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September 3 2018

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Page 45 of 71

46 The Journal of Commerce | September 3 2018 Government CIMC opposes tariffs, and Cheetah Chassis is for them. Hercules Chassis also supports tariffs, according to Cheetah Chassis, although the compa- ny declined to comment on the topic. Other domestic manufacturers such as Hyundai Translead, Kwik Equip- ment, and Pratt Industries take no official position. CIMC said domestic manufactur- ers cannot handle a sudden shift in sourcing patterns as post-Panamax vessels and domestic intermodal put a strain on existing equipment. Chee- tah counters that it can quickly ramp up production and tariffs would cost consumers less than a penny per item. Like other industries, Cheetah be- lieves CIMC undercut the market by slashing prices as much as $3,000 per chassis and a protectionist measure is necessary to equal the playing field. CARGO OWNERS ALREADY battling pressures of rising truck rates could see transportation costs increase further if a 25 percent tariff is imposed on chassis. President Trump originally proposed a 10 percent tariff on a $200 billion list of Chinese-made goods, but he eventually asked the US Trade Rep- resentative for 25 percent. China International Marine Containers, the largest worldwide manufacturer, would face the greatest impact. CIMC has about 50,000 chassis orders in the pipeline and constructs 45,000 units per year, the company said, which added new Chinese factories to increase output past 30,000 units. While prices can vary on spec, an average chassis costs $10,000 to $13,000. Assessing a tariff would add $2,500 to $3,250 per unit. Multiply this by CIMC's annual pro- duction levels and purchasers would pay an additional $112.5 million and $146.3 million annually. Companies buying chassis would bear these extra costs and then likely pass them along to shippers and ultimately consumers. In August, an intra-governmen- tal agency scrapped tariffs on Chi- nese-made containers because there aren't US manufacturers. There are domestic alternatives on chassis. Although CIMC is headquartered in China, the company employs more than 2,700 workers in the United States and operates several domestic offices and distribution locations. The transportation industry is replete with "not enough" — not enough drivers, not enough trucks, not enough chassis. Chassis shortages are a com- mon problem in US ports and inland railyards. Port authorities in Georgia and South Carolina recently launched a Southern States Chassis Pool under the theory that the region needs an additional 7,000 to 10,000 chassis to serve the demand of post-Panamax vessels. Truckers serving the Port of Virginia have complained about the lack of chassis in the Hampton Roads Chassis Pool II, pointing out even the online counts ignore how frequently the available units cannot be safely used on the highways. Truckers in Memphis and Chicago suffered from acute chassis shortages this winter, and an effort is underway in the Ten- nessee intermodal hub to investigate options such as a single gray pool. CIMC President Frank Sonzala argues that shippers would face severe shortages should a tariff be enacted. "If you add up everything [the domestic manufacturers] have built in the last two years, they still can't match the 30,000 that we have built per year. Nobody in this country will be able to satisfy near the numbers of 50,000 to 55,000 orders in 2019 and more than 60,000 that will be ordered in 2020," he said. "If they're going to ramp up and retool, we're going to have a bunch of bad chassis back out on the streets." It's a statement that domestic manufacturers vehemently deny. Shippers and trucking companies have demanded new chassis have radial tires, anti-lock brakes, and LEDs to safely truck containers on US highways — the so-called premium chassis. "CIMC has said they are the in- novators, that we've lagged behind in quality. We totally disagree with that. CIMC has copied our designs over the years." Cheetah Chassis President Garry Hartman said. JOC email: twitter: @arijashe Chassis clash While proposed chassis tariffs would elevate shipper costs, support builds among US manufacturers By Ari Ashe JOC image database "If they're going to ramp up and retool, we're going to have a bunch of bad chassis back out on the streets and even see bias ply tires come back."

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