Joseph Bonney, Senior Editor | May 18, 2017 2:50PM EDT
The International Longshoremen’s Association (ILA) says “insane” rents for near-dock chassis depots at the Port of New York and New Jersey threaten the port’s competitiveness and could affect union jobs.
Dennis Daggett, executive vice president of the ILA and president of the union’s Local 1804-1, said the port authority is trying to squeeze intermodal equipment providers (IEPs) and depot operators on rental of near-dock property. His complaint comes as chassis management at the East Coast’s largest port enters a new phase of an industry-wide transition that began in 2009 when container lines began transferring their US chassis fleets to third-party lessors that rent or lease equipment to truckers.
“We’re angry that the port authority is acting like a real estate broker instead of trying to help the industry,” Daggett told JOC.com “It’s going to drive business to other ports. This port already is losing market share to other ports along the East Coast. If we don’t have depots, how can we service the trade?”
New York-New Jersey, the nation’s third-largest port, has seen its share of goods moving through the coast decline from 33.5 percent of all loaded imports and export containers in 2010 to 30.1 percent in 2015, according to PIERS, a sister product of JOC.com within IHS Markit. New York and New Jersey in the first quarter controlled 33.3 percent of US East Coast imports, compared to 34.4 in the same period of 2016. The ports share of loaded US East Coast TEU from Asia has also slipped, from 42.8 percent in 2010 to 35.9 percent in 2016. The port’s share of the East Coast’s imports from Asia also declined in the first quarter from 36 percent to 34.5 percent.
A port authority spokesperson said Molly Campbell, director of the agency’s seaport division, was reviewing a letter in which Daggett expressed his concerns, and that the agency had no immediate response.
Flexi-Van Leasing and Direct ChassisLink Inc. (DCLI), which operate 8,000 of the 25,000-plus chassis in the port area, this month announced plans to place their competing fleets into a port-wide “pool of pools.” TRAC Intermodal, whose Metro Pool operates 17,000 chassis in the Northeast United States, will continue to operate separately.
Meanwhile, in New York-New Jersey and other ports, motor carriers and beneficial cargo owners have been acquiring their own chassis as a hedge against lessors’ rising rental rates and to ensure access to roadworthy chassis.
As chassis ownership has shifted from container lines to lessors, the ILA has sought to maintain its jurisdiction over maintenance and repair work. Unlike container lines, lessors are not signatories to the union’s coastwide master contract.
The New York-New Jersey pool of pools was accompanied by the ILA’s signing of “commercial agreements” with DCLI and TRAC that commit the companies to continued use of ILA labor for maintenance and repair. Daggett’s Local 1804-1 already had a longstanding contract with Flexi-Van, which works directly with union employees at its depot at Kenilworth, New Jersey, about 15 miles from the port.
Daggett said the ILA has “a great relationship” with the equipment providers and wants the lessors’ New York-New Jersey chassis pools to prosper, but that high property costs could undermine that effort. He said the port authority is seeking per-acre rents far higher than those at chassis depots in other East Coast ports.
“We worked with the IEPs to develop an enforceable work-preservation agreement. Everybody said it was impossible, but we did it,” Daggett said. “Now the port authority is trying to charge marine terminal rents for off-dock equipment yards. This hurts the industry and threatens hundreds of jobs.”
He said establishing pool chassis depots on private property farther from marine terminals “wouldn’t work from a logistical standpoint.” Marine terminals want to move chassis off-dock but have them close enough to enable truckers to easily pick up or drop off chassis.
Daggett said the ILA is talking with equipment providers about a plan to designate “core gangs” of union maintenance-repair workers who would be assigned to a chassis pool but could shift from one pool depot to another where demand is higher.
He said this would move workers to where they are needed, instead of repositioning damaged equipment to a repair shop where labor is available. “We’re trying to protect ILA jurisdiction, improve performance at depot gates, and make life easier for the truckers,” Daggett said.