“Why wheels matter.”
Years ago, our President Tom Case took his wife’s car to the office. Unbeknownst to him, he was trailed by car thieves who shortly after parking on the side of our building, drove away past our front windows with the car. Later, when he received a call from the City of Chicago informing him the vehicle had been found and he inquired about the condition, they would only offer, “The vehicle is missing one or more component parts to make it operable.”
Upon seeing the car for the first time, that was an understatement. He shared the interior was stripped of upholstery, the stereo removed and notably, the wheels were missing.
That car wasn’t going anywhere without the guts, obviously, but absent wheels, nothing was going to happen.
Looking at all of the challenges of supply chains right now including vessels offshore, pilot COVID rules, and driver shortages, there are few things that could be legitimately pointed to as being a root cause of the problem.
We’re here to make the case that the problems started when carriers got out of the chassis business in the late 00’s and early 10’s.
With the exception of cargo arriving by rail via a Canadian port, ocean carriers provided wheels for containers. In an effort to get out of the chassis and fleet business, carriers moved away from this business model, instead allowing private chassis fleet operators to act as contractors who would bill truckers for their use.
Today, the crisis faced both at the port and at inland depots isn’t an overflow of containers, but rather a shortage of wheels. For those truckers or BCO’s who have a fleet of their own wheels, rails are refusing to “cherry-pick”, or move stacks of containers, and load on a private chassis. The industry is forced instead to wait for wheels to be returned – a wait that has grown by double-digit percentages through the pandemic. While early, the government is taking steps to look into all facets of the supply chain, including equipment shortages.
Manufacturing capacity is maxed out and international chassis are subject to an additional 188% antidumping duty because the government has determined they’re being sold at less than fair market value.
All of this means that shippers will continue to be the victims until there is equilibrium returned between equipment levels and the ability of companies to more quickly empty and return containers (and wheels) for export and then place that loaded box on an available chassis
