Attorneys for the Institute of International Container Lessors argue terminal operators have no right to bind third parties to mandatory chassis inspections by International Longshore and Warehouse Union.
The Federal Maritime Commission is being asked to find an agreement that allows West Coast Longshoremen to inspect chassis as they leave marine terminals to be illegal.
In a letter to FMC Chairman Mario Cordero, attorneys for the Institute of International Container Lessors (IICL) say terminal operators, ocean carriers, and the organizations that represent them have agreed to have members of the International Longshore and Warehouse Union perform mandatory roadability inspections on all chassis that exit marine terminals on the Pacific Coast, with the exception of chassis owned by motor carriers.
“The ILWU, without objection of the marine terminal operators, is requiring definitive proof of motor carrier ownership that is, in and of itself, a significant burden on the motor carrier; the proof of ownership is not required by law; and it results in significant delays to the motor carriers,” they added. “In addition, every chassis has a small box affixed that contains the chassis registration card.”
IICL said that that the ocean carriers and their organization, the Ocean Carrier Equipment Management Agreement (OCEMA), and the terminals and their organization, the West Coast Martine Terminal Operators, are violating a provision in an agreement filed with the FMC, called the “Pacific Ports Operational Agreement.”
That provision reads “nothing herein shall authorize the Parties to agree hereunder to impose rates, charges (including detention and demurrage), or other fees on non-Parties,” according to IICL.
By operating in violation of that agreement, the parties are “in violation of 46 U.S.C. §§ 41102(b) and 41106(2), we respectfully request that the Federal Maritime Commission put a stop to these violations,” IICL added.
IICL noted that any chassis that does not pass inspection “must be repaired at the marine terminal before it can leave the terminal with a container and that the repairs are made by ILWU labor working for agreement parties or for service providers who employ ILWU labor that are hired by agreement parties.”
“The repairs and the parts utilized for the repairs and the labor costs to make the repairs are charged to the chassis lessors who own the chassis and who are not party to the Agreement or to the PMA/ILWU Agreement,” said IICL. “The repairs are made without the prior knowledge, consent or supervision of the chassis owner lessors. As a practical matter, the chassis lessors have no ability to determine that the repair was necessary or that the work was in fact performed.”
Trac Intermodal, Flexi-Van Leasing, and DirectChassisLink, major lessors of chassis, are all members of the IICL.
Keith Lovetro, chief executive officer of TRAC Intermodal, told American Shipper, “The situation that’s evolving out there (at West Coast Ports) is our equipment is being delayed, we believe inappropriately. So we’re asking the FMC to look into it and see if there hasn’t been an overreach in authority.”
Lovetro said inspections should be done “at the point of interchange, when a motor carrier takes a chassis.”
“The motor carrier’s responsibility is to do his inspection prior to actually taking that equipment on his tractor and moving it along,” he added. When an inspection is done at the gate, it is after the interchange takes place and is inappropriate.”
Inspections are “redundant at best,” according to Lovetro, and delay cargo from exiting the gate.
Loveto said that some terminals are also charging fees for inspections, as much as $22 at one terminal. That’s significant considering TRAC only charges $20.50 per day for a chassis rental on the West and East Coasts. With many chassis hired for just three or four days, that inspection fee can become a substantial percentage of the cost of hiring a chassis.
IICL also argues that by deciding chassis owned by motor carriers are not subject tot mandatory inspection and repairs by the ILWU, terminal operators have violated a section of the shipping act that says a marine terminal operator may not “give undue or unreasonable preference or advantage or impose any undue or unreasonable prejudice or disadvantage with respect to any person…”
Curtis Whalen, executive director of the Intermodal Conference at the American Trucking Associations says the inspections are “discouraging. We’re trying to work out of the congestion problem and no matter who you blame congestion on, this is certainly not a step in the right direction.”
“This whole issue of inspection and maintenance and repair jurisdiction asserted by the union is not a new issue. The big change, of course, is that the ocean carriers no longer own these things they are owned by private individuals or leasing companies and such. So the people that set up and agreed to this system have no contractual right or interest to bargain away.”
He also said from the trucking industry’s point of view the inspections are illegal.
“We have a federal law, the Chassis Roadability law, that very much established a federal dominance in this area. It was designed to ensure safer equipment than we had seen in the past.”
“But it also ensured that the system would be fair to the motor carrier– that once the chassis was interchanged and the driver does his inspection his walk around, which is required, there is nobody along the way to second guess him getting out the gate. And that’s exactly what we’ve got now.”
“On top of that, we then have privately owned motor carrier chassis that are likewise being pulled aside where you have to prove that this thing is actually privately owned and not part of the otherwise rental mix. We find that outrageous.
”Who are they to decide what is and is not inspected? They have no right to do that. And two, the same federal chassis law spent a lot of time setting up what types of markings that the chassis would have to have to comply with federal law.”
Chassis lessors claim ILWU inspection agreement illegal
