@rstanfill Thank you for the catch!
NY-NJ joint chassis pool collapses
This article by Hugh Morley originally published on JOC.com.
The Port of New York and New Jersey is searching again for a way to create an interoperable chassis pool after the latest effort involving two of the complex's three main chassis providers collapsed amid the uncertainty of one of them having to relocate a key chassis yard.
Despite an announcement in May that the planned pool to be created by Flexi-Van Leasing and Direct ChassisLink Inc. (DCLI) had been finalized and was ready to go, the initiative - involving their combined fleet of 8,000 chassis - was largely abandoned in July, the two companies said. While both said it could resume in the future, there appear to be no imminent plans to do so.
The plan's demise is another setback for the port in its three-year effort to create a port-wide chassis pool to streamline the process by which truckers pick up and deliver chassis, a task that took on importance with the expected arrival of mega-ships, and the anticipated surge in cargo volumes that accompanies them.
The pool would make it quicker and easier for truckers to get cargo in and out of terminals, removing the need for a truck to deliver a chassis to one terminal or pool and then go to another to pick up a new one, which could make serious progress toward reducing turn times in the port.
The termination of the pool means the East Coast's largest port does not have full chassis "interoperability," or universal availability of chassis, three months after the elevated Bayonne Bridge was opened, allowing big ships to pass below it. The bridge, until June, was too low for ships of more than 9,500-TEU to pass under, and so they were unable to reach three of the four main terminals at the port. The $1.6 billion elevation project now means the port can handle vessels of up to 18,000 TEU.
The pool floundered in large part over the necessity for DCLI to move its chassis pool from inside APM Terminals in Elizabeth, New Jersey, and find a new location from which to operate, said Ron Joseph, senior vice president and chief operating officer for DCLI. He said the terminal needs the space for a construction project. The terminal is undergoing a $200 million upgrade that will include enhanced berths, four next-generation ship-to-shore cranes, an expanded gate complex, and improved container handling equipment.
"We decided not to move forward at this time," Joseph said. "With all these changes going on, it wasn't the right timing… I think the pool is a possibility once we settle down."
Greg Moore, executive vice president for Flexi-Van, said the proposal for the pool had dragged on unfinished for so long that the company eventually gave DCLI a deadline.
"We just said: 'Look if you guys are committed, then let's get it done. And if you can't then we are going to withdraw," Moore said. "So they basically withdrew."
Moore said Flexi-Van still wants to create a chassis pool, and is talking to DCLI and TRAC, which is the largest of the three main chassis providers in the port, controlling about two-thirds of the 30,000 chassis in the port area.
"We are still engaged in discussions with all of them," Moore said. "But we are not sitting at the table and hammering out details, like we were at one time."
The port authority declined to comment on the pool except to say that it was a "business decision among the chassis providers."
"The Port Authority's focus is on making sure that the port has sufficient chassis to meet the needs of the port complex," spokesman Steve Coleman said.
The idea of a "gray" or port-wide pool was recommended by a 2014 port performance task force, and the initiative has been cited as a top priority by members of the Port Performance Council, which succeeded the task force as a permanent body designed to help improve efficiency at the port. However, the pool has long been stalled by bickering among equipment providers and by issues surrounding International Longshoremen's Association (ILA) jurisdiction over equipment maintenance and repair.
John Nardi, president of the New York Shipping Association who is also vice-chairman of the council, said the body still believes that the creation of a gray chassis pool is in the best interest of the port.
"I encourage the IEPs [independent equipment providers] to work together to find a way to make this happen," he said. "But under the current structure within the port, it's a commercial matter to be agreed upon by the IEP's."
The two companies told a port performance council meeting in July that their partnership would not go ahead, and the council agreed that the "interoperable pool continues to be one of the highest priorities" of the body, according to the meeting minutes.
The idea of a two-company pool emerged after the main three providers were unable to reach an agreement to create a port-wide pool. TRAC had proposed a centrally managed cooperative pool, in contrast to the Los Angeles-Long Beach "pool of pools" in which each equipment provider retains its chassis fleet separately. However, the three parties could not agree on the market pool's rules on governance and operations.
After that, DCLI and Flexi-Van pursued their own pool. Flexi-Van and DCLI said in May that beginning about June 1, all the chassis from their competing pools would be available to truckers through a "pool of pools" similar to one used since early 2015 at the ports of Los Angeles and Long Beach.
Donald Kassilke, counsel to the Ocean Carrier Equipment Management Association, said the organization hopes that the port will eventually get a gray pool.
"I think it helps everybody," he said. "The whole notion of a gray cooperative chassis pool, it's an efficiency enhancing, and a demonstrated proven, model in other ports and inland terminals."
- Crude Oil Trade: Algerian exports remain flat, while uncertainty increases
- Crude Oil Trade: Aframax rates under more pressure in August
- Crude Oil Trade: No miracles for suezmax rates
- Crude Oil Trade: Libyan production and exports back to normal?
- When OFAC issues new guidelines organisations need to act fast
- Crude Oil Trade: Angola exports more to China, but overall volumes are down
- Crude Oil Trade: Indian output under pressure
- Crude Oil Trade: Challenges ahead for Japanese imports