b'AJOT.COMTERMINAL OPERATORS, CHASSIS MANAGEMENT & DRAYAGE 13(MODELcontinued from page 11) Utilizationistheir[leasingcompa- with the new structure that had a fixedis a copycat league. Will the chassis in which SACP-1 was a contributorynies] friend when it is high, its notprofit of 10% per year over a decadepool model move to be more utility modelthis cooperative -model wastheir friend when its low.(as opposed to a 10% profit over twoin its operation? where the ocean carriers initially con- But what is the ideal utilization?orthreeyears)wouldattractlongerIts hard to say with only a month tributed their assets into a gray pool. Howmuchshouldbeontheroad?term minded investorsparticularlyplus into the transition and it is worth YearslatertheoceancarrierssoldHow much should be rotated out forprivate equity investors.noting,Oaktreesnewinfrastructure theirassetstothe[chassis]leasingservice? AndhowmuchshouldbeAccordingtoWilson,CCE,theinvestmentinthechassisbusiness companies, where the leasing compa- kept in reserve for demand spikes? InthenparentofparentCCMstartedcame in the midst of a severe down nies became the contributors. SACP 3.0, an agreement was reachedwitharound35potentialinvestorscycleintheshippingbusiness.As As Wilson noted, the chassis leas- to move from 80% utilization to 73%andeventuallywhittleditdowntoWilson points out the business model ing companies understandably had autilization,whichcreatesabufferfivebeforechoosingOaktree.Wewas based on 73% utilization and is differentbusinessmodel.Theirpri- stock. Also, it was agreed to upgradefinally picked Oaktree as the potentialnow running at only around 50%. And maryobjectivewastodifferentiatethefleetwithinfouryearstogopartner based on that they were a goodhowlongwillitbebeforedemand themselvessoastomaximizetheirfrom an average of 20 years to lessfit. They believed in the utility model.beginstopushutilizationupisjust income from the chassis they owned.than four years through an extensiveThey believed in quality service. Theyabout anyones guesssometime in Totheoceancarriers,thechassisrefurbishingandanew-buildinjec- believedinlong-terminvestment.24 or 25 according to some econo-wereadjuncttotheirmainbusinesstion plan. They werent going to try to flip it inmistsbut with so many geo-polit-offillingshipswithboxes.Hence,Theambitiousundertakingalsofive years. ical factors riding along with uneven theserviceofmaintainingandpro- requiredthebusinesstobere-mod- macro-economic trends even Cassan-vidingchassiswerecomplimentaryeled. As Wilson explained regardingD riving then ewM oDel dra would be flummoxed. to their overarching business of shift- the transition, We [CCM] designedWhat is emerging from the launch- Whetherlaunchedinanupor ing boxes from port-to-port. With theitaroundautilitystylemodeltoaingofSACP3.0coupledwiththedowncycle,SACP3.0coupled shift in chassis ownership, the leasingpoint where we knew that we neededOaktree investment is a new approachwiththeOaktreeacquisitionsurely companies became the primary con- to attract investors to help finance theto managing the chassis business. Itschanges the landscape for managing tributor to the chassis pools, replacingmodel. It was also clear to CCM thatoften said, that as in sports, businesschassis pools in the U.S.the ocean carriers. The division in the two business models widened with economic pres-sures following the Lehman Brothers bankruptcyandtheensuingReces-sionin2008.Theywerentneces-sarilydrivenbythosevaluesthat the ocean carriers had originally putWELCOMEONE OF THE around the design of CCM, Wilson said. In the period leading up to theLARGESTcrisis,shippingdemandwasrisingTOCHASSIS POOLSand so was the utilization of chassis. Leasing companies wanted to addressIN THE USboth chassis fleet capacity and qual- 45,000 chassis eetity. With the ensuing crash in demand, chassis utilization fell, as did replace-ments and quality. As a result, whenCOMPETITIVE demand returned back to near pre-cri-sis levels with the economic rebound,PRICINGthere was a lack of capacity as wellDriven by market dynamicsas quality. As Wilson explains The chassis were aging there were fewVAST NETWORKifanychassispurchasesfornearly 10yearsThevolume,letscallit75 locations throughout the Southeastbetween 2009 and 2015, grew into the standing fleet. There wasnt a need toMANAGED BY CCMadd capacity. But there also wasnt anProfessional, single source serviceinjection of any new assets.In the meantime, chassis technol-ogywaschangingwithinnovationsREvolutionizing POWERED BYlike antilock brakes, radial tires, spokePOWERED BYwheels,andheavydutyspringsbutChassis Provisioningthe fleet remained mostly stagnant. Enhanced efciency and visibilityAsSACP2.0rolledaround (2019/2020), The Ocean Carriers and CCMwantedthepoolcontributors to upgrade the fleetthe argument wassimple;withafleetpushing 20-years old, the motor carriers were unhappy, and the ports also unhappy. It was agreed that the fleet upgrade had to be done. But it never happened. According to Wilson the best that ever happened was a 43% upgrade over a two-year period. Things had to change. AsWilsonexpoundedtheports pushedforanewmodelexpressing along the line Look, we appreciate youguystrying,butthisapproach, this concept isnt working.The fleet isntbeingupgradedanditsstill old. We [port authorities] need a new model. We [CCM] went back to the drawing board and came up with the SACP 3.0 model. a n uanCeDa pproaChFirstandforemost,designing arebootwasansweringtheneed forhavingbothenoughchassisand havingreliablechassis.Theleasing company model was designed to haveccmpool.com/sacp3-0just enough chassis, as chassis utiliza-tion is a key to profit. As Wilson says, BSYA 1065 CCM SACP Welcome AJOC 8x10r2.indd 1 11/9/23 3:24PM'