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LONG BEACH, September 29  – Chassis availability continues to be a major problem in the supply chain, according to industry experts and analysts, though some observers see gradual improvement in the coming year. Indeed, some even view 2023 as a year of surplus in chassis availability.

“The issue of chassis and chassis provisioning right now is probably the single biggest choke point we see in the ports,” said Jon Eisen, director of the Intermodal Motor Carriers Conference. “Chassis availability just isn’t there.”

But the issue is not restricted to the nation’s seaports, Mr Eisen said, pointing out that the situation in the inland railroad ports of Memphis, Dallas, Kansas City, and Chicago as being “particularly problematic”.

“What we’re seeing at some of the inland ports is as bad, if not worse than what we’re seeing at the seaports,” Mr Eisen told Cargomatic, adding that the rail terminals normally offload containers right onto chassis but that they currently “don’t have the chassis to do that.” 

Chassis production down

According to Mr Eisen, the main reasons for the lack of chassis lie in the numbers being produced for sale on the market as well as in the number of them currently taken out of circulation while being used as wheeled storage for the excess number of containers throughout the country. 

The most important reason for the shortage of supply lies in the “trade remedies” imposed in 2021 by the US on manufacturers of chassis in China, considered the world’s largest producer of the wheeled trailers.

The US International Trade Commission and the Department of Commerce imposed heavy duties on chassis produced by China International Marine Chassis, producer of some 40,000-50,000 units a year. 

Those duties come on top of earlier tariffs of 25% imposed by President Trump on a wide range of Chinese imports in 2018.

At the time, the Journal of Commerce said “the cost of a CIMC chassis could balloon from as little as $10,000 a few years ago to more than $35,000. On a $10,000 chassis, CIMC would have to pay $3,914 in countervailing duties, $18,805 in antidumping duties, and $2,500 in Section 301 tariffs.”

US producers fall short

While such US duties would make the Chinese chassis far too expensive to afford, US chassis makers were – and are – in no position to make up for the shortfall in equipment coming out of China.

“The problem is the North American manufacturers told the ITC in a March 16 2021 hearing it would take at least six to nine months to ramp up production enough to produce at least 10,000 to 15,000 chassis annually, so chassis orders may not necessarily be filled until 2022,” JOC said.

But 2022 has come and nearly gone and, as Mr Eisen noted, “American manufacturers have not been able to increase their manufacturing sufficiently to supply chassis.”

At the same time, of course, the increasing throughput of containers into US ports has stepped up the demand for chassis – a demand that has been exacerbated by difficulties in off-loading containers from chassis due to shortages of warehousing space and even enough workers to remove them.

“So, you’re taking those chassis out of the process,” Mr Eisen says.

But he cites a panel of experts at the recent IANA Conference who claim an easing in the conditions that have created chassis shortages over the past year.

The future looks brighter

Douglas Hoehn, president of chassis and containers at Milestone Equipment Holdings, told the IANA Conference that “the last couple of years have been a game of catch-up” but that “we are at a turning point and starting to get enough supply.”

Dave Manning, CEO of the North American Chassis Pool Cooperative, said “it will take longer than a few months for us to dig out of the demand that exists”. He believes that “demand is going to continue to be high for us” and that it is going to be late 2023 “before we catch up with the backlog.”

Tim Denoyer, vice president at ACT Research, said that the overall US chassis fleet is roughly 700,000 units in decline. 

“That population had been shrinking since 2019, and last year production was impacted by the tariffs,” Mr Denoyer said. “We think replacement demand is probably 25,000-30,000 new chassis per year.”

He estimated the chassis industry is building 60,000 this year, up from 25,000 last year, and noted new players are entering. “We are going from a shortage to a better supply,” he said.

Larry Gross, president of Gross Transportation Consulting, said equipment cycle times have been extended, with chassis held longer than normal by carriers.

“That has sucked up a tremendous amount of capacity and created what you might call an artificial shortage. If things were running normally, there would be enough equipment,” he said. 

Mr Gross actually expects an excess of equipment when activity normalizes — which may happen in 2023. “I suspect we’ll have a lot of equipment and when we sit here next year, we’ll be talking about an equipment surplus, not shortages.”