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FMC chassis ruling will have major impacts

Last week, the FMC chief administrative judge ruled on a long-running dispute involving chassis usage. The ruling will provide cargo owners and truckers more options to deliver containers moving under merchant hauling agreements. However, several important questions remain unanswered. 

Judge Erin Wirth ruled that shipping lines violate the US Shipping Act by mandating which chassis company must be used for merchant haulage business. Wirth ruled that shippers and truckers ultimately have the power to make the final decision regarding chassis.

It is unlikely that the ruling will go into effect in the short term. Multiple sources believe that the February 6th decision will be paused pending a review / appeal.

The decisions could have ramifications on carrier haulage – an agreement in which the ocean carrier is responsible for door-to-door transportation. Ocean carriers combine carrier and merchant haulage to get steep discounts. The ruling will de-link carrier and merchant haulage volumes. This could lead to higher chassis rates for ocean carriers and cargo owners.

The ruling only applies to the ports of LA, LB, and Savannah. Therefore, the ruling does not apply to the Port of NY-NJ, Port Houston, or other cities. One legal expert said that the judgment will likely trickle down to other ports and rail hubs.

Lastly, Wirth said that the chassis “pool of pools” in Southern CA would need to change. Ocean carriers would no longer be able to mandate shippers to use the pool of pools for merchant haulage. Therefore, other chassis lessors may open pools in Southern CA in the future.

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Spot truckload rates rise on EC, drop on WC

Outbound spot truckload rates from US East Coast ports rose last month while rates from West Coast ports dropped. This might signify a continuing shift in freight by US importers. Truckload spot rates from six of the eight East Coast ports rose from December to January. On the other hand, only one out of seven West Coast ports saw an increase. 

Outbound rates from West Coast ports remain higher than East Coast rates. However, the decline in West Coast rates signifies a reduction in freight activity.

Six West Coast ports saw their average outbound rates decrease $0.10 per mile. The six East Coast ports that experienced rising rates saw rates increase $0.08-per-mile on average. Two Gulf Coast ports experienced an average increase of $0.02 per mile in January.

Outbound rates from US ports are well below year-ago levels. Outbound spot rates from West Coast ports were down $1.33 per mile from January 2022. East Coast port spot rates decreased $0.90 per mile. Over the past three months, WC spot rates fell $0.19 per mile and East Coast rates declined $0.10 per mile.

The small increase in spot rates from East Coast ports came as ocean container spot rates dropped to pre-pandemic levels. This is amid a lull in container shipping that is expected to last until at least March.

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About O’Neill Logistics

O’Neill Logistics is a leading third party logistics provider. We operate in California, Savannah, New Jersey. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.

O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.

Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.

Please reach out to us if you have any questions or need assistance with your logistics solutions!