A recent ruling by the U.S. Federal Maritime Commission (FMC) may have implications for container transport within the U.S. As a result of this ruling, ocean carriers were ordered to cease requiring cargo owners and their truckers use specific chassis for shipper-controlled transportation. The ruling responds to Ocean Carriers Equipment Management Association’s (OCEMA) appeal of a 2023 decision by an FMC hearing examiner that ruled in favor of the American Trucking Associations (ATA).
The ruling addresses two primary arrangements between cargo owners and ocean carriers. One is the carrier haulage agreement where the ocean carrier is responsible for managing door-to-door container transport. The other agreement is known as a merchant haulage agreement which sees the cargo owner managing the inland container movement. The ATA filed a complaint against OCEMA in 2020 alleging a violation in the U.S. Shipping Act of 1984 for denying truckers chassis provider choice and for charging higher than reasonable equipment leasing fees.
2023 HEARING EXAMINER FINDING
In 2023, the hearing examiner found that ocean carriers were violating the U.S. Shipping Act of 1984 by requiring truckers to use a specific intermodal equipment provider (IEP) for merchant haulage agreements. The examiner noted that chassis rental rates under merchant haulage agreements increased by 35% between 2018 and 2020 with one U.S. region increasing 90% between 2013 and 2020 – these rates were virtually unchanged under the carrier haulage agreements. OCEMA appealed the 2023 finding to the full FMC.
“By affirming motor carriers’ right to chassis choice, the FMC has taken action to reduce supply chain delays and cut costs for motor carriers and consumers.”
Jonathan Eisen | IMCC Executive Director
FMC UPHOLDS HEARING EXAMINER DECISION
The FMC reviewed the hearing examiner’s findings and voted 4-1 to uphold the original ruling. The FMC ruling indicated that, in many cases, motor carriers lack reasonable alternatives to designated IEP pricing. Chassis are necessary for container freight movement. And added that is not financially viable to replace them with trucker-owned wheels. Furthermore, these constraints hinder competition among potential chassis providers and prohibits motor carriers from shopping for affordable rates when conducting merchant haulage business.
“Changing which provider supplies the chassis will not alter traffic volume or demand—the same number of chassis will still be required—but who supplies them will be open to competition.”
FMC
SUPPLY CHAIN IMPACT
OCEMA’s 2023 decision appeal raised concerns that the ruling would disrupt chassis availability creating supply chain disruptions and freight delays. The FMC’s ruling stated that, “while a period of readjustment is certainly possible if ocean carriers stop using exclusive arrangements, it is equally possible that the chassis supply market will adjust within a reasonable time frame and reach a new equilibrium.” Chassis supply is expected to remain consistent and negative impacts to shippers are unlikely. The ruling creates an opportunity for chassis rental competition that may create lower leasing rates to truckers.
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