ILA concerned about NY/NJ chassis depot rents

Increasingly high rents charged to chassis providers by the Port Authority of New York and New Jersey could hurt the port’s overall competitiveness, says Dennis Daggett, executive vice president of the International Longshoremen’s Association.    The International Longshoremen’s Association (ILA) is expressing concerns about the rents that the Port Authority of New York and New Jersey (PANYNJ) is seeking from container chassis providers as they move operations out of marine terminals to other locations near the docks.
   According to a letter dated May 8 from ILA Executive Vice President Dennis Daggett to Molly Campbell, the director of PANYNJ’s Port Commerce department, and John Nardi, president of New York Shipping Association, rents currently being negotiated by the port authority are “higher than the depots can afford and are also higher than the market will bear given the parcels’ location.”
   “Recently, several chassis depot operators are in the process of relocating their operations in the port and have entered into negotiations with the port authority for new leaseholds,” Daggett wrote. “As you are likely aware, the port’s marine terminal operators are no longer subsidizing the chassis depots’ leases. Nevertheless, the current rents being demanded by the port authority seem to presuppose depots should pay at the same rate as marine terminals.
   “A chassis depot is not a marine terminal, and, as a result, the depots are seeking to lease parcels that have no pier access,” he added.
   Daggett’s letter was specifically directed to Campbell and Nardi because of their roles as co-chairs of the Council on Port Performance, a group of stakeholders that has been striving to make the Port of New York and New Jersey more competitive.
   One of the group’s biggest priorities has been the establishment of a port-wide “gray” chassis pool, with equipment contributed by the three major chassis lessors in the area – Flexi-Van, Direct ChassisLink Inc. (DCLI), and TRAC Intermodal – similar to the interoperable pool that has been set up in the ports of Los Angeles and Long Beach.
   Earlier this month, Flexi-Van and DCLI formed a gray pool, but TRAC, which owns about two-thirds of the 30,000 chassis in the New York/New Jersey area, is not a member, at least not yet. Because it has such a high percentage of the chassis in the region, TRAC has wanted to have more say in how the pool is governed.
   Daggett said in his letter he believes the rental rates PANYNJ is seeking from these providers “will act to undermine the port’s competitiveness,” even going as fas as to say the authority’s “miscalculation will drive the depots out of the port and out of business, thereby destroying the chassis pool that this council has worked so hard to achieve.
   “I know that other port authorities along the East Coast are providing land to their chassis pools at substantially less than market rate, with the understanding that an efficient chassis pool will only serve to make a port more competitive,” he added.
   Nardi said that Daggett’s letter was discussed at a recent meeting of the Council on Port Productivity, and participants expressed the view that there was a need for land to be made available for chassis depots “at a reasonable rate” if a chassis pool is to be successful.
   Steve Coleman, a spokesman for PANYNJ, said the agency is preparing a response to Daggett’s letter.
   The three major chassis providers had no immediate comment.