UPDATE: Feb. 1, 2021: Federal Maritime Commission Chief Administrative Law Judge Erin M. Wirth denied a motion to stay the case proceedings filed by the Ocean Carrier Equipment Management Association and ocean carriers involved in the proceedings. The denial of the motion to stay means the case will continue to move forward.

The respondents argued that the FMC did not have jurisdiction in the case. Wirth disagreed, writing that the agency has jurisdiction in disputes between regulated entities that involve "the receiving, handling, storing, and delivering of property that are shown to violate the Shipping Act." This comes after an attempt by the respondents to dismiss the case was also denied in November. On Feb. 18, respondents must submit their response to the original complaint and status reports must be submitted by March 1.

Dive Brief:

• The American Trucking Associations' Intermodal Motor Carrier Conference has filed a Federal Maritime Commission complaint against the Ocean Carrier Equipment Management Association and 11 of the largest ocean carriers, claiming they have limited chassis choice across the country, resulting in overcharging or other damages totaling "as much as $1.8 billion" over the last three years, according to a press release from the association and the complaint.
• The IMCC is asking the FMC for multiple cease and desist orders, including relief from the enforcement or adoption of "any regulation or practice that limits the ability of a motor carrier to select the chassis provider it designates for merchant haulage movements or other movements," the complaint reads. The ocean carriers have largely turned chassis management over to three intermodal equipment providers, known as IEPs, that the IMCC claims undercharge ocean carriers while overcharging for merchant haulage, resulting in the estimated $1.8 billion in overcharges.
• The OCEMA disagrees that chassis choice has been limited. "The ATA suit at FMC is based on a false premise of lack of choice for truckers," Jeff Lawrence, an attorney for OCEMA, said in an email. "Motor carriers have choice all around the country. CCM runs pools that impact maybe 20% of the US based international chassis fleet. Truckers can bring their own chassis at all CCM locations. [Ocean] carriers overwhelmingly let motor carriers bring their own equipment and choose alternate vendors that CCM pools uniqueness make available."

Dive Insight:

Chassis are an important link in the supply chain. They provide a way for trucks to haul containers after they're transported via ocean or rail. "How chassis are made available is a pivotal element of American international supply chain productivity," the FMC said last year.

The debate over how to properly manage this constantly moving resource has been raging for years, if not decades. The U.S. chassis fleet is between 400,000 and 500,000 chassis, but the ownership has undergone a substantial shift over the last decade, according to the complaint filed by the IMCC.

Ocean carriers owned 51% of chassis in 2009, but that shrank to 17% by 2013. Ocean carriers don't currently own any of the chassis in the U.S. but have handed over the responsibility to leasing companies or IEPs.

But as ocean carriers handed over ownership of chassis, they have continued to use the equipment. Ocean carriers often have contracts with shippers that require them to move containers on chassis to their final destination. And the ocean carriers are getting the equipment at a "dramatically" cheaper rate that IMCC Executive Director Tyler Rushforth referred to as a "sweetheart deal."

The price difference is how IMCC calculated the $1.8 billion overcharge estimate.

"They're able to cut this deal with the chassis provider ... and basically the IEPs make up the difference on the back of our trucking folks," Rushforth said in an interview.

The goal with chassis pools was to allow logistics managers more flexibility and choice in picking up or returning a chassis to a port complex. "For example, a chassis interchanged at a marine terminal in Long Beach may be returned to a rail ramp in Los Angeles," The Pool of Pools, an agreement between Direct ChassisLink, Flexi-Van and Trac Intermodal, states on its website. The trucking company hauling for the shipper can choose any chassis from an independently owned "gray" pool and use that chassis for any branded container.

Depending on which port a truck driver is servicing, there might only be one IEP serving the location, which cuts down on a trucking company's ability to negotiate or choose alternatives, Rushforth said.

The IMCC agrees that the OCEMA voices support for chassis choice, but says the choice is limited in practice.

"IMCC members have received innumerable denials — often with identical boilerplate language — rejecting motor carrier requests to designate a chassis provider other than the default chassis provider," the complaint reads.

The complaint describes an instance in which HMM told a customer its contract requires the use of Direct ChassisLink exclusively. "Giving consent to allow open choice would put HMM in violation of the contract," the exchange said.

Early in the pandemic, supply chain managers feared a chassis shortage could arise if imports suddenly spiked in the spring as businesses reopened, though the issue did not materialize because imports did not surge.

More recently, The Pool of Pools said it has seen an uptick in volume, and "chassis availability has been declining at some locations." APM Terminals in July warned of "extremely low" chassis inventory at Pier 400 at the Port of Los Angeles and advised truckers to bring their own chassis. Kuehne + Nagel in a July report noted chassis shortages at the San Pedro Bay port complex, driven by increased imports and longer dwell times at warehouses, resulting in a delay of chassis returns. A volume surge ahead of peak season could result in chassis shortages and make choice and availability a further point of contention.

The complaint filing with the FMC comes after IMCC sent a Cease and Desist letter to OCEMA and the ocean carriers in May. The IMCC says the OCEMA did not address the complaints raised in the letter.

The next step will be the assignment of a docket number. Then there will either be a settlement or a hearing before an FMC administrative law judge. The settlement process could take the form of a single settlement or 12 individual settlements. The FMC commissioners will reach a final decision, acting as the jury, if no settlement is reached and the case appears before a judge, Rushforth said.

Shefali Kapadia contributed to this report.