Posted on: Sep 20, 2018
Marine terminals were spared a multi-million-dollar tariff that could have placed a crimp into projects to expand US ports, but chassis providers and users didn't get a reprieve amid a dispute between US and Chinese equipment manufacturers. Shippers will ultimately suffer since chassis lessors will pass along these extra costs by raising prices on daily rentals or long-term leases.
The Office of the US Trade Representative released the final list this week after hearings into a 25 percent tariff on goods touching virtually every US industry. The Section 301 Committee, an intergovernmental working group, heard testimony in August from chassis manufacturers and providers who are integral in the use of wheels to deliver containers.
China Intermodal Marine Containers (CIMC), the largest container and chassis manufacturer in the world, spearheaded an effort with chassis lessors such as Direct ChassisLink, Inc. (DCLI), Flexi-Van Leasing, TRAC Intermodal, and the North American Chassis Pool Cooperative to outline how a tariff could cost the industry more than $100 million and was improper because US manufacturers cannot churn out equipment fast enough to satisfy the needs of cargo owners.
Cheetah Chassis led an effort to maintain the tariffs, arguing CIMC flooded the US market with cheap chassis and a protectionist measure would put them back on equal footing while only costing shippers fractions of a penny per item. An average chassis costs $10,000 to $12,000.
The Port of Virginia and the American Association of Port Authorities (AAPA) lobbied against a tariff on ship-to-shore and gantry cranes. While it is not known exactly why the port authorities were successful while the chassis lessors were unsuccessful, the key difference was US businesses are not being harmed on cranes but are on chassis.
As many of these chassis lessors are owned by private-equity groups, any adjustments in price could alter the balance between refurbishing old chassis and purchasing brand new units. In the end, shippers don't care whether a chassis is refurbished, remanufactured, or new, as long as the equipment has anti-lock brakes, LEDs, radial tires, modern electrical wiring, and other features to guarantee a safe and reliable delivery to distribution centers.
Source: Journal of Commerce