 Commerce Department moves ahead with duties on Chinese chassis |
Source |
American Shipper |
Post Date |
04/02/2021 |
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The US Department of Commerce will formally move ahead with an almost 40 percent duty on Chinese-made chassis, a move that would significantly raise acquisition costs for chassis providers just as an Asian import surge makes the equipment scarce.
The 38 percent duty has been collected since Dec. 28 when Commerce issued a preliminary recommation. In its move to make the duty official, the agency also said it was raising the amount to 39.14 percent.
Still, the US International Trade Commission (ITC), which heard testimony from interested parties on Tuesday, has the final say on whether the duty will remain in place.
If enacted, US chassis providers such as TRAC Intermodal, DCLI, Flexi-Van Leasing, Milestone Equipment Holdings, and Triton could face additional costs of $6,000 to $10,000 for each chassis manufactured by China International Marine Containers (CIMC), once CIMC passes on the extra costs it incurs at the US border. The Chinese company produces about 35,000 to 50,000 chassis annually, it has said previously.
The 39.14 percent anti-dumping duty would be placed on top of the 25 percent tariff previously imposed under the Trump administration unless the ITC reverses the decision. For a $10,000 chassis, the anti-dumping duty would add another $3,914 to the cost, on top of the $2,500 tariff.
CIMC has been paying the anti-dumping duty since the Commerce Department issued the preliminary 38 percent recommation Dec. 28, but it has been held in an escrow account until the final decision. If the d 39.14 percent is upheld, the US Customs and Border Protection will collect the money. If the duty is overturned, CIMC would receive a refund.
The Coalition of American Chassis Manufacturers has argued that CIMC has undercut the market with low-cost chassis, unfairly driving US-based Cheetah Chassis, Hercules Chassis, Pratt Industries, Pitts Enterprises, and Stoughton Trailers out of the chassis business.
The Commerce Department agreed in its Mar. 16 determination, but the ITC will make the final decision. The commission will vote April 13 on whether US businesses have been ¡°materially injured¡± or not. A ruling explaining the vote will be published April 29 and an official order issued May 6.
Robert DeFrancisco, an attorney from Wiley Rein representing the US chassis companies, said there is clearly an injury to US makers.
¡°The evidence on the record that the International Trade Commission collected demonstrates that not only are those (Chinese) chassis subsidized, but they undersell the domestic industry by a wide margin,¡± he told JOC.com. CIMC testified during the 25 percent tariff investigation that it¡¯s not owned by the Chinese government, doesn¡¯t undercut the market, and makes a better product than US manufacturers.
The duty, if enacted, would not only force US chassis providers to pay more, but also hit draymen, importers, and exporters who want to build a private fleet to hedge against chassis pool shortages.
Can US companies feed the growing chassis appetite?
The duty debate comes as there is a chassis shortage in Southern California, which Tioga Group founder Daniel Smith called ¡°a genuine crisis¡± in March 16 testimony before the ITC. Frank Katz, chairman of Cheetah Chassis, argued that there is no shortage, saying instead chassis are ¡°stuck¡± in the wrong port or location.
TRAC Intermodal, one of the top three US chassis providers, said supply is a problem, noting US manufacturers cannot satisfy urgent needs in Chicago, Dallas, Los Angeles, Long Beach, Memphis, and the Port of New York and New Jersey.
"We do not import chassis from China and elsewhere because they are cheaper as a result of dumping or subsidies. We import chassis because we have to, we have no choice,¡± Val Noel, chief operating officer of TRAC Intermodal, told ITC during the Tuesday hearing. ¡°I have lost track of how many times our company has gone to a US producer seeking 800 or more chassis within the next two or three months only to be told by the manufacturers it can only supply a portion of the requested chassis. Who can do business on that basis?"
But Bob Whalin, CEO of Stoughton Trailers, testified before the ITC that his company will be able to produce at least 10,000 chassis annually ning later this year, and more if the anti-dumping duties are upheld.
DCLI has begun talks for US manufacturers to build chassis, but emphasized it wants well-built equipment in large quantities at a reasonable price.
¡°Precisely when new chassis are scarce, these investigations threaten extremely high tariffs on top of the existing 25 percent tariff,¡± Mike O¡¯Malley, DCLI¡¯s senior vice president of government and public relations, told the ITC. ¡°The intermodal supply chain is already stretched thin, and we need your help to ensure we can do our part to support the economic recovery that everyone so desperately seeks.¡±
Frank Sonzala, CEO of CIE Manufacturing, likened the latest developments to a ¡°10 round heavyweight battle,¡± telling JOC.com that ¡°we¡¯ve lost a couple rounds, but it¡¯s not over.¡± CIE Manufacturing is the US-based division of CIMC, with construction plants in South Gate, California
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