The biggest intermodal chassis builder in the US is getting bigger.
CIMC Intermodal Equipment, the US chassis arm of global giant China International Marine Corp, is on track to grow its chassis output tenfold since 2012, thanks in large part to a series of expansions to serve the East Coast and Great Lakes region.
CIMC has been producing container chassis at a plant in South Gate CA since 2006, serving the Western US. The company opened an assembly facility in Emporia VA in 2015. Early success prompted a move two years later to an adjacent facility.
Not long after beginning chassis production there, CIMC Intermodal Equipment President and CEO Frank Sonzala told workers assembled for pizza in the breakroom that he hadn’t initially been excited about the move, due to the previous condition of the building.
“You guys have done a fantastic job. I’m so proud of this facility,” said Sonzala, who came to CIMC in 2016 from industry supplier Pressure Systems International. “You made the move from one factory to another and didn’t miss a shift. I’m totally amazed and very proud. We’ll be bringing customers to Emporia to come in and see what you do and how you do it.
“There’s nothing better for a customer than to come in and get a warm feeling that everything is going great, and it’s going great because we’ve got the right people doing the right thing in the right place at the right time,” he continued. “We are the biggest, we are the best, because of your work.”
Moving into the larger facility has allowed Emporia, which the year before produced about 20 percent of CIMC’s North American chassis, to fully catch up with production at the South Gate facility.
And Sonzala set an ambitious plan for growth. CIMC, which produced about 6,000 chassis in 2012, was expected to hit 35,000 in 2017, with a goal of 60,000 by next year—a figure that would approach the output of the top trailer builders in North America.
Emporia is centrally located on I-95 south of Richmond. The CIMC facility is less than 500 miles from New York and Newark to the north and 530 miles from Jacksonville to the south, putting the plant within range of the top ports along the East Coast and the vast majority of the container freight.
At $40 Billion, the North American intermodal market is the largest in the world. It relies on a fleet of more than 700,000 chassis to move the domestic and international containers on its network, according to the Intermodal Association of North America. Globally, 95 percent of all manufactured goods at one point are moved in a container.
That’s good news for a chassis builder. The challenge, of course, is to execute and take advantage of the market.
“We’re still trying to figure out the most efficient way to do things. We took ideas from guys out here on the floor that have been doing this for a couple of years,” said Chris Ratliff, whose work in Emporia recently earned a promotion to senior vice president of production and plant/satellite operation. He pointed out people on the floor, along with the suggestions they made in organizing the line for the newer location. “Everybody in the company is providing input on how we can improve our products, our delivery—everything—so that we can grow into that 60,000.”
Another major contributor to the Emporia surge is the growing distributor base, Sonzala added.
“We went from selling direct to selling through distributors, and that’s what opened up the East Coast,” he said. “When you think about it, this is almost as good a distribution point as central Ohio—almost. Less than 2 percent of retails sales were handled through distributors before, and that climbed to about a third of the business in less than two years.”
The 78,500-square-foot facility sits on 15 acres. The land around the building had to be regraded to make it suitable for parking the assembled chassis before delivery. The yard can hold about 1,200. The facility also comes with a rail head.
Inside, a portion of the building is being refit to serve as a parts distribution center for CIMC as well as sister-company Vanguard National. The assembly line is separate from the area where the retail work is done: custom additions such as branding, tire inflation systems, or GPS units.
“We don’t have to keep them separated, but we’re always looking for the most efficient way to do things,” Ratliff said.
The Emporia plant, like the California facility, builds chassis from subassemblies shipped from the company’s manufacturing plant in China where the frames are robot-welded and KTL-coated. Sonzala praised the China plant for its zero-waste production systems and state-of-the-art technology.
“It’s a very, very efficient process—we reclaim everything: the coating powder, the steel,” Sonzala said. “The final QC program is showing close to 100 percent inspection, then we 100 percent inspect again here because you can get some damage in shipping.”
The suspensions feature components from SAF-Holland, Hendrickson and Hutchens—also shipped from China.
“Because of the globalization of the products today, we are able to get the best American products in China,” Sonzala said. “And when they come over here, if there’s a problem, we don’t have to look for someone or wait a day and a half for a decision on the Chinese side. We just call the American supplier and get it taken care of.”
Among CIMC’s biggest customers are J.B. Hunt Transport and Schneider National, along with equipment leasing companies such as TRAC Intermodal. Earlier this spring, Schneider announced it had completed its conversion to a company-owned and managed chassis fleet by purchasing more than 15,000 intermodal container chassis over the last four years—a move being made by many of the big players in the intermodal market. Such companies cite the numerous advantages to relying on their own equipment rather than on the traditional shared chassis pools and the associated problems such as availability and equipment quality.
And, again, CIMC is the beneficiary. But, as Sonzala insisted, providing a higher-quality product is the real difference maker in the company’s 77 percent share of the US chassis market. He tells of sitting at the port gate at Norfolk and spotting old chassis that still have branding from shipping lines that haven’t been in business for 20 years.
“Chassis had been the cheapest product on the market. CIMC put the line in the sand and started using quality components,” he said. “But we still had to convince some customers who said they had to have paint, instead of KTL. It was like pulling teeth to get them to change a spec because it wasn’t the way they had always done it.”
To meet demand, CIMC tries to keep about 500 chassis in stock, and monthly orders have been exceeding that—meaning periodic shortages.
“Unfortunately, we don’t have a good enough crystal ball that we don’t run out,” Sonzala quipped.
Indeed, as Ratliff explained, the challenge is to manage shifting demands for chassis of a certain spec.
“We can have 200 20’-40’ tridem chassis sit in inventory for six months, then all of the sudden we get a customer that’s looking for that model,” he said. “We’ll order more that sell out, so we double the order—then they sit again.”
But, again, the growing dealer network has helped to moderate those surges.
“I think there’s a paradigm shift coming. The trucking companies are starting to realize that if you buy a chassis and finance it, in about three and half years you own that chassis instead of continuing to pay to rent or lease it,” Sonzala said. “We still have house accounts for our biggest customers, but even for an order of 200 we’ll take that to the dealer, and the dealer can provide service and driver training on how to use the chassis. It’s very interesting how much this company has evolved from just selling chassis to being full service.”
And that includes an app that provides nationwide access to road service and uniform parts pricing, he explained.
In closing his informal employee lunch gathering, Sonzala—who’s been doing business in China since 1983—provided a quick lesson in global economics, and pointed to the growing demand for consumer goods in the world’s most populous and increasingly wealthy nation. He dismissed talk of tariffs as “political,” and suggested that trade barriers don’t make sense in the long run.
“Guess what? When they need product over there, it’s going to go into a container box, and go onto a chassis, and go to a port on the East or West Coast, then China. And then it’s going to come back here with something else,” he said. “They’re going to need our products as much as we need their products.
“There is a bright future ahead.”
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