The Advantages of Long Term Chassis Leasing in Chicago

Chicago is one of the most important intermodal ports in the U.S. for the movement of dry bulk goods. This is because it serves as one of the gateways connecting both the east- and west coast regions, in addition to the Gulf of Mexico. Long-term chassis leasing has some distinct advantages over daily (short term rentals) or pool chassis use for truckers and over-the-road carriers who routinely move dry bulk containers to and from Chicago’s ports. The primary advantages of lease chassis and regional hauling opportunities include:

• Offering an alternative to some railway bottlenecks, which plague Chicago’s intermodal transportation system.
• Reducing draymen and drayage carrier concerns regarding the high number of pool chassis in need of repairs.
• Avoiding issues with low chassis availability and lengthy repair times for damaged chassis, which are expected to increase between now and the year 2040.

Long Term Chassis Leasing in Chicago- Penn Intermodal

In this article, we take a brief look at some of the challenges facing intermodal truckers and the advantages for longer-term chassis leasing in the Chicago area.

Historically, the dry ports of Chicago have suffered from severe rail traffic bottlenecks, delays, which result from a number of factors including:

• Passenger train traffic.
• Inadequate signal stops and other insufficiencies to consistent movement of rail freight.
• A high volume of container cars that must be loaded and unloaded.
• The large number of rail lines which converge on Chicago.

In addition, the high number of chassis in need of repair has drivers concerned about their safety and drayage companies, “last mile” transporters, concerned about delivery times, cargo spoilage, and breakdown and repair costs.

The Intermodal Association of Chicago surveyed draymen working for drayage companies in Chicago. This survey revealed drayman concerns including, but not limited to:

• A high percentage of chassis in need of repairs,
• Insufficient time to make repairs, and
• Potentially inadequate tires / equipment, particularly for pool chassis.

These issues make it more difficult for the drayman to do their job safely, efficiently, and effectively. For these reasons, longer-term leases are being considered as an alternative to pool chassis.

Longer term chassis leasing provide road-ready chassis, and a business model that offers younger and more reliable equipment to minimize out-of-service chassis. Leasing may also provide an advantage in terms of availability. Winters in Chicago can be brutal causing problems for intermodal container shipping by rail and last mile” container transporters. The trucker or leesee of chassis with a long-term lease has the option of repairing chassis in their own yard which is often faster and may lower repair costs.

A July 2014 article in the Journal of Commerce Magazine that focused on drayage gridlock in U.S. ports and rail yards provided insight into, and an analysis of, this year’s severe winter and the resulting reduction in available chassis. The article pointed out how in winter, some containers on chassis can be effectively put out of operation due to poor weather conditions. Thus, extra chassis are necessary to replace these in order to meet the same number of load demands in winter months. Although leased chassis were not discussed in the article, drayage companies that must keep goods moving are likely contemplating the advantages of leasing under the right circumstances.

Container freight movement is expected to rise in coming years and with this increase will be a need for additional drivers and chassis. The challenges of increasing the movement of goods in Chicago, and the entire state of Illinois, are obvious in the Illinois DOT 2013 State Transportation Plan. The Plan, which looks at freight movement through the state through the year 2040, showed that 1.26 billion tons of goods moved through the state in 2010. That is expected to jump 34 percent to 1.7 billion tons by 2040 with 67 percent of those goods being moved by truck.

While these are not aggregate numbers that provide a breakout of container chassis transport, it is reasonable to infer that a large part of the 42-percent jump in tonnage attributed to the trucking sector will come from intermodal container chassis shipments. As the pool chassis reach saturation due to limited availability, space and storage constraints, road worthiness/out of service challenges and other factors, longer-term chassis leasing and the reliability it offers will be part of the solution for drayage, regional trucking and logistics companies.

April Uhlenburg
April U

April has been working with Penn Intermodal’s Sales and Operations teams to educate clients on the benefits of leasing chassis for bulk liquid storage and transport since 2012.