December 13, 2021
The Issue
Somewhat overshadowed by the larger focus on congested ports, the intermodal chassis shortage has had a big impact on supply chain disruptions. Why has there been a chassis shortage and when will the problem be alleviated?
What Are Intermodal Chassis?
Intermodal chassis are trailers or frames used to move product between modes of transportation, such as from ships to trucks or from trains to trucks (or vice versa).
The History
Intermodal chassis shortages stem from tariffs and duties placed on those imported from China. Prior to the tariffs and duties, most chassis in the US came from China. In particular, one company (China International Marine Containers or CIMC) accounted for 85% of the US market.
While the tariffs and duties effectively priced Chinese manufacturers out of the US intermodal chassis market, not enough US, North American, or foreign manufacturers outside of China were making them to handle the large demand. US companies that had long manufactured chassis had halted manufacturing when CIMC’s low prices made it unprofitable to continue making them.
Additionally, both shutdowns due to the pandemic and labor shortages contributed to the slowdown in production of components that go into making chassis, including suspension systems and axles. A demand for these components from manufacturers of 18 wheelers, meant that both chassis production and tractor trailer production slowed down considerably. The pandemic shutdowns internationally, along with the congested ports, has slowed the import of chassis from countries like Taiwan and Vietnam1.
Their Importance
Intermodal chassis are important because they are used to transport product to and from ports, train depots, and warehouses. With far fewer chassis, product has remained on containers creating congestion and, in turn, contributing to the global container shortage. In addition, some existing chassis that would otherwise be used to move product are being used to store it—or empty boxes—instead. The CEO of the Harbor Trucking Association, which serves US West Coast ports, said that thousands of chassis are being used to store shipping containers that are waiting be moved back to ships to return to their points of origin2.
When Is Relief Coming?
Industry experts expect that by the third quarter of 2022 all current chassis orders will be filled and the shortage will subside. Whether the demand will rise, remain steady, or decrease is uncertain.
Sources:
1Ari Ashe, US chassis orders may not be fulfilled until late 2022, Journal of Commerce, November, 4, 2021, https://www.joc.com/trucking-logistics/trucking-equipment/us-chassis-orders-may-not-be-fulfilled-until-late-2022_20211104.html.
2Ana Monteiro, "U.S. harbor truckers say west coast port congestion is worsening," Bloomberg, December 13, 2021, https://www.bloomberg.com/news/newsletters/2021-12-13/supply-chain-latest-u-s-truckers-say-west-coast-port-logjams-worsen