IICL claims South Carolina and Georgia port authorities’ chassis pool would reduce competition.
While a proposal by the South Carolina Ports Authority and Georgia Ports Authority to form a new container chassis pool has garnered more than two dozen letters of support from shippers and government officials to the Federal Maritime Commission, a trade organization representing lessors of chassis and containers is asking for the agreement between the two ports to create the pool to be rejected.
In a letter to the FMC, which regulates agreements between ports, attorneys for the Institute of International Container Lessors (IICL) say the proposed agreement should be rejected because it is not “complete and definite” as required by the Shipping Act of 1984 and it may reduce competition.
The two ports announced last month they wanted to replace Consolidated Chassis Management’s South Atlantic Chassis Pool (SACP), which covers the states of North Carolina, South Carolina, Georgia and Florida, with a new pool to be called the Southern States Chassis Pool (SSCP).
The current pool has about 53,000 chassis, and GPA and SCPA have said they believe there is a need for an additional 10,000 chassis in the pool.
IICL members include the three major chassis lessors TRAC Intermodal, Flexi-Van Leasing and Direct ChassisLink (DCLI) as well as container lessors like Triton International, which also owns and leases chassis. IICL says the existing South Atlantic Chassis Pool principally uses chassis contributed by its members.
But Greg Moore, executive vice president of Flexi-Van told American Shipper, “In fact, two of the chassis lessor members of the IICL abstained from participating in the IICL discussions on the matter and did not support nor participate in the letter of objection. FlexiVan was one of the two abstaining members and in fact filed independent comments directly to the FMC, supporting the SSCP proposal filed by the ports of Georgia and South Carolina.”
IICL says the proposed agreement between the two ports is “a price-setting agreement between two competing ports and a third party that would regulate the supply of and the price at which chassis” not owned by the ports are leased.
The South Carolina Ports Authority said the new pool will be operated by the North American Chassis Pool Cooperative (NACPC).
IICL says NACPC is a motor carrier-owned and -operated chassis pool cooperative approved by the Surface Transportation Board in 2013.
“NACPC is neither a marine terminal operator nor an ocean common carrier subject to regulation under the Shipping Act, and it cannot receive antitrust immunity under the Shipping Act.”
It says in the current pool “chassis lessors compete aggressively with one another on the charges that they negotiate with the entities using their chassis. There is meaningful competition among the chassis providers and there are contractual commitments with some users that have volume considerations.”
Based on the agreement the two ports filed with the FMC and statements from the South Carolina Ports Authority, IICL said, “It appears all of this competition will be eliminated.”
South Carolina Ports Authority said it and the Georgia Ports Authority have three goals in creating the new pool:
• “Significantly improve the quality of the chassis fleet in the Southeast through setting standards in terms of age and attributes, such as radial tires, LED lights and anti-lock brakes;
• “Grow the size of the chassis pool to keep up with the explosive growth in containerized trade in the Southeast, both in terms of number of chassis and more realistic trigger levels for the injection of new chassis;
• “Provide an ‘at cost’ model per day of use which removes the current economic discontinuities which apparently exist between the various segments in the market that use chassis services.”
In its letter to the FMC, IICL said. “The first two bullet points are not matters that require anything close to the sweeping changes the agreement parties have decided to make to the current pool structure.”
IICL says its members have “provided chassis when there have been shortages or dislocations and the trigger points for new injections.” And it says specifications for chassis in the existing pool can be set by Consolidated Chassis Management and applied to all contributors. Chassis leasing companies have been taking steps to upgrade chassis and supply, it adds.
IICL says the last bullet point “appears to state that the port members and the operator want to operate the pool solely at a uniform fixed per diem charge basis without any price competition for the use of the chassis and apparently without consideration to the volume of containers for which a particular user may have contracted to obtain chassis. The agreement does not address the status of existing agreements between chassis providers and users that will be upended.”
The proposed agreement “should not be allowed to interfere with these existing business arrangements, particularly with virtually no consideration or justification given to the FMC for why such a drastic action must be pursued,” the IICL says.
Chassis lessor group opposes Southeast pool
