US Chassis Pool provider waives penalties for chassis over utilisation in wake of delays caused by Hurricane Dorian.
Grey pool chassis manager Consolidated Chassis Management (CCM) has agreed to waive South Atlantic Consolidated Chassis Pool’s (SACP) standard penalties for overutilisation (OU) related to Hurricane Dorian. The move is a clear indication the US intermodal equipment industry has heard the message from the Federal Maritime Commission (FMC) that detention and demurrage charges must actually be able to incentivise the movement of cargo.
Prior to the FMC’s draft rulemaking on detention and demurrage shipping and trucking interests had complained that they were charged detention and demurrage in instances when weather, delays and congestion prevented them returning assets to terminals. Accordingly, the FMC advised that, providing companies were operating within the normal terms of their agreements, detention and demurrage would likely be ruled unlawful in these circumstances.
CCM’s actions in the wake of Hurricane Dorian are consistent with the behaviour the FMC highlighted as good practice. “For the last few weeks of the summer season the SACP’s usage on 40-foot chassis exceeded the CCM stress trigger threshold of 75% utilization, translating into OU, which typically results in penalties.Traditionally OU is the precursor to equipment shortages, which create bottlenecks, slowing down the flow of goods and impacting the efficiency of the supply chain,” CCM said.
To prevent equipment shortages penalties for OU would typically be charged, a cost that would incentivise the return of chassis. However CCM will not levy these on the SCAP in this instance, providing that: “Members eligible for the waiver of these penalties must have been properly fleeted prior to the hurricane to qualify”.
“As a collaborative partner, CCM has decided to waive standard OU penalties related to Hurricane Dorian to allow our members to re-assess their needs and re-allocate inventory as appropriate. We understand that hurricanes and other natural disasters cause unplanned business interruptions and wreak havoc on inventory allocations,” said Mike Wilson, CEO, CCM.
“In the case of Hurricane Dorian, it was not a lack of planning that caused the OU, but rather the fact that our members simply could not react in time to increase their fleet. Ports were closed a minimum of two days after each long weekend, causing the amount of outgates to spike. What’s more, the vessels bunched up out at anchor caused a cargo surge as they began coming in to port,” Wilson continued. “Unavoidable and unpredictable weather conditions are a fact of life in our business. Rather than penalise our members for these unfortunate events, we feel a responsibility to continue to work cooperatively to ensure utilisation rates return to normal and that the pool operate at optimized conditions in the very near future.”