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Q&A: US container chassis industry still finding itself

An exclusive interview with Mike Wilson, CEO of Consolidated Chassis Management

Chassis continue to challenge the U.S. supply chain. (Photo: Jim Allen/FreightWaves)

Container chassis in the U.S. have been a challenge to manage in the drayage and intermodal ocean transport space even during the best of economic times due to the numerous players and handoffs associated with the equipment.

There is also the ongoing regional logistics and capacity tug of war among chassis providers and users.

Mike Wilson, CEO of Consolidated Chassis Management (Photo: Courtesy)

Mike Wilson, CEO of Consolidated Chassis Management (CCM), a chassis pool management company owned by the Ocean Carrier Equipment Management Association (OCEMA), understands the problems associated with this equipment. 

Prior to his executive appointment at CCM, Wilson spent years in charge of Hamburg Süd’s U.S. marine and terminal operations, equipment and intermodal, finance and accounting, information technology, human resources, quality management, and administration. He also served as chairman of CCM and the Intermodal Association of North America.

“I don’t think anyone would disagree that the evolution of chassis provision has been challenging. Notwithstanding the regional impacts, often the conceptual stances taken in regards to the value of free market dynamics versus overall supply chain fluidity have complicated things,” Wilson said. 

American Shipper recently caught up with Wilson for a discussion about the future of chassis management in the U.S. He foresees an industry that will streamline operations in the years ahead but must still overcome significant obstacles.

“These differences continue to push the evolution in a way where the provision models will likely find a workable balance in each market,” he said. “With that said, the effects of COVID-19 have not had a direct impact on the provision models per se, although the decreased volume has been a catalyst to finding efficiencies in the existing operations.”

American Shipper asked Wilson a series of questions about the challenges still facing the U.S. chassis industry. 

Chassis challenges

American Shipper: Despite the recent trade setbacks wrought by the COVID-19 pandemic, have you witnessed specific improvements in chassis management across the U.S.? Is now the time for the U.S. chassis industry to implement fundamental operational improvements?

Wilson: “I don’t believe there have been any remarkable or significant changes in the various provision models since the beginning of the pandemic. 

“In the SACP [South Atlantic Consolidated Chassis Pool], we did alter the M&R [maintenance and repair] program to consider the significantly reduced utilization, which is down from 75% to 52%. These changes allowed for improved cost savings.

“Given the reduced volume, one could assume that this lull in activity is indeed an opportune time to make significant changes to any business model. Unfortunately, the stakeholders are still not fully aligned regarding the best overall model, so there really is no significant change to be had at this point. 

“Discussions continue to be centered around cost and service as represented by the business elements of interoperability, utilization, improved asset condition and provider choice. There remain differing opinions as to what form this will take since the key stakeholders have yet to come together in such a way to create a clear path.”    

One of CCM’s South Atlantic Consolidated Chassis Pools (Photo: Consolidated Chassis Management)

Just-in-time post-coronavirus

American Shipper: With the vulnerabilities of, just-in-time, international supply chains exposed during the pandemic, and based on your many years in the ocean carrier industry, do you foresee a trend toward nearshoring or reshoring certain types of manufacturing in the next several years? 

Wilson: “Given the newfound awareness regarding products strategically important to the U.S., such as PPE [personal protective equipment], certain electronic components and certain pharmaceuticals, I do believe we will see some reshoring to the U.S. and nearshoring to Mexico. 

“Also, I believe certain supply chains that have been China-centric will continue to diversify in regards to sourcing in other regions, such as Southeast Asia and India. 

“Overall, I believe the traditional just-in-time-oriented supply chains will need to change their tactics to further consider unknown disruptions, which will include higher buffer stocks in strategic distribution points to assure more reliable availability.”

Uptick in intermodal

American Shipper: If more nearshoring should take place in the U.S. trade, what does that mean for chassis and their place in domestic transport and inland port operations? How should the chassis industry respond to a nearshoring trend?

Wilson: “Increased production in North America of traditionally imported products will likely increase the demand for both intermodal and truck capacity. 

“Intermodal by its very nature will require chassis for the first and last mile, so increased volume in that regard will require additional chassis capacity. This increased volume will affect traditional international types such as 20-foot, 40-foot, 45-foot, as well as domestic 53-foot types. As a result, additional capital investment in the chassis fleet will likely be necessary. 

“With increased intermodal volumes, the inland rail facilities will need to adopt chassis provision models that facilitate increased operational efficiency so that the supply chains remain fluid. This increased volume may also necessitate traditionally wheeled ramp operations moving to grounded operations. This will take both increased capital investment in the facilities as well as time to complete such projects. 

CCM offices and pool locations in the U.S. (Source: Consolidated Chassis Management)

“Where feasible, considering issues such as available land, some railroads may choose to maintain wheeled operations, which are less capital intensive as well as being more operationally efficient and expedient regarding truck turn-times through a facility. 

“With increased volumes comes increased demand for drayage capacity. When looking at drayage capacity one must consider that increased turn-times, meaning the chassis is turned around more quickly, equals increased capacity. 

“An efficient interoperable chassis solution is a key driver in increasing intermodal truck and drayage turns, which will be a key fluidity factor in these new scenarios.”

Reaching interoperability

American Shipper: As CEO of CCM, what is your vision for chassis pooling operations post-COVID-19? What specific changes are on the horizon at CCM to prepare for a possible reshaping of international supply chains in and out of the U.S. market?

Wilson: “As intermodal activity increases, chassis provision will play a key role in ensuring supply chain fluidity. 

“Although this has been said many times before, I believe chassis provision is still evolving, though it is approaching the realization that interoperability must be at the core of any truly acceptable solution. Interoperability is what CCM was created for, has designed its business processes, technology and organization around since its inception. 

“It has become readily apparent that interoperability can come in several forms and must consider all stakeholder positions if it is to become an acceptable solution. 

“CCM, as the leader in interoperable pool management, is evaluating the various provision models with an eye towards interoperability, though not tied to the past. We understand that any solution must consider the demands of the various players in the marketplace, and we are developing our strategies to meet those demands. 

“Whether through our technology or our expertise, we intend to evolve with these changing demands, with the goal of assuring a more fluid supply chain.”

Related articles:

FMC identifies San Pedro Bay container challenges during COVID-19

Drayage truckers, ocean carriers discuss chassis lease rate disparity

American shippers, draymen want ocean carriers out of chassis pools

Click for more FreightWaves/American Shipper articles by Chris Gillis.

Chris Gillis

Located in the Washington, D.C. area, Chris Gillis primarily reports on regulatory and legislative topics that impact cross-border trade. He joined American Shipper in 1994, shortly after graduating from Mount St. Mary’s College in Emmitsburg, Md., with a degree in international business and economics.