Online shopping has balkanized destinations of consumer goods, making it hard to get chassis to/from customers
 Lately, ocean carriers have identified and exploited an e-commerce boom that has enjoyed unparalleled growth during the long-lasting Covid scare.
In doing so, shipping lines have made an effort to address troublesome glitches in the supply chain - equipment shortages and unsatisfactory chassis circulation. These have become more acute in meeting the needs of door-to-door delivery essential to online shopping.
US consumers last year spent US$861 billion online, up 44 per cent from $598 billion in 2019. That means there are many of them and many more deliveries needed to meet their needs.
With massive cargo dumps causing serious congestion at ports worldwide, and with online shoppers wanting low-end goods in spectacular volumes at speeds previously reserved luxury items, the shipping industry must now iron out kinks that stand in the way of serving this ever-burgeoning market.
Presumably, what coping mechanisms have been implemented at the marine terminal level - up to, and including, remotely driven quay cranes, yard trucks and stackers - are moving toward 24/7 cargo handling through automation when waterfront operations are no longer imprisoned by shift work, overtime and statutory holidays.
In this, less attention has been paid to chassis recirculation, which typically takes seven to 12 days when three days ought to be enough to get the chassis for the next customer.
Honolulu's Matson Navigation, a pioneer in this, has found that smaller ships delivering goods at high speed, with door-to-door service in mind, cost more, but that customers are willing to pay more for speed and reliability. To ensure this, Matson started providing chassis to shippers.
Matson Navigation has long offered an expedited service from China that, thanks to its proprietary chassis fleet in Long Beach, which guarantees customers next-day container availability. Having tested the waters, Matson added a second expedited China-Long Beach service.
This reverses a decision that carriers took 10 years ago when they stopped providing chassis. Dockers on both east and west coasts wanted to check if they were roadworthy enough to leave the port, charging their usual inflated pay rates for a service only they wanted done.
In 2010 and 2011, carriers, Hanjin, Japan's big three, Hong Kong's OOCL, Germany's Hapag-Lloyd and Hamburg Sod told shippers to make their own arrangements and washed their hands of the chassis business.
But because of the changing retail scene with online shopping, it seems that carriers, with Matson's premium fast China-West Coast service leading, are back providing chassis to complete the door to door.
Zim too, has begun its eCommerce Xpress (ZEX) from South China to Los Angeles, approached TRAC about a dedicated fleet of chassis at the West Basin Container Terminal in Los Angeles where its vessels call.
An expedited ocean service of 12 days loses its effectiveness if there are bottlenecks at the marine terminal, said Zim US chief George Goldman.
“Our service is expedited on the ocean, but the real key is when the ship docks - with a dedicated gate and chassis,” Mr Goldman said.
CMA CGM also launched a premium service to southern California that features a 12-day transit and container availability within 24 hours of vessel docking in Los Angeles. In this case, chassis lessor TRAC provides a dedicated chassis fleet to CMA CGM for that service. Not quite Matson, but almost.
Maersk Line has introduced two premium Asia-US services in August, one connecting China with its Pier 400 terminal in Los Angeles, and another all-water service from China and Southeast Asia to Norfolk and Baltimore.
Data sharing is essential to managing dedicated chassis fleet to ensure chassis are where they must be when wanted and that requires constant data sharing among supply chain partners.
Zim updates TRAC in real time on the progress of vessel arrivals in Los Angeles and container discharge from the vessel, and TRAC projects equipment availability in an environment in which chassis are dwelling much longer than usual at warehouses throughout the region.
While online shopping growth, barring a war risk crisis in months to come, appears assured, little else is. Whether the maneuvering of chassis leasing companies like TRAC, Flexi-Van Leasing and Direct Chassis Link, which have grouped themselves into a "Pool of Pools", because permanent feature, or are replaced by carrier-owned chassis, only time will tell.
Progress in shipping is an endless tale of contingencies attempting to meet exigencies with greater or lesser success depending on how things turn out. But for the moment, the job is to effect door-to-door delivery and provide the best chassis service at this link in the supply chain.
“It pretty much dictates a dedicated fleet,” said Flexi-Van Leasing CEO Ron Widdows, former APL chief executive and International Maritime Hall of Famer, who added that to do the job nothing short of the latest GPS tracking and tracing features would do.
Carriers realise that if their premium services are going to deliver on the guarantees for which customers are paying, they must have access to sufficient chassis no matter how hard it is.
Mr Widdows noted that APL, which pioneered double-stack intermodal service from the west coast, said equipment availability was a key component of what is known as inland point intermodal service.
“That was the APL model going back to the 1980s. We were block-stowing [vessels] and providing equipment,” he said.
The essential problem facing all players from the factory gate to the consumer's shelf is unnecessary delay. There are many links in the supply chain where delays have been reduced if not eliminated, or are in the process of being eliminated on an ever larger scale - here, but not there.
Chassis re-cycling is one of the weakest of the surviving weak links. To solve the re-circulation issue, severely cutting back on "street dwell" would be the beginning of the end of problem.
One feels confident that automation at marine terminals, perhaps the commencement of 24/7 cargo handling operations will take hold in the next few years.
It takes more imagination to see how the enforcement of chassis re-circulation at the shipper level, typically having laden chassis parked at customer's warehouses and unloaded at the customer's convenience, is to be addressed. Fines come to mind, high enough to be avoided, but not so high as to risk losing customers. One can hardly induce more efficient freight handling practices as a growing number of warehouses multiplying into balkanized networks so to shorten the last mile delivery to as much as possible.
Sometimes, and more times than one might think, the new conveniently located warehouses from the consumers' point of view, are short of space and are only too happy to retain the container and chassis as an extension of their square footage.
Whatever solutions emerge, it appears that a number of carriers have taken the lead in addressing the chassis shortage to ensure their customers get them. The next problem is how to get them back. |
