SC Ports prepares for influx with expanded chassis pool

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A flood is predicted for the Port of Charleston — not water, but ships.

West Coast ports await July 1 with bated breath and weeks of delays: the day marks the deadline for the International Longshoremen’s Worker Union labor contract.

The last contract negotiations in 2014 shut ILWU ports down for four months, according to Jason Haith, manager of global freight forwarder OEC Group Louisville. At the time, 24 vessels waited for a chance to dock.

A few weeks ago, Haith reported 180 cargo ships stalled off the West Coast, not including vessels waiting at the docks. It also doesn’t take into account an annual slinky effect brought on by the Chinese New Year, “probably the largest human migration on the planet where hundreds of millions of people leave the cities and go back inland to visit their families,” he said.

Most of his clients have diverted imports to other parts of the country, to Houston, Savannah and Charleston.

Haith believes the Port of Charleston is primed for growth, but the West Coast fields typically 60% of volumes coming into the United States.

He fears eastern ports like Charleston may soon look like Los Angeles as ILWU labor negotiations mount.

“I definitely think there are volume increases headed their way, and their biggest challenge is probably going to be how to handle all the business that’s coming now,” he told GSA Business Report.

Importers using eastern ports are seeing delays of more than a month just to get cargo to distributors and are paying up to $25,000 in total import costs, said Haith. Four years ago, most East Coast importers paid around $3,500. Some logistics companies can’t pick up imports at the Port of Charleston for three or four weeks after containers are unloaded.

“They’ve had a heck of a time getting containers out of the port and delivered,” Haith said. “A lot of this has to do with chassis.”

There isn’t a shortage of chassis in circulation. But there is a shortage in how many chassis are available for use at the terminal — and not waiting to be unloaded at a short-staffed warehouse or transported back to the terminal by a coronavirus-inundated fleet.

Solutions, not weather reports

The S.C. Ports Authority will be the second ports system in the nation to create its own chassis pool program to meet that demand, according to COO Barbara Melvin.

Once launched in 2023 through a $200 million investment, the pool will house thousands of chassis able to be leased from the Port of Charleston’s terminal. The seed money will be sourced from port revenue, she said.

“We’re trying to utilize the latest technology to see how we can rethink the chassis pool model,” said James Caudill, director of the ports authority’s chassis pool. He added that the new chassis, built by Dorsey Intermodel will be wired with GPS tracking technology. “GPS technology sounds simple, but you can utilize something like that to forecast issues down the road.”

The data could be used to help streamline inventory management or provide business insight for port customers.

Aside from Port of Virginia, the first port to develop its own chassis pool, many Eastern ports participated in the South Atlantic Chassis Pool.

The closed-loop Palmetto State pool is expected to enhance the efficiency and availability for logistics companies, and also open up chassis for other nearby ports systems.

“That really is the biggest benefit for the supply chain,” said Melvin.

Leading up to the 2023 launch, the ports authority will phase out its use of chassis leased from the South Atlantic Pool with more than 11,000 purchased chassis that will be upfitted with smart tech.

On Jan. 24, the Port of Charleston received its first shipment of more than 700 chassis after a 40-day journey on the Liberty Promise from Vietnam, according to the ports system. An additional 1,600 are set to arrive in February as the ports authority builds out its inventory. These chassis will be available for long-term lease agreements until the April 2023 launch. After, they will be available for a daily rate.

Rates will soon be made public, according to the ports authority.

“We’re going through all the steps of making them ready for providing [for] the people who have a need early on right now for 20-foot equipment,” Caudill said. “And then, as we go throughout this year, we’ll step-by-step transition areas like Greer and Dillon. That will provide relief to the South Atlantic chassis pool.”

The chassis pool is just one of the places the ports authority sees room for growth as more ships redirect from clogged West Coast ports to Charleston.

“We see others along with the chassis, whether that be ample warehouse space, a labor force that is available for working in logistics, motor carrier driver availability,” as well as the ability to move containers off marine terminals, said Melvin.

State support to build a dual-served rail facility will go a long way for helping the port keep pace, she said. Once finished, it will bring port capacity to more than 1 million rail lifts. The port deepening project, set to make the Port of Charleston the deepest in the Southeast, is expected to reach completion in September.

“Even when we hit supply chain challenges like we’re seeing today, we have to keep working through those with our maritime partners, keep putting forward solutions instead of just having weather reports on the problem,” she said. “You have to bite the bullet sometimes and do what we’re doing with the chassis pool. You have to not get scared when you’re making investments like a billion dollars into a new terminal. You have to have a long view of what is needed in the supply chain to be successful.”