 US providers face higher costs after duty ruling on Chinese-made chassis |
Source |
American Shipper |
Post Date |
04/22/2021 |
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The US International Trade Commission (ITC) ruled unanimously Tuesday that the Chinese government¡¯s subsidizing of China International Marine Chassis (CIMC) materially harms US manufacturers, a decision that clears the way for an almost 40 percent duty to be officially slapped on the chassis ning May 6. It also raises the likelihood US chassis providers ¨C customers of CIMC, the largest producer of chassis in the world ¨C will be forced to pay much more for the company¡¯s equipment.
The 5-0 vote is an indication the ITC will also likely find in favor of North American chassis manufacturers in a separate antidumping case that could see a vote in June, according to an attorney familiar with the case.
Tuesday¡¯s decision will have widespread ramifications on customers of CIMC, including importers, exporters, truckers, and chassis providers such as DCLI, Flexi-Van Leasing, Milestone Equipment Holdings, and TRAC Intermodal.
¡°We are gratified by today¡¯s International Trade Commission affirmative determination and look forward to finally competing in a fairly traded market,¡± said Robert DeFrancesco, an attorney representing the Coalition of American Chassis Manufacturers, consisting of Cheetah Chassis, Hercules Enterprises, Pitts Enterprises, Pratt Industries, and Stoughton Trailers.
A US representative for CIMC declined to comment.
The countervailing case and the ping antidumping case are separate but related issues. The countervailing case involving the 39.14 percent duty has to do with whether the Chinese government was subsidizing CIMC¡¯s sales of chassis in the United States to the detriment of domestic manufacturers. The ITC vote on Tuesday certifies the subsidies caused ¡°material injury¡± to the five North American manufacturers.
The ping antidumping case is about whether CIMC flooded the market with chassis to artificially lower prices. The US Department of Commerce ruled in the affirmative in a preliminary report last December and recommed a 188.05 percent antidumping duty. Commerce officials will determine a final percentage in May, and then the ITC will hold another vote on ¡°material injury¡± to the North American manufacturers.
An attorney who is familiar with the case but not a party in the proceedings said Tuesday¡¯s decision virtually guarantees a similar outcome on the antidumping duties. If so, the cost of a CIMC chassis could balloon from as little as $10,000 a few years ago to more than $35,000. On a $10,000 chassis, CIMC would have to pay $3,914 in countervailing duties, $18,805 in antidumping duties, and $2,500 in Section 301 tariffs.
CIMC would be responsible for the duties and tariffs because it is the importer of record on the bill of lading, but the company could pass the costs to its customers. Duties and tariffs may also be applied to chassis components if assembly is done in the US, which is one way to lower the financial burden.
For CIMC customers, it sets up a difficult decision when chassis pools have been stretched to their limits in the ports of Los Angeles, Long Beach, New York, and New Jersey, and inland in Chicago, Cincinnati, Columbus, Dallas, Detroit, Kansas City, and St. Louis. Not all chassis pools are depleted in each market, but at least one provider has a chassis shortage in each of these markets.
Customers have a decision to make
One option is to continue to purchase from CIMC since it is the only supplier in the world capable of producing at least 40,000 to 50,000 chassis annually. Paying triple the price, however, may not be a financially viable choice without substantially raising the chassis rental rates on cargo owners, ocean carriers, and truckers.
Mike Wilson, CEO of Consolidated Chassis Management (CCM), said he thinks more chassis users will up paying the higher price. CCM operates cooperative chassis pools with contributions from DCLI, Flexi-Van, TRAC, and other chassis providers, but does not buy its own equipment.
¡°CIMC has slowed down their production because of all the duties, but I think people are going to say, ¡®I need to pay because otherwise Im going to lose business and I need to find a way to keep the business,¡¯¡± Wilson told JOC.com. ¡°Whether its a trucker or a chassis provider, it gets to a point where you have to have it. It¡¯s like a loaf of bread: You have to eat sooner or later no matter the price.¡±
Another option is to purchase from the five North American manufacturers. The problem is the North American manufacturers told the ITC in a March 16 hearing it would take at least six to nine months to ramp up production enough to produce at least 10,000 to 15,000 chassis annually, so chassis orders many not necessarily be filled until 2022.
A third option could be that US chassis providers lean toward refurbishing old chassis rather than ordering new ones. But that is impractical, say the providers, because every roadable chassis is being used right now to handle the surge in cargo.
CIMC may eventually provide a fourth option. The company has ed a US-based division called CIE Manufacturing with production plants in California and Virginia. If the chassis were assembled in the US, only chassis components from China would be subject to duties and tariffs. If CIE were to also source components from North America, then duties and tariffs would not apply.
¡°The duties put a barrier on new entrants or startups. The established companies like DCLI, TRAC, Flexi-Van, and Milestone can probably hold their heads above water. But anybody that wants to get into the chassis business right now, you got to be willing to wait a long time to get any r
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