The world of intermodal container chassis has changed significantly in the past decade.
Truckers hauling containers in and out of the ports used to be faced with old, poorly maintained chassis provided by ocean lines. Law enforcement officers who found safety infractions cited drivers and sometimes carriers instead of the chassis' owners.
But in 2009, the federal government officially started requiring owners of container chassis to follow equipment “roadability” regulations published by the Federal Motor Carrier Safety Administration, and the ocean lines worked on getting out of the business of providing chassis.
Chassis pool cooperatives were founded to provide intermodal chassis, and large companies such as Schneider and J.B. Hunt started investing in their own intermodal chassis fleets.
CIMC Intermodal Equipment has capitalized on those changes, engineering higher-quality chassis and growing its intermodal chassis business significantly the past few years. Last year, in fact, it increased its intermodal chassis production 53% last year compared to 2017, producing more than 45,000 at its South Gate, California, and Emporia, Virginia, facilities – a record, and the result of initiatives started in 2016.
We talked to Frank Sonzala, president and CEO, about how the intermodal chassis business has changed and CIMC’s role in that transformation.
This interview has been edited for length and clarity.
HDT: It’s been three years since you became president and CEO of CIMC Intermodal Equipment. How did your experience in the field of tire pressure inflation with PSI prepare you for your job at CIMC?
Sonzala: Startup companies have always been my forte. I started PSI with Tim Musgrave back in 1993, and one thing we did was open up the market in Europe and China for the system. When I first went to China, I was introduced to CIMC, the largest trailer and chassis manufacturer in China at the time. So I had a 19-year relationship with them providing tire inflation systems. When they had this opportunity open up [to head up CIMC’s intermodal business] in North America, they asked me if I wanted to put my name in the hat.
I knew the company, they were customers of PSI and of mine, but [despite their longevity in China], I had to look at it as a startup company. We added a lot of things that I was doing at PSI and other places. I think that first year we did about 16,000 chassis. They were good chassis, but most of them went to Maersk because they were the big chassis buyer at the time; then they gave them up to the chassis pools.
HDT: Tell us about what you’ve been doing at CIMC the past two years.
Sonzala: We started a program called ‘Six to 60’ in 2016. It was based on the 6,000 chassis built in 2012, when they first turned the corner to become a large manufacturer of chassis, and it was our goal to get to 60,000 chassis by 2020. And in order to do that, we had to put in place 256 initiatives in 24 departments. This was a big undertaking, but we identified everything we needed to do in the U.S. and in factories in China. I have three factories in China that are all zero emissions. No welding fumes, no wastewater and no paint. You hear all the stories about how bad China is polluting the world, but they’re really working tough on not polluting the world.
In 2016 we put out 24,000 chassis. And in 2017 we got to just under 35,000. And in 2018 we did 45,441 to be exact, out of our two factories – and we carried over into 2019 [orders for almost] 10,000 chassis we couldn’t get built and out the door by the end of the year.
Without tariffs [on Chinese goods], we were well on our way to 60,000. Right now, we’re right at 36% of what we forecast for this year, which was the same forecast as last year, because we did not know what tariffs were going to do. We believe if tariffs go away or stay at 10% we’ll easily get to the 60,000 numbers in 2019 and beat our goal by one year.
It was a very ambitious goal, but I question the census on the population of chassis in the United States – 750,000 chassis in the U.S., of which more than 50% are at least 23 years old. Of that, there are a whole lot that are 30, 31 or 32 years old. And if you go back 30 years, there are not the safety items [on them] that you have today. They’re either parked, or used when they run out of chassis, and the driver looks at it and goes, ‘I’m not taking this piece of rust with bias tires down the road.’
So we are getting the replacement [orders for those old chassis] plus the new needs [for growth].
HDT: Why were those old intermodal chassis so bad and why did it change?
Sonzala: They had bias tires, split rims, no ABS, incandescent lights -- the cheapest things. The thinking was, they only go 9 miles across town and come back empty, so there’s no need for them to be safe or anything else.
The whole model changed with the advent of the expansion of the Walmarts and Targets, where a container comes in with a full 40-foot container of goods going to one distribution center 600 miles inland. They may do a little bit of that on a train, but they’ve got to get to the train, and they’ll do the last 200, 250 miles or more by truck to deliver it to a distribution center.
In the early to mid ‘80s when intermodal started to surface as a big-time part of trucking, bias belt tires were rated to about 40 mph going down the highway with up to 40,000 pounds. Up until around 2001 or 2002 when CIMC said we’re not putting bias tires on, customers said, ‘We can’t afford radial.’ We said, ‘We can’t afford to be going 70 mph down the highway on tires that aren’t rated’ [for that speed and weight].
CIMC really did a lot to change the entire industry from bias tires to radials, and adopting LED lights and ABS brakes.
[Some companies] were remanufacturing 8-, 9-, 10-year-old chassis and keeping same VIN number and putting back in service without safety upgrades. But under CSA 2010, [the government said] if you’re going to refurb, you have to put on the latest mandated technologies like automatic brake adjusters, stroke indicators, ABS; LEDs aren’t mandated, but they mandated themselves.
HDT: CIMC was originally known as China International Marine Containers. Goods from China have had a bit of a quality reputation problem.
Sonzala: Absolutely, but I can also say in the 1950s, we got cars from japan that were the worst quality; they weren’t reliable but they were cheap. And now we have Acuras and Lexus and Infinitis and Subarus from Japan that are very, very high quality.
I’ve been going to China since 1983; the industrial revolution started there in 1977. I saw people being bused from the farms, they called them peasants, to the industrial cities being built and taught how to build Reebok shoes. Yes, the quality wasn’t as good in the early days, but right now, as the generations have come on since the 1980s, their quality is very, very good.
Right now, we have a KTL coating (electrophoretic cathode metal coating or E-coat), which is very, very expensive. All our steel goes through 15 vats of liquid and electricity that makes the steel porous enough to accept the powder coating we put on so there are no fumes. Now we’re giving a 10-year warranty in North America on our coatings and steel parts. We have forced our vendors to go from 5- or 6-year warranties to 10 to match our coatings. Our Revere chassis warranty is 10 years on everything but wear parts like brake pads and tires. No one else is doing that.
In order to make that investment, you have to have large numbers built to make [it up on] that small margin; we’ve driven up the pricing on chassis, but it’s still a small margin.
There’s so much that we have going on in China and the technology centers and engineering wise. We developed in my first year there, what we call the astronaut program, where we have three or four Chinese engineers, customer service or quality people come over and stay for three or four months with us in the U.S. They work with us, then they take what they learned from our factories back to their factories. Then we bring another group over – like the space station, astronauts work there for a while and then go back to Earth.
HDT: Who are your typical customers?
Sonzala: Our typical customers are the leasing rental companies, like Direct Chassis Link (DCLI), Traclease, Milestone, the group Dave Manning’s head of [North American Chassis Pool Cooperative.] The ports are now going into chassis because they don’t want those old 30-year-old chassis. And the chassis pools are scrapping old ones and buying new ones, too.
On the trucking side of the business, J.B. Hunt I believe back in about 2006 decided they were going to convert the majority of their fleet to 53-foot container boxes and chassis, and CIMC won the award. Everyone who had tried to build container boxes in the U.S. failed. We had never built them before, the Chinese were building them, and they were stronger and sturdier than the cheap ones being built in the U.S. The shipping companies [from all over the world] bought chassis [from the Chinese]. When J.B. Hunt couldn’t get a 53-foot chassis in the U.S. to work, they discovered CIMC, and CIMC engineers said here’s what’s going to happen, the torques, etc., [cause problems when making a 53-foot container], so they designed around that. Every year, J.B. Hunt turns on the lights every morning at our plants. Schneider just a few years ago decided they would get into that, and they have tens of thousands of them in their fleet now.
But I think there are a lot of opportunities for the total trucking industry to embrace some of the intermodal side. Say I’m a fleet and I look out in my yard and I’ve got 200 tractors and 180 are out making deliveries. Those 20 sitting in the yard give me no money that day. But I’m 15 miles from the port of Charleston, I could send 20 drivers to pick up container boxes coming off the ships seven days a week and make some money. Companies can use their own chassis going into a port or domestic containers. Most common are the marine 40, marine 20, and the 53-foot domestic. We have chassis that can go out with two 20-foot boxes and bring back one 40-foot. There are ways of doing that we call our city combos.
HDT: You’ve done a lot to improve chassis; what will the intermodal chassis of the future look like?
Sonzala: You can’t be thinking about how good 45,442 was in 2018; we’ve got to think about the 100,000 in 2024.
We’re already investigating regenerative braking power on axles for chassis. So when a Tesla goes down the road, they’ve already charged the battery.
Technology’s not going to stop, and we’re going to be at the head of it.