US East Coast e-commerce network growth fuels imports
28.01.2022
Network changes boost Asia capacity to East, Gulf coasts
29.01.2022

Growing demand for domestic containers leaves shortage of 53-foot chassis

With Amazon, Walmart, and others bringing in thousands of new 53-foot containers, the chassis supply has been stretched thin as new orders are still being built. Photo credit: Philip Starr/Flickr.

Chassis are more available now in the US interior to dray ocean containers from rail terminals to cargo owners because of a steep decline in international intermodal over the past three months. But as demand has let up in one area it has increased for domestic containers, causing shortages to pop up for 53-foot chassis.

The reversal is a confluence of two events since August 2021 — international shippers transferring cargo from ocean containers to long-haul trucks in Los Angeles, Oakland, Seattle, and Tacoma, and a simultaneous increase in the number of 53-foot containers major companies such as Amazon and Walmart have brought in from China while chassis to haul those boxes are gradually but slowly coming online.

International intermodal volume declined 16 percent year over year in the fourth quarter, according to the Intermodal Association of North America. The bulk of the decline was on the West Coast, where intermodal plunged 31 percent out of the Southwest and 28 percent out of the Northwest.

Ron Widdows, CEO of chassis provider FlexiVan Leasing, said that has had a major impact in the Chicago market.

“There has been material improvement in Chicago where not so long ago there were some significant fluidity and chassis availability challenges,” he told JOC.com. “Changes in [inland point intermodal] volume and some additional assets being contributed appears to have combined to ease the situation there.”

As less cargo moved in ocean boxes inland on trains, spot truckload rates surged out of California and Washington state, according to JOC’s Shipper Trucking Spot Rate Index.

Rates out of Seattle averaged $2.75 per mile for shippers in August, then rose in the last four months of 2021 to end the year at a whopping $4.24 per mile. Rates out of Los Angeles rose from $3.78 to $4.27 during the same period, according to a JOC analysis of data from Cargo Chief, DAT Freight and Analytics, and digital broker Loadsmart.

With fewer ocean boxes moving inland on trains, chassis are much more plentiful in Chicago, Memphis, Kansas City, and the Ohio Valley than in August.

Val Noel, chief operating officer at chassis provider TRAC Intermodal, said the biggest difference is in secondary markets such as Cincinnati, Cleveland, and Columbus, Ohio. In 2020, trains from the West Coast were typically 3,000 feet in length into Ohio, broken off from a larger train in Chicago. When international intermodal surged in early 2021, railroads would regularly bring in 10,000-foot trains into Ohio, Noel said. Today, the train size is more manageable again.

“At 10,000 feet, the trains basically brought the terminal operator, the chassis provider, and drayage community to their knees because you don’t have enough capacity to handle all of it,” Noel told JOC.com. “The reason why the second half of the year got better is more control over the flow by the Western railroads and better communication. Our engagement at TRAC intermodal has never been better. And we’re constantly talking to [the railroads] day in and day out. It’s a collaboration, in my opinion, it’s never been better.”

Domestic chassis pools strained

While the situation has gotten better on marine chassis, thousands of new 53-foot containers are coming into the US from China and placed onto intermodal trains without a parallel increase in chassis supply. That has led to DCLI chassis shortages, causing containers to be grounded in markets such as Dallas, Phoenix, and San Bernardino, California.

E-commerce giant Amazon has imported approximately 2,000 domestic containers since August, according to PIERS, a sister product of JOC.com within IHS Markit, doubling its intermodal footprint in only five months. Walmart has imported nearly 1,000 containers over the last 12 months. At least a third of the containers have come through the Port of Houston, according to PIERS, which requires the use of 53-foot chassis to dray the containers to Dallas, the closest rail hub that can distribute the containers throughout the US.

Reefer intermodal equipment. Photo credit: Gladys Goldfein/Flickr.

Other intermodal customers are adding containers, either to grow their existing fleets, or because US railroads want to get out of the trailer-on-flatcar business that less-than-truckload and temperature-controlled trucking companies such as Marten Transport or KLLM Transport used for long-haul loads.

“DCLI has more domestic chassis deployed today than ever and hundreds of millions of dollars’ worth of new equipment on order to serve growing markets like the Southwest where changes in the way customers use our assets are driving much longer street dwell time,” said Mike O’Malley, DCLI’s senior vice president of government and public relations.

DCLI is not the only company struggling with domestic chassis issues. UP has ordered 5,600 domestic chassis that are due to arrive this year to address shortages that have plagued customers in Los Angeles and Lathrop, California, and in Seattle in recent months. Norfolk Southern Railway, meanwhile, has an order for 7,000 chassis to arrive over the next two years.

Contact Ari Ashe at ari.ashe@ihsmarkit.com and follow him on Twitter: @arijashe. The underlying data behind JOC’s Shipper Truckload Spot Rate Index is available to paid subscribers upon request.