Chassis-leasing companies, truckers and beneficial cargo owners have raised their opposition to a proposed $5chassis gate fee in Los Angeles-Long Beach to a new level by filing their complaints with the Federal Maritime Commission.
FMC Chairman Mario Cordero told JOC.com the commission is looking into whether the fee, which is scheduled to take effect on Sept. 1 after a one-month delay, runs afoul of Section 10 of the Shipping Act of 1984, which addresses unreasonable practices, and also anti-competitive provisions under the 6(g) provision of the act. Cordero questioned the basis for a chassis fee, noting that before the majority of carriers got out of the chassis business, the repositioning of chassis was part of the contractual relationship between terminals and carriers.
It appears that BCOs, who would ultimately pay the fee, are pressuring the shipping lines they contract with to try and prevent the terminals from charging the fee. A majority of the 13 terminal operators in Los Angeles-Long Beach have a corporate affiliation with shipping lines. The lines are concerned that the $5 fee per chassis gate could interfere with their relationships with their BCOs customers. The fee would cost individual customers tens of thousands of dollars a year considering the volume of cargo they ship through the largest U.S. port complex.
The terminal operators are members of the West Coast Terminal Operators Agreement, and their argument for charging the fee to equipment-leasing firms is based on a fundamental business principle. The chassis are stored on the terminals, which are located on some of the costliest property in Southern California. Terminal operators employ expensive longshore labor to stack and unstack the chassis and deliver them to truckers. The terminals via EDI notify the equipment owners to whom the chassis are delivered, and the leasing companies use that information for billing purposes in their for-profit operations.
“We are providing these services, and we want to be compensated just as everyone wants to be compensated for the services they provide,” said John Cushing, president of PierPass Inc., which provides management services for WCMTOA.
Until recently, shipping lines owned most of the chassis that are used at U.S. ports. The terminal operators charged the shipping lines for storage, stacking and EDI services through their terminal throughput agreements with the lines. However, in 2015, the lines completed their sale of the chassis to the big three leasing companies, DCLI, Flexi-Van and TRAC Intermodal, which formed a neutral “pool of pools” for chassis in Los Angeles-Long Beach.
Now that the leasing companies own and manage the equipment, the terminal operators receive no compensation from the shipping lines for the services they perform, Cushing said. The likely scenario under the WCMTOA proposal would be for the terminals to charge the $5 fee to the equipment-leasing companies, which would pass it on to the truckers, who would pass it on to the retailers and other BCOs.
WCMTOA earlier this summer notified the equipment-leasing companies of the proposed fee, and then WCMTOA filed its tariff with the FMC 30 days before the effective date of Aug. 1, as required by the commission. However, when that date approached, the leasing companies balked, and WCMTOA decided to postpone the effective date until Sept. 1, Cushing said.
Technically, the terminals have no obligation to store the chassis on their facilities. However, if the terminal operators tell the leasing companies to remove their equipment, chaos would ensue because at this time there are no designated start-stop locations in the harbor on which to store the chassis. Spokespersons for organizations representing BCOs and the equipment-leasing companies either declined to comment or could not be reached.
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