11


House to House July 2010


picking-up, utilising and dropping-off chassis that they do not own or lease themselves.


TTClub’s contribution to the success of chassis poolswas particularly prominent in the area of in- ter-change agreements.Apracticallyworded and robust inter-change agreement had been, of course, an important aspect of the day-to-day working of the original system of ‘carrier- owned/trucker-operated’ chassis fleets. The changes to these inter-changes, required to ac- commodate the pool operations, were equally critical to the efficientworking of the newsystem. TTClub’s role in the identification and framing of liability in this area has therefore, been consistent throughout the 20 years that it has been cover- ing chassis liability.


It was in the late nineties, however, when, in the wake of some high-profile cases resulting in large awards for damages, truckers (motor carriers) attempted to curb their costs and potential liabil- ity exposure. They adopted a two-front strategy, seeking changes to the industry-wide Uniform Intermodal Interchange Agreement and lobbying for federal and state legislation that would have shiftedmuch of the liability for chassis-related ac- cident from the truckers to the equipment providers. The Intermodal Association of North America (IANA),which had been responsible for the inter-change agreements then in current use, sponsored a number of negotiating sessions in 2004-05 involving representatives of all the in- terested truckers, railroads, and ocean carriers in order to address the truckers’ concerns. TTClub, in order to up-hold its Members’ best interests, engaged specialist legal representation.


These negotiations resulted in a compromise re- wording of the inter-change agreement, called the Uniform Intermodal Interchange and Facilities Agreement (UIIFA). This, broadly speaking, called for chassis owners, including carriers and pools such asHRCPandOCEMA, to offer the free use of their equipment to truckers in return for the truckers’ undertaking of explicit trucker liability for claims arising out of the use of the equipment, even in the event of provider negligence, subject to limited exclusions for latent defects in the equipment which are narrowly defined. The re- vised UIIFA retained the truckers’ obligation to provide $1million in auto liability insurance that names the providers as additional insureds.


During that same 2004-05 time frame, further at- tempts were made to alter the balance of liability in the truckers favour.Political lobbying and some public pressure, resulting fromroad accident pub- licity, gained the attention of legislators. In 2005


new federal legislation came into force under which extensive obligationswere placed on inter- modal equipment providers (IEPs) to complywith roadability regulations as laid down by the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA adopted such regulations in June 2009, with the phase-in of various requirements beginning inDecember, 2009. As a compromise between the ocean carriers and the trucking in- terests, the federal legislation did not eliminate the motor carriers’ contractual defense and indemnity provisions of theUIIFA. This pre-empted conflict- ing state regulation of the equipment providers, and placed specific inspection obligations on the drivers consistent with the revised UIIFA.


Messers Wise and Jorgensen of TT Club’s re- tained legal firm, Flynn,Delich andWise LLP have provided TTMemberswith guidance to the ram- ifications of this legislation. Indeed, TTMembers will have access to a comprehensive checklist, itemising the aspects of a chassis’ condition that contribute to its roadability according to the terms of the legislation.Under the 2009 regulations, the designation of intermodal equipment provider must bemade clear at the time of inter-change of the chassis to the trucker, by way ofmarking the unit. The Club points out that Members, who own chassis and who are designated as an IEP might see an increase in their liability. The IEP must systematically inspect, maintain and repair the chassis and ensure it is in safe and proper op- erating condition. Details of the IEP’s responsi- bilities are laid out in the regulations and include a requirement that the drivers inter-changing the unit be provided an area inwhich they can safely inspect the chassis.


Despite this newlegislation, the question ofwho is designated an IEPremains open.Nor is the law clear on the scope and timing of the inspections required to be undertaken by the IEP, hence TT Club’s efforts in drafting the Roadability Check- list referenced above. There is an inspection list specified by the regulations for the driver’s (mo- tor carrier) pre-trip inspection. This includesmost of the items now listed on the UIIFA but omits a number of significant components such as land- ing legs, mud flaps, rear under-ride guards and hazardous material placards. TT Club’s commit- ment to maintain a vigilant defence of its Mem- bers’ limited liability in cases involving their chas- sis remains as relevant today as it was some 25 years agowhen TT first undertook the insurance cover of such equipment.


The benefit of this commitment to chassis own- ers is reflected in the share of the total fleet pro- tected by TTClub cover. The Institute of Interna-


tionalContainer Lessors (IICL) estimates theUS chassis fleet to number in the order of 825,000 units, though industry experts put the inactive unit total at between 100,000 and 150,000. Ocean carriers own just under 50% of these, with lessors owning the balance; the Journal of Commerce quotes the lessor Seacastle’s own- ership at 280,000 and Flexi-Van’s at 150,000.As a consequence of insuring high proportions of OCEMA/CCMpooled chassis, aswell as ocean carriers’ self-managed fleets, and significant num- bers of Seacastle and Flexi-Van equipment, in 2010 TT Club will carry risk on over 50%of the active US chassis fleet. TT’s dedication to the sector is clearly appreciated.


Meanwhile ocean carriers continue their quest to make the provision of chassismore efficient and equitable. Last year Maersk Line introduced its Direct Chassis Link through which it is leasing chassis to truckers at a diemrate; there is re-im- bursement of this charge for certain types of container deliveries. While this move may save the line some costs, the inter-change agreement is still necessary and the liability picture, though altered, still remains.


Other lines are beginning to introduce arrange- ments with their haulage suppliers whereby the motor carrier provides the operational chassis, as is the practice in other parts of the world, but it remains to be seen whether this model will be adopted more widely or can be sustained com- mercially The picture remains fluid. Pooling agree- ments are growing in influence; equipment leas- ing companies are adapting their offerings and carriers continue to seek efficiencies.Whatever the changes that willmaterialise in the future, TT Club iswatchful, involved and expertly advised of the US chassis situation.


Leo Kirchner, TT Club


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