at least 2015.” As a result of the closure the terminal operator sent an email out to all truckers, requiring them to bring their own chassis to pick up containers.
Quoted in the article, Matt Schrap, CEO of the Harbor Trucking Association, said “If you want to move a box, then you’ve got to bring your own chassis. Well, the problem with that is not everyone has their own chassis.”
Transport Dive updated its reporting on June 8th, noting that TraPac’s chassis pit at the Port of Oakland had reopened, but “the terminal operator continued to advise drivers to bring their own chassis as availability remains limited.”
According to a July 15th chassis update for Oakland on TraPac’s website:
Below status is subject to change without notice.
**All truckers are required to bring their own chassis for transactions**
20′ – VERY LOW
40′ – LOW
45′ – VERY LOW
Yet Another “Unprecedented” Supply Chain Situation
In a June 22nd post, a Supply Chain Dive headline underscored the ongoing shortage: “Chassis constraints create ‘unprecedented’ situation at ports: TRAC Intermodal.”
According to James Segata, vice president of strategy for TRAC Intermodal, the wait for truckers to return chassis is almost three times longer than before the pandemic.
“It’s a phenomenon that we are seeing across all markets,” Segata is quoted as saying. “Some are obviously a little worse than others.”
But as Supply Chain Dive notes, there are many factors that may keep truckers from returning chassis on time—including wait times to load or unload in various locations.
As a result of the shortage, TRAC has been focusing on “refurbishing, upgrading and repairing unused chassis to raise its fleet utilization rate to as close to 100% as possible” and is investing in domestic manufacturing to increase their inventory.
Quoted in the article, COO Val Noel said that even with all of their efforts, it’s difficult to keep up with demand, since chassis are “getting consumed on the street three times longer than what they historically have been.”
“We really haven’t caught our breath now for almost two years,” Noel said. “It’s unprecedented.”
No “Immediate Remedy” in Sight
In its Supply Chain Roundup published on June 28th, J.M. Rodgers Co., Inc (JMR) also provided a dim assessment of the chassis situation.
“The nationwide chassis shortage that continues to impact supply chains throughout the US does not have any end in sight after the imposed duties on Chinese-made chassis in 2020 have brought the import of new chassis into the country to a halt,” JMR said.
“The chassis shortage has left many shippers and supply chain professionals frustrated as there are not enough chassis to prevent cargo from dwelling for much longer at ports and inland checkpoints.”
Citing the stockpiling of inventory over the last ten months by retailers who are looking to get ahead of peak season, JMR said the surge in orders has been “putting additional strain on chassis availability and leaving many more cargo containers sitting in ports.”
Noting that Chinese company CIMC “sourced approximately 90% of all chassis in the US market,” prior to the implementation of tariffs, JMR said although there have been efforts to ramp up production from other sources—including those within the U.S.—long lead times for both new orders and the construction of new facilities means there will be little positive impact in the near term.
But There’s Good News, Too.
Although the current chassis shortage is creating a mess on a variety of fronts, the good news is there’s hope on the horizon. Here are a few recent headlines demonstrating the efforts being made to help turn things around.
South Carolina Ports welcomes its first shipment of chassis
On January 24th, South Carolina Ports announced it had received its first shipment of chassis, “marking a significant milestone in the ongoing development of the SC Ports-owned and operated SMART chassis fleet.”
According to the statement:
“This initial shipment delivers more than 700 chassis with another 1,600 expected to arrive in February.”
“South Carolina Ports will continue receiving chassis equipment throughout 2022 as the Port builds its fleet leading up to the full launch of the SMART chassis pool in 2023.”
“SC Ports continues to work with the management of the existing South Atlantic Chassis Pool, SACP 2.0, to create a smooth transition that will ensure uninterrupted service for our ocean carrier customers, shippers, and motor carriers.”
New sixty thousand strong South Atlantic Chassis Pool announced
On February 28th, Jacksonville Port Authority announced the formation of a “new” South Atlantic Chassis Pool—dubbed “SACP 3.0.”
“The Ocean Carrier Equipment Management Association (OCEMA), Georgia Ports Authority (GPA), Jacksonville Port Authority (JAXPORT), North Carolina State Ports Authority (NC Ports), and Consolidated Chassis Management LLC (CCM) have signed a historic Memorandum of Understanding to establish a new South Atlantic Chassis Pool (‘SACP 3.0’) based on a single provider pool model,” the press release said. “The new pool will start in October 2023.”
According to the announcement:
“The pool will offer 60,000 chassis to truckers, beneficial cargo owners, ocean carriers and other port users.”
“Under the new structure, the SACP will transition from the current multi-contributor chassis pool to a single provider utility type pool.”
“Chassis rates will be made available to pool users through a publicly available tariff.”
“The pool will continue to be owned by a subsidiary of OCEMA and managed by CCM, but subject to forward looking operating parameters agreed with the ports.”
“The SACP 3.0 is designed to infuse the pool with new high-quality chassis by placing the responsibility for procuring assets with a single provider, CCM.”
“The single provider model takes the best qualities of both the current gray pool and proprietary models and combines them to offer a safe, reliable, cost-efficient, and scalable premium service.”
“The SACP will continue to be the largest fully interoperable chassis pool in the U.S., with over 75 locations in the states of Alabama, Florida, Georgia, North Carolina, and South Carolina.”
“A filing with the Federal Maritime Commission reflecting the new pool arrangement is expected in the near future.”
TRAC Intermodal Partners With American Made Chassis (AMC) to Increase 40-foot Chassis Fleet
On March 16th, TRAC Intermodal announced its plans to increase its 40-foot fleet—relying on domestic production to do it.
According the statement, “Continuing a commitment to increasing the supply of chassis following a surge of imports and elevated equipment dwell time, TRAC Intermodal is increasing its fleet of 40-foot chassis through a partnership with American Made Chassis (AMC), an alliance of LB Steel and Integrated Industries.”
Further details include:
“Under this agreement, LB Steel is building frames for the new chassis and Integrated Industries is blasting, painting and installing all equipment components at its Dixmoor, IL facility.”
“TRAC’s procurement of these chassis aligns with its strategic objective of partnering with key manufacturers in North America to build high-quality chassis.”
“The AMC chassis capacity will complement TRAC’s core manufacturer capacity.”
TRAC is just one of many chassis manufacturers ramping up production efforts—as the Coalition of American Chassis Manufacturers noted in the letter it sent to President Biden last year.
A press release announcing the October 13th letter described both its intent and the efforts being made to ramp up domestic production efforts.
“Following on from President Biden’s meeting and constructive efforts to help get America’s supply chain moving again, the Coalition of American Chassis Manufactures sent a letter to the President calling on the Administration to maintain antidumping (‘AD’) and countervailing duty (‘CVD’) tariffs on imports of intermodal container chassis from China,” the statement said.
“The letter notes that since the imposition of the orders, America’s chassis manufacturers have hired hundreds of new workers, with plans to hire hundreds more, invested millions of dollars to increase production and capacity, and increased production and capacity by over 400% with additional planned expansions.”
Factors Contributing to Ongoing Supply Chain Congestion
Although published at the end of last year, the two videos below provide a few perspectives from experts about ongoing supply chain congestion and contributing factors—which include a shortage of chassis.
In the following CNBC video, Matt Schrap, Harbor Trucking Association CEO, joins “Squawk on the Street” to discuss “transportation bottlenecks and where the problem truly lies.”
And in the following SupplyChainBrain video, Charles Armstrong, founding partner at Orion Advisors Group, “explains how we came to this state of affairs.”