TRAC’s drayage foray
CEO Lovetro says chassis pool operator “intent on providing a broader suite of services.”
TRAC Intermodal, the largest chassis leasing company in North America, is looking to enter the drayage business.
TRAC’s fleet of 310,000 chassis is spread across the United States among 546 locations for its marine chassis and 154 locations for domestic chassis. It also runs 10 neutral pools.
“As we evolve from leasing company to a pool operator, the question is what’s the next step in the evolution?” said Keith Lovetro, the president and chief executive officer of TRAC. “We’re intent on providing a broader suite of services to our customers.”
As shipping lines have sold their chassis fleets during the past two years, TRAC has purchased about 35,000 from ocean carriers. Lovetro believes these carriers will seek to sell another 75,000 chassis in coming years.
TRAC currently has about 40 percent of the chassis fleet in North America. In its annual report, the company said there are about 740,000 of those chassis—589,000 marine and 151,000 domestic. (This excludes J.B. Hunt’s proprietary fleet of 66,000 chassis.) Last year, TRAC had revenues of $515 million, compared to $415 million in 2012.
TRAC noted the United States is the only major container market in the world in which shipping lines and railroads have provided chassis as part of their basic transportation services to their customers, but in recent years they have been transitioning to a model where the responsibility for chassis provisioning is now placed on the motor carriers.
Lovetro explained that as part of its management of pools TRAC has a constant need to shuttle chassis between locations. In the Chicago area, for example, the company has chassis at several rail ramps in locations ranging from downtown to Joliet.
From moving chassis, TRAC developed the skills to manage revenue loads, he said. Originally, the company outsourced that work, but as it became an active pool manager it developed a need for better control and built a transportation group to handle that activity.
“As we developed that competency we said, ‘well there’s really not much difference between moving chassis and controlling chassis between pools than controlling revenue loads. We’ve developed a capability; let’s leverage it into the drayage business,’” Lovetro said.
TRAC plans to use owner-operators and brokers to provide power equipment, while it will sell and manage the drayage service.
“We don’t actually plan to stop there,” Lovetro said. “Our aspiration is to provide a broader suite of services in the first and last mile to our intermodal customers.”
Instead of just hiring draymen to go from pool A to pool B, TRAC might instruct that carrier to pick up a load at a rail ramp and take it to a marine terminal or deliver it to a consignee’s distribution center.
In an interview in March, Lovetro said TRAC is bidding on several engagements with customers, but had not yet won any contracts.
TRAC’s intent is not to compete with its existing customers, he said, noting that no drayage company owns a large share of the market, so there are many opportunities where TRAC could win business and not step on the toes of its customers.
Given their druthers, he said some drivers would rather haul freight than have to become “a little business that bills consignees and coordinates loads and does other aspects of a broader business.”
He also noted many ocean carriers continue to offer drayage to shippers buying transportation to inland locations and may hire TRAC to perform that work. There are even beneficial cargo owners looking to purchase drayage who could be potential TRAC customers.
For the past year and a half, a regional group has been studying chassis operations in the Los Angeles/Long Beach region where about 40 percent of the nation’s containerized cargoes move through 13 terminals.
Home to four chassis pools the Southern California region has a “level of complexity greater than anywhere else in the country,” Lovetro said.
While the industry group has discussed moving chassis out of the marine terminals and into a gray fleet, “that’s a pretty challenging end point and it leads to potential disruption,” Lovetro said. “Today, you have basically four pools in L.A./Long Beach, so it wouldn’t surprise me if the interim solution was more of a creation of how you make the pools work together — a pool of pools… an interline agreement between those four pools.
“That would make more sense to me than trying to just tear the thing apart and build something new off-dock that is going to be very complicated,” he said.
Congestion at marine terminals and a lack of in-service chassis have also been a persistent problem in New Jersey over the past year where TRAC’s Metro pool has a 75-80 percent share. TRAC has increased the number of chassis it has at the port by 15 percent in recent months. Lovetro said a lack of sufficient longshore maintenance and repair workers has been aggravated this winter by severe weather.
Hiring International Longshoremen's Association mechanics remains complicated by a dispute by terminal operators, the ILA and Waterfront Commission of New York Harbor.
“If we had mechanics repairing in the right locations we would have those available for the trade. The second piece is because of natural imbalances in the cargo flow, we may have hundreds of them sitting in a port location that we simply… can’t get them out of,” he said.
In March, Lovetro said there were more than 1,000 chassis out of service in the port.
Last year, TRAC introduced in the New York and Savannah, Ga. markets 50 “Titan” chassis aimed at truckers who have heavy, long-distance drays. They’re equipped with radial tires, LED lights, ABS brakes and a tire inflation system. Lovetro said the company plans to roll out the product in other markets later this year.