I recently testified before the Federal Maritime Commission (FMC) to warn about the implications of rising shipping rates and delays should these challenges not be resolved. The Alliance for Chemical Distribution (ACD) relies heavily on chemical imports and our members are starting to experience the impacts of these shipping challenges.

We recognize some increases in costs and transit times are justified and we want ocean carriers to ensure the safety of their employees, vessels, and cargo. However, they must also ensure their response does not damage the global marketplace.

Our members have grown concerned by the lack of communication from carriers about the location of their containers and potential for delays. In a world of 24/7 global communications and GPS tracking, this is unacceptable.

More than Necessary?

ACD members have also seen an uptick in shipment surcharges. While we understand the interwoven nature of global shipping means these disruptions will impact ocean shipping, we fear that current pricing shifts go beyond what is necessary and place a disproportionate cost burden on shippers.

Shippers are experiencing a significant increase in the spot rate market. More frustrating, carriers have invented new surcharge names, such as Emergency Freight Surcharges or Peak Season Surcharges, and placed them on shipments regardless of their destination and without clarifying how they determined these charges.

Following the historic profits made by carriers during the pandemic, Congress overwhelming passed the Ocean Shipping Reform Act, giving the FMC expanded oversight and power to regulate the ocean carrier community. However, carriers continue to do as they wish with little regard to the impact on businesses across the supply chain.

If we want to avoid another supply chain crisis and get out of this endless time loop of shipping challenges, a number of actions must take place:

1. The FMC must remain vigilant in overseeing special permission requests and surcharges levied by ocean carriers.

2. The FMC has the authority to address unreasonable surcharges, and must hold these carriers accountable.

3. The FMC must proceed with the Maritime Transportation Data Initiative to improve data transparency and cargo movements.

4. Congress must conduct oversight to once again force carriers to be held accountable for their actions.

We must not let the ocean carrier community use tensions in the Red Sea as an opportunity to financially benefit at the expense of the American supply chain, businesses, consumers, and ultimately, the U.S. economy.

The FLSA is the federal law that governs crucial aspects of most employment relationships, including minimum wage and working conditions. The FLSA’s applicability turns on whether a worker is considered an employee or an independent contractor, and being able to structure the relationship with certainty is vital to the worker, employer, and the logistics sector as a whole.

Those who decide to operate as an independent contractor make this choice to enjoy autonomy and flexibility. The relationship is typically characterized by freedom to set their own schedule and to generate/risk a profit or loss.

Contrarily, employees typically work according to the employer’s schedule and receive a salary regardless of how the business performs. Each receives different benefits depending on how they choose to order their lives.

The new rule potentially disrupts the ability of workers to choose which economic model to provide services under, as well as making employers revisit long-standing arrangements and consider whether the new classification rules alter the model that operated successfully for many years.

Ripple Effects

The ripple effects of these changes will also impact logistics and the U.S. economy. The marketplace relies heavily on the flexibility and efficiency of independent contractors. Third-party logistics providers, brokers, and motor carriers depend significantly on these workers to meet the demands of their operations. The prospect of reclassifying these vital contributors as employees threatens to disrupt an already fragile marketplace and supply chain.

There is an inherent balancing act between safeguarding workers’ rights, respecting an individual’s freedom to choose their own economic path, and finding a balance that promotes marketplace efficiency. Policymakers, workers, businesses, and labor advocates must collaboratively address the challenges this ongoing debate poses.

For independent contractors, freedom to choose one’s economic destiny, clarity in classification, and clear-cut labor protections are critical components of any solution.

Finding a Resolution

Although the Department of Labor has issued its final ruling, unanswered questions remain: How will the DoL interpret this rule? Will the courts let it stand? While we wait for these questions to be resolved, we must continue to advocate for a resolution of the independent contractor versus employee dilemma. It’s a resolution that requires thoughtful dialogue, legislative action, and perhaps a reevaluation of our employment paradigms.

Compromise can be found, but the solution must be one that ensures the continued prosperity of our industry and supply chain business model.

The Unseen Goldmine

Every digital interaction, sensor reading, and transaction leaves a trail of data. From GPS trackers on shipping containers to time stamps on warehouse scanners, each piece of information is a potential goldmine of insights.

Unfortunately, much of it remains unused, sitting in data warehouses or cloud storage, gathering virtual dust. It’s estimated that 90% of generated data is never analyzed or acted upon.

The key to unlocking the power of dark data is artificial intelligence (AI) and machine learning. These technologies can sift through the noise, find patterns, and provide actionable insights.

For logistics, this might mean identifying inefficiencies in route planning or predicting maintenance issues before they cause downtime. In transportation, it could translate to optimizing fuel usage or improving delivery times by anticipating traffic patterns.

Reduce carbon footprints. By analyzing unused data, companies can optimize routes not just for speed and cost, but for environmental impact as well. This could lead to a significant reduction in carbon footprints, helping companies meet regulatory requirements and customer expectations for green logistics.

Predict the future. Dark data can improve forecast demand, adjust to market fluctuations, and even predict global trends that might affect supply chains. This foresight is invaluable in a world where agility and adaptability are not just advantageous but essential for survival and success.

Mitigate risks. By analyzing historical data, logistics and transportation companies can identify potential risks before they become issues, from supplier reliability to geopolitical instabilities affecting trade routes.

Illuminating the Darkness

How do we step into the light of dark data? The journey begins with investment in data analytics capabilities. Businesses must prioritize the integration of AI and machine learning into their operations.

But the technology alone isn’t enough. It requires a cultural shift, one that values data-driven decision-making and continuous learning. While AI can illuminate trends and patterns, the human element remains critical.

The insights gained from dark data need to be interpreted and implemented by skilled professionals who can translate complex data into strategic actions.

Privacy and security concerns must be at the forefront. It’s essential to balance the quest for insights with the responsibility of safeguarding sensitive information.

By bringing dark data into the light, businesses can discover new ways to optimize operations, reduce costs, increase sustainability, and stay ahead of the curve.

Ignite the potential of dark data, and lead your organization toward a brighter, more informed future. The age of data illumination is here.

I had to explain that our pallets are not for sale, and that the ones currently in his possession were also our company’s property.

In most cases, companies and individuals that wind up with someone else’s crates, pallets, and shipping containers are not criminal enterprises or bad actors. The supply chain is a complex and fast-moving operation, and it’s understandable that some assets will go astray.

If manufacturers have a big order to fill and find themselves short of the proper platforms or containers designated for that product, it’s not surprising they might use whatever assets they have on hand. And if retailers have their dock backed up because a certain type of pallet or container is taking up valuable space, it’s possible that these assets might wind up outside the boundaries of their intended network.

Everyone Benefits

While it’s easy to understand how shipping assets may be misdirected, the type of “leakage” I have just described ends up hurting the entire industry.

Efficiency concerns. First and foremost, leakage takes these assets out of operation.

Overall consumer demand continues to skyrocket—according to one statistic, ecommerce spending alone topped $1 trillion in the United States for the first time last year. In an industry where demand for high-quality shipping assets exceeds supply, every asset pulled out of useful service contributes to an overall slowdown of the supply chain.

Sustainability concerns. The misdirection of shipping containers and pallets also harms the environment. When in use, these assets can take many trips before they are retired (and in the case of most plastic pallets and certain other materials, they can then be recycled and reused indefinitely).

But if these assets are misdirected, they can end up in landfills or polluting our waterways, while new platforms and containers must be manufactured to meet demand.

Cost-of-business concerns. Inflation feels like an endless cycle. Products and services cost more, which means people need to earn more, which means employers need to pay more, which means businesses need to charge more.

One of the many ways we can curb rising costs is by minimizing leakage of assets in the supply chain. This enables the producers of these assets to keep their costs manageable, and the entire supply chain benefits from these savings.

We all play a role in making sure that vital shipping assets stay within the boundaries of their intended ecosystems. I encourage manufacturers and retailers to communicate frequently with their logistics partners to ensure they can repurpose excess inventory appropriately.

If you’re in an asset recovery role, be flexible. People may not always realize they’re in possession of someone else’s property.

Working together, we can make sure that an optimized, sustainable, and cost-effective supply chain is constantly moving.

All seven Class I railroads reported that they ran longer trains with the intent of increasing efficiency, according to a 2022 U.S. Government Accountability Office (GAO) report examining PSR.

Since 2011, the length of the trains has nearly doubled, with one rail increasing the average train length from 5,250 feet in 2011 to nearly 7,000 feet in 2021.

In 2019, the GAO issued a report on freight train length stating, “To prevent derailment, stakeholders said it is important that longer trains are arranged appropriately and that crews are trained to operate them.”

Earlier in 2023, FRA Administrator Amit Bose warned Class 1 rail executives that they needed to improve their engineer and conductor training and certification programs. He questioned railroads’ ability to adequately employ and train staff to perform important safety-related job functions.

Shrinking Pool of Workers

The same 2022 GAO report disclosed that from 2011 through 2021, the number of employees across all Class I railroads decreased by about 28%. The largest percentage decrease was among “Maintenance of Equipment and Stores” employees, which includes mechanical staff responsible for maintaining equipment including railcars and locomotives. This category of rail worker shrunk by 40%—nearly half.

Last year I penned an op-ed highlighting my concerns that rail workers should receive a commensurate amount of sick leave as employees who work in the private sector. A national rail strike was averted in December 2022, but the question of providing more sick leave and better quality-of-life benefits to workers remains unanswered for most Class 1 railroad workers.

Drastic rail employee reductions combined with the increasing length of trains and a lack of the industry prioritizing its workers should cause concern.

It is unacceptable that rail companies continue to use a system that lines shareholder pockets while causing nationwide service disruptions and leading to dwindling numbers of rail workers, particularly amid ongoing supply chain challenges. It is unfathomable that they choose not to address these issues in light of continued derailments. The railroads simply cannot bury their heads in the sand and hope things will improve.

Recent bipartisan bills introduced in Congress attempt to address rail safety in measured, yet effective, ways. It will be critical that both parties work together to find common ground on provisions to address freight rail operational challenges, training and inspection requirements, train length, enhanced safety measures, and infrastructure improvements.

They must reach a consensus to ensure a safe and reliable freight rail system in the years to come.

Instead of working to promote safety within the industry, the FMCSA decided to undertake a rulemaking that would further regulate freight rates, building upon a piece of 1980s regulation that requires brokers to share a copy of the pricing for each transaction with their carriers.

The FMCSA used their power to make a decision that is anti-free market and anti-business—and does nothing to solve real problems that impact everyone from carriers to consumers. 

Paying More Attention to Safety and Fraud Issues

What the FMCSA should be doing is focusing their efforts on actually addressing real issues for which they are tasked—safety. The National Highway Traffic Safety Administration (NHTSA) recently noted that large truck crashes increased 10% in 2022, on top of a 13% increase in 2021.

Additionally, 92% of today’s trucking companies are unrated because the agency is using an outdated physical audit system to rate motor carriers. A new data-driven proposal was put forward under the Obama Administration, yet the FMCSA has not done anything to re-engage on this critical carrier safety issue in the past six years.

During this same time, illegal and fraudulent activities in the supply chain have skyrocketed, leading to broken chains of custody and higher costs impacting brokers, owner operators, and consumers. Complaints to the FMCSA-monitored National Consumer Complaint Database total more than 80,000, yet the FMCSA has not investigated a single one of them and has not proposed any enforcement action.

The FMCSA claims that a 2019 Administrative Law Judge ruling bars them from enforcing civil penalties on commercial violations, because their core mission is safety.

Regardless of the significance of issues like safety and fraud, the agency seems to be following the direction of a small, but vocal movement, initiated during the first two months of the pandemic, and led by small trucking companies to impose further restrictive regulations on freight brokers by framing it as rate transparency.

Rate Transparency or Rate Intrusion?

Fast forward to now, and the FMCSA decides to initiate the rulemaking petition put forth by Owner-Operator Independent Drivers Association (OOIDA)—a prominent leader of this movement—to require electronic submission of internal proprietary rates 48 hours after delivery.

This rulemaking also prohibits brokers from including any language in their contracts that asks motor carriers to waive their rights to view the commission, which currently is legal for brokers to do.  

The issue of “rate intrusion” as we are calling it is a dispute over rates between the carrier and the broker. When the demand for freight in the supply chain plummeted because of the pandemic, rates decreased, but some carriers alleged their rates fell because of brokers. As we predicted, the decline in demand was short-lived and over the past year and a half, volumes and demand have been at record levels, along with freight rates for motor carriers.

In the 1980s, when there was a smaller market, less trucks on the road, and no internet, rate transparency was a regulation that was needed as motor carriers paid brokers a commission for finding them loads.

Forty years and a whole pandemic later, we are now living, driving, and working in a completely different world—brokers now pay carriers for their service—so why would the FMCSA want to go back in time instead of progressing the industry forward? 

This regulation reflected a time where brokers often were agents of shippers, paid a commission by carriers. To repeat, that time no longer exists.

To believe that the enforcement of this old regulation somehow responds to today’s marketplace denies reality. And to suggest that a dated regulation could prevent a marketplace distortion wreaked by a worldwide pandemic, that harmed, albeit, not for long, all players in the freight space, defies credulity.

That we are only hearing complaints from small carriers now, during a freight slowdown after two years of a freight bonanza, seems not to have piqued the agency’s curiosity. It would be fascinating to hear the agency explain what problems that seeing proprietary rates of the broker, and the broker’s customers, solve.

It would also be instructive to learn whether the FMCSA will ask for transparency in owner-operator rates so that brokers can determine how much of their bottom line goes to dispatch services, which may or may not be illegally brokering freight.   

FMCSA surely doesn’t want their stakeholders to conclude that safety has been left off of their agenda. Every day, drivers and the public are put at risk because of issues like fraud in the supply chain and crashes, yet the FMCSA decides to spend its valuable time dissecting the business relationship between an owner operator and a broker—which has nothing to do with safety. The FMCSA could use their resources and power to make a real difference within the industry. It is an utter shame they decline to do so.

The disrupted supply chain is not just a two-by-four that came loose and needs to be hammered back into place. It’s a collection of complications that no one has ever seen to this extent before. Shippers navigating their way through this mess don’t need a gadget. They need a strategy.

When a shipper has to deal with bad ETAs, an integration platform alone will not solve that problem. The shipper needs better industry insight and more knowledgeable partners who can help fix the underlying issues.

When a shipper pays too much on the spot market, a platform to identify real-time carrier pricing can help. But before deploying the software, a value-added partner needs to have a conversation with that shipper about how the pattern became established in the first place. Maybe the answer comes from better carrier relationships or from different shipping strategies.

Start with the strategy

Those who have spent time in logistics understand the factors that led us here. It may be the first time such a perfect storm came together at once. But insightful supply chain professionals can still analyze and make sense of the situation, and provide guidance to shippers.

Often shippers are left to repeat the practices and patterns they’ve always known. As difficult as things are right now, the supply chain is replete with professionals who offer valuable knowledge and ideas. Strategic, analytical thinkers gain the greatest value from finding and learning from each other.

We also need people who look at problems and refuse to accept them. This is where much of the technology comes from. Strategic, analytical thinkers view technology as a tool that can help solve the puzzle.

When the global supply chain is working according to design, it’s a marvel. When it’s not, the result is higher costs of goods, inefficiency in operations, and constant struggles to keep people working and goods flowing.

For people in the industry, the bottom line is threatened. Some jobs are also threatened while others seem to remain unfilled forever. Smart, determined people who understand the industry can find a way to make it work again the way it used to—or perhaps even better.

Software vendors and logistics companies play a critical role. But even more so, we need partners and strategists who can sit down with shippers and say, “Let’s think this through. We can figure this out.” Then, when the technology is deployed, it will drive real solutions.

The industry needs insight, connections, and solutions. Making all of this right has to start there.

Guaranteeing high and stable driver wages would certainly help. But unless driver utilization, and, in fact, the driver’s actual experience is improved, this is a costly and ineffective solution for carriers.

Driver demographics are rapidly aging, with millennials and Gen-Z relatively uninterested in trucking careers compared to the prior generation. Some companies combat this reluctance by switching the wage structure from per-mile to salary to entice younger drivers. But, this isn’t solely a wage-driven issue. Drivers want to go home reliably and frequently. 

Companies are attempting new approaches to remedy driver retention, such as breaking routes into relay legs, which enables drivers to get home daily, and carriers to fulfill long-haul obligations. Market research shows this to be an increasingly attractive perk. 

The downside is that it puts more pressure on route coordinators, which only draws more attention to outdated, profit leaking, manual dispatch planning practices. 

Ironically, in many cases, fleet managers exacerbate this issue by favoring tenured truckers with lucrative and fixed routes, affecting the health of the trucking ecosystem. Overhauling dispatch planning and coordination is critical to improving driver satisfaction and retention.

Winning the Battle

Planning routes is not for the faint hearted. Planners and dispatchers across nearly all fleets fight a losing battle every day. Drivers get delayed, appointments postponed or missed, orders are canceled. Any initiative to optimize drivers and assets is nearly impossible in a manual planning environment.

Optimizing fleet assignment certainly improves driver productivity and lowers costs for carriers. But this cannot be handled without support from advanced technologies that enable real-time tracking.

Using technology to optimize scheduling and maximize driver miles and utilization could be the industry’s saving grace. This will be critical to all fleets, large and small, and lead to higher and consistent revenue miles, and greater driver satisfaction.

Logical Decision Making

Taking an automated approach is a critical step toward resolving driver turnover. It also would yield another advantage in dispatch planning—there is no emotion involved in its decision making and decisions are equitable.

Consider the effect of being able to incorporate live road data to devise a seamless route, something akin to an app that takes into account real-time road conditions, truck capacity, and proximity to next pickup or dropoff, to optimize routes and driver efficiency. 

Without endless pauses between drop offs, and drivers awaiting instructions, earnings would be maximized. Besides increasing efficiency, and therefore profitability, increased wage reliability would bolster employee retention.

New, innovative approaches, technology solutions and HR know-how can help optimize the labor force, resulting in higher, more stable wages, greater profits, and products shipped across the country more economically and seamlessly. 

Ports had to adapt, jettisoning old wooden finger piers and dockside warehouses and building marginal wharves with gantry cranes and container storage areas near the stringpiece. Ocean carriers bought containers and built cellular container ships. And chassis became a critical component in the supply chain, as they were needed for all first- and last-mile container truck moves.

In the 66 years that have followed the advent of containerization, chassis have been viewed in different ways depending on who was providing and paying for them. To some, chassis might be viewed as a competitive advantage; to others, they might be seen as an unavoidable cost to doing business and a maintenance and administrative headache.

Today, chassis provisioning is evolving into a more interoperable, homogenized, streamlined, and cost effective system.

To understand where the industry is going, we need to look at how chassis have been provisioned in the past, how ownership has transitioned, and how new provisioning models have and continue to evolve.

Chassis Deployment and Ownership Through the Years

In the early days of containerization, particularly outside the United States, motor carriers owned and operated the chassis.

In the United States, however, shipping lines developed a different approach. They provided their customers with chassis along with containers for all moves as part of their service offerings. Given dockside land was readily available most terminals operated as “wheeled” facilities allowing for less on terminal handling and a more expedited pick up and drop off of cargo.

The chassis was owned and/or leased and maintained by the ocean carriers. Motor carriers were allowed free access to chassis through interchange agreements.

This meant that chassis provisioning for the first 40-plus years of containerization up until the early 2000s was ocean-carrier centric.

To some carriers, providing chassis to customers was viewed as a competitive advantage, while others wanted to exit the chassis business because it was not a core part of their expertise. Moreover, given the line had minimal physical control over the use of their chassis, they believed it would be more efficient for others to operate them.

So in the early 1990s, ocean carriers looked for a more efficient provisioning model and began contributing their chassis to “pools.”

This allowed the lines to share their chassis, resulting in greater efficiencies, as well as operational and administrative cost savings driven by the synergies created where any chassis could be used to move any container of the participating ocean carriers.

The trend toward pooling arrangements was driven by the desire to improve equipment utilization, reduce inventory, increase velocity, and reduce costs. Pooling also provided for centralized inventory control via forecasting and repositioning; standardized maintenance and repair for safety and reliability; reduced congestion at ports with faster truck turn times and positive environmental benefits, and regional efficiencies resulting from less equipment repositioning.

Over the next 15 years, those pooling arrangements began to take off in several different forms, including port terminal pools, carrier alliance pools, and cooperative gray pools.

In 2005, many of the world’s largest ocean carriers under the Ocean Carrier Equipment Management Association (OCEMA) decided to take a more holistic approach to chassis pooling and created Consolidated Chassis Management (CCM) to manage their cooperative gray pools.

By 2008, some say driven by the economic crisis, shipping lines began to divest themselves of their chassis, selling them to leasing companies and shifting away from providing chassis for all of their shipments. This opened the door for new new provisioning models.

As ocean carriers sold chassis, shippers and motor carriers became increasingly responsible for providing chassis. Chassis leasing companies, which were becoming the primary contributors to the pooling model, were also leasing chassis directly to motor carriers, shippers, and beneficial cargo owners (BCOs).

How the Different Chassis Provisioning Models Have Evolved

Ocean Carrier Ownership – Pre 2005

In this straightforward model ocean carriers owned and/or leased their chassis. A motor carrier would pick up ocean carrier “A’s” box and would use ocean carrier “A’s” corresponding chassis, which was provided free of charge for the container move as part of the line’s service offering.

Ocean Carrier Chassis Pools – Mid 1990s – Early 2000s

Chassis pools comprised of chassis contributed by ocean carriers were introduced sporadically and in different forms throughout the 1990s and early 2000s. In some regions of the country, lines still owned and operated their own chassis, but also contributed them to gray pools, which allowed truckers to enter a terminal and take any chassis from the pool to move any box for a participating ocean carrier.

Sea Land Service was the first to implement a limited scope chassis sharing arrangement within its vessel sharing agreement (VSA) with OOCL and P&O Nedlloyd, which was formed in the 1990s. About the same time, the Maher Terminal Chassis pool was formed as the first terminal sponsored cooperative chassis pool.

In 2004, OCEMA in conjunction with Virginia International Terminals (VIT) established the Hampton Roads Chassis Pool as the first port-wide gray chassis pool in the United States.

In 2005 OCEMA created CCM to manage chassis on behalf of the ocean carriers in interoperable chassis pools across regions in the United States.

The Grand Alliance, which was begun by OOCL, NYK, and Hapag Lloyd in 2008, also produced a significant “alliance” shared chassis pool on the West Coast.

Ocean Carrier and Leasing Company Mixed Ownership Pools – 2008 and Beyond

Ocean carriers began to divest themselves of their chassis, selling them to third-party leasing companies, who then became the primary contributors to the pooling model while also leasing chassis directly to motor carriers and BCOs.

The first shipping line sold its chassis fleet in 2009 with the intention of providing chassis only on a limited basis. As that happened, they began to bill certain shipments for chassis usage and would only provide chassis on carrier haulage moves. They also initiated charges on merchant haulage moves.

Evergreen was the last major carrier to sell their chassis in 2019. However, even with this shift in the chassis provisioning model, there are still some smaller carriers that maintain their own fleets.

Over time, leasing companies decided to create their own proprietary pools to service their liner customers as opposed to operating in cooperative pools.

One example is the “Pool of Pools” (POP) in the Port of Los Angeles/Long Beach. It was formed in 2015 by combining three major proprietary marine container chassis pools, DLCP (DCLI), TPSP (TRAC), and FLBP (Flexi-van). At the time the pool encompassed a combined fleet of more than 80,000 marine container chassis with mutual start/stop locations covering 11 major marine terminals and 4 major rail facilities.

Within pool operations, any chassis contributed to the three proprietary pols (DCLP, TPSP, or FLBP) could be used by authorized parties (users) in all of the participating pools, and would be interchanged out or returned to any of the 15 start/stop locations.

For cargo shippers in the POP chassis are assigned to the providers carrier regardless of the chassis used. While this creates a degree of interoperability, chassis use is dedicated to the provider that the ocean carrier has nominated regardless of shipment terms.

A Further Focus on Chassis Provisioning Models in the United States

While there are several provisioning models and variations in the United States, these are the most commonly found:

The Daily Rental Model

In this model, chassis customers pay by the day. A chassis user establishes a bilateral agreement with a provider for use. A customer/user is able to take and use the equipment as long as they want and are charged for the usage accordingly. This arrangement works for motor carriers looking to rent a chassis on a short-term/daily basis. With this model, truckers may use the network of the specific provider only.

Cooperative Pools/Gray Pools

Chassis contributors, the majority of them leasing companies along with other entities (also called EPs), provide equipment into “pool” based on the anticipated volume of their contracted users within a pool to which they contribute their assets.

The contributor charges the user which can be an ocean carrier, trucker, or BCO. These pools are typically managed by a single entity who is responsible for all M&R, repositioning, and general operations. The pool manager charges the contributors on a cost-pass-through basis for these operational costs which are included in the EP’s charges to their eventual end user.

Among contributors to these pools are ocean carriers, motor carriers, and shippers. In return, these and other entities are able to access pool units throughout the pools network for their use. Those who do not contribute to the pool, may participate via an existing provider. A cooperative or gray pool means that chassis in the pool, regardless of branding on the side of the chassis, all are “gray” and a motor carrier can use that chassis for any box and return it to any location within that regional network.

Neutral, Dedicated, or “Proprietary” Pool

Typically in this model a single equipment provider will operate independently where all aspects including price, network, and operational rules for pool access and usage are controlled by this single EP. The pool can be neutral (meaning open to all users) or dedicated (to a single user). A dedicated pool is usually established by the leasing company for a specific customer’s use and is usually sourced off the ocean or rail terminal.

Direct Least Operation / Purchase / Long-Term Rental Without a Chassis Pool

In this scenario, a user either contracts directly with the leasing company to lease their chassis, or purchases a chassis directly from a chassis manufacturer for private use. This allows motor carriers, BCOs and others to operate independently of pools.

Leases typically track a calendar period with the lessee paying daily for the length of the contract and assuming responsibility for all costs including the maintenance and storage of the units.

The Latest Developments in Chassis Provisioning

In an effort to ensure port users, including U.S. exporters and importers, truckers, railroads, and ocean carriers, as well as the ports themselves, receive access to the most resilient, efficient, and environmentally sound chassis within a large geographic area, public-private partnerships are being established to create single-provider models that combines the best qualities of the current gray pools and proprietary operating arrangements.

With a single provider utility-type pool, the pool manager controls the availability/quantity of chassis as well the overall quality of the chassis. Chassis rates are made available to pool users usually through a publicly available tariff. The single management entity ensures chassis availability that is responsive to swings in chassis demand as well as maintaining the quality/reliability of the chassis.

The most recent example of this development is the announcement this year by major South Atlantic ports, OCEMA, and CCM to develop the next generation South Atlantic Chassis Pool (informally know as SACP 3.0) of 60,000 units that will debut in October 2023.

OCEMA, the Georgia Ports Authority (GPA), Jacksonville Port Authority (JAXPORT), North Carolina State Ports Authority (NC Ports), and CCM are all signatories to the historic memorandum of understanding. The pool will be owned by a subsidiary of OCEMA and managed by CCM.

CCM will be responsible as the single provider by way of long-term operational leases with the major leasing companies. A key part of the operational agreement are forward looking operating parameters that have been agreed with ports.

The SACP will continue to be the largest fully interoperable chassis pool in the United States, with over 75 locations in the states of Alabama, Florida, Georgia, North Carolina, and South Carolina.

The success of this chassis provisioning model is largely dependent on the strength of the public-private partnership and the technology and management expertise of the pool manager.

While chassis provisioning has evolved significantly since the advent of containerization, the trend continues to be open to several forms, including this homogenized, streamlined, and cost effective model.

About the Author:

Mike Wilson is chief executive officer for Consolidated Chassis Management, LLC, a leading manager of cooperative intermodal chassis pools in the United States. He has been a member of the CCM board of managers, and an officer of its parent company, Ocean Carrier Equipment Management Association, since 2010.

To address this, five U.S. senators co-introduced a bill called the Guaranteeing Overtime for Truckers Act, aiming to improve wages and working conditions for the people who kept America’s economy moving during the height of the pandemic. The bill would end the overtime wages exemption put into law by the Fair Labor Standards Act of 1938, as trucking companies do not have to pay most employee drivers’ overtime due to the law’s motor carrier exemption.

The legislation is, undoubtedly, a well-meaning attempt to help the trucking industry, logistics industry, drivers and consumers, and it raises the profile of the most critical challenges the industry faces.

While the bill’s ultimate fate is still up in the air, we should consider what a comprehensive solution would look like.

No one-size-fits-all solution

Unfortunately, when it comes to wages, the bill offers a one-size-fits-all answer to a complicated reality. The bill would almost certainly pose significant challenges for large carriers, but the extent to which it would impact owner-operators is much less clear. 

First, not all companies pay the same way. For example, 80% of the trucking industry is owned by small companies (with 15 or fewer trucks), which rely heavily on spot rates that are determined by the real-time balance of supply and demand.

Some drivers are paid by a percentage of the revenue; in some cases, being paid by the hour and receiving overtime could result in lowering their pay instead of increasing it. The goal should be to keep or increase driver wages while offering reasonable working hours. Anything less would be unacceptable.

Second, the law may have unintended consequences for the full-time employees it aims to help.

Large carriers that tend to employ company drivers may cut benefits or rely on independently contracted owner-operators to keep total earnings primarily unchanged. This would reduce the number of company-driving positions; jobs that offer stability, insurance, and retirement savings.

Single truck owner-operators leased to larger carriers stand to reap the reward. Although such owner-operators’ independent contractor status prevents them from receiving overtime pay as a direct result of ending the exemption, they may indirectly benefit if large carriers start paying company drivers overtime and freight rates rise as a result.

While the full-time employees who survive the industry shakeup might receive higher wages, the most coveted stable, full-time positions could end up being even harder to come by than they are today.

Working conditions should be a priority

There are many issues, like improving working conditions, that would have a more immediate positive impact on the industry. 

The abysmal driver retention rate suggests that even when drivers enter the industry believing the pay will be worth it, the day-to-day aspects of the job quickly lead them to find a different line of work.

To cite one example, long-haul truckers must comply with Federal Motor Carrier Safety Administration (FMCSA) hours of service (HOS) regulations, which specify driving time and rest periods. Instead of waiting to see if the overtime bill literally pays off, companies can self-regulate how long they push their drivers to work by ensuring that electronic logging devices are accurately collecting HOS data. 

Meanwhile, drivers themselves continue to say their number one issue is finding parking and rest areas.

Drivers who can’t find a safe rest stop have to drive past their limit or park illegally. This puts them at risk of a $500-plus ticket, which goes on their permanent driving record and increases insurance rates due to unnecessary fines. 

In October, the USDOT announced intentions to expand the nation’s truck parking capacity on the interstate system, investing $37.6 million to create approximately 225 new parking spaces in Florida and Tennessee. It’s a start, but greater investment is needed.

Don’t stall on important issues

Until the bill is ratified, we won’t know whether it will have a positive impact on the industry. There is a lot to fix in a short time, and more data will help us devise better solutions.

That said, there are things companies can do now to tackle the most pressing and immediate issues. In the end, we should get ahead of the curve to improve drivers’ working conditions and wages. Our nation’s supply chain can’t afford a continued exodus from the transportation logistics industry: Without drivers to deliver the goods we rely on every day, life as we know it would come to a grinding halt. Isn’t it time to prioritize truck drivers’ wages and working conditions?