Memphis chassis shortage worsens
Date: Thursday, January 24, 2019
TRAC intermodal blamed an onslaught of containers for the West Memphis area chassis equipment shortage.
Crippling congestion has struck Union Pacific Railroad’s terminal near West Memphis, and its primary chassis provider blames an onslaught of containers for the equipment shortage.
TRAC Intermodal acknowledged truckers have been unable to obtain a neutral pool chassis in recent weeks, causing TEU and FEU containers to pile up. Meanwhile, beneficial cargo owners (BCOs) are being charged demurrage by the railroad and detention by the ocean carrier while the gridlock is sorted out.
UP has said it’s charging $100 per day in demurrage fees, while detention varies by BCO and ocean carrier, but these charges can be several thousand dollars.
The gridlock is another example of how a small piece of equipment can cause havoc to the supply chain. The chassis shortage was a distinct possibility after ocean carriers deployed 34 extra-loader vessels for Los Angeles-Long Beach to handle front-loaded cargo. The Trump administration extended the deadline to raise tariffs from 10 percent to 25 percent until March, but many containers were already en route. Imports rose 20 percent in December, and while some of the cargo remains in warehouses in California, enough was sent to Memphis to overwhelm TRAC’s chassis pool in January.
“What we did was look at our fleet size, our historical demand level, key components around demand such as dwell [of chassis idling at a BCO’s dock], and then built in a growth factor for the surge,” said Val Noel, TRAC’s chief operating officer. “But anyone who foresaw the amount of cargo moving inland because of the political situation has a better crystal ball than most of us in the industry.”
TRAC: +35 percent chassis fleet increase wasn’t enough
He explained TRAC made a commitment not to allow a repeat of last winter when there was also a chassis shortage. The response was to grow the fleet size 35 percent and inject nearly 10 percent more chassis in Memphis after New Year’s Day. But even that wasn’t enough.
The effect is that logistics providers such as Mallory Alexander International Logistics are waiting a week or two to access containers while the penalties accrue daily.
“I am talking about thousands of dollars this week alone on a move where the container is in the stack with no end in sight,” said Neely Mallory, company president.
Pleas for truckers to temporarily use their own chassis on carrier haulage have been rejected. It’s unclear whether terminals are also turning away truckers on merchant haulage too. Multiple sources explained to JOC.com that deconstructing a stack to locate a container, lifting it onto a truck, then rebuilding the stack would be very disruptive to terminal operations, even if the draymen were willing to pay for it. No alternatives have yet been proposed.
For BCOs and truckers, it appears the only option is to wait for TRAC to deliver chassis so crane operators can wheel-mount containers in an orderly fashion. Noel believes the shortage will subside soon, but skeptical truckers might not be so confident in this forecast.