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By Mike Wackett
China’s “near de facto worldwide monopoly” of intermodal equipment “manufacturing should be deeply concerning”, according to US FMC commissioner Carl Bentzel.
He has released a report on the US’s almost total dependence on China for the manufacturer of containers and chassis.
A year in the making, Mr Bentzel’s 24-page report was provoked by acute shortages of chassis and containers that have hobbled intermodal operations in the US, and restricted its export market in the wake of the pandemic.
He said: “This report is important in what it represents – that as a country our maritime equipment and industry is increasingly dependent on China.”
He noted that the three largest Chinese manufacturers controlled 86% of the world’s supply of intermodal chassis, and those same companies produced 95% of all new containers, including US domestic train and truck intermodal 53ft boxes.
Mr Bentzel accused China’s state-owned manufacturers of being “notably slow in ramping-up production” when demand for container shipping returned, and alleged that the limited flow of equipment was, in part ,caused by “the market manipulation of Chinese container manufacturers who jointly decided to reduce production”.
He added: “While the US government has spent the past 40 years deregulating our transport industry, the Chinese government has used industrial policy planning to support Chinese firms in strategic sectors, including marine shipping and, specifically, to support its state-owned companies and entire industries.
“Our nation faces a fundamental policy question: should the shipping container be considered an essential piece of equipment by our country instead of being seen as a fungible commodity?”
According to consultant Drewry, a record 7.2m teu was added to the global container equipment fleet last year, taking the total to 50.5m teu. It said containers took an average of 30% longer to complete their transport cycles last year, due to port, landside and haulage delays.
Drewry said that, although China dominated the market accounting for about 97% of production last year, there were two container manufacturers coming onstream in Vietnam this year that would, in due course, have a capacity of some 1m teu a year.
In regard to chassis, Mr Bentzel said, there were “pockets of chassis manufacturing outside of China, such as Hyundai’s operations in Mexico and a growing number of smaller domestic chassis manufacturing operations”.
He conceded that the timing of protective ‘anti-dumping’ tariffs imposed on the import of chassis from China by the US Department of Commerce and the US International Trade Commission “could not have been worse, because of the Covid-19 pandemic-related cargo surges and congestion”.
Indeed, at the TPM conference in Long Beach last month, industry veteran, and now CEO of chassis lessor Flex-Van, Ronald Widdows said the trade war tariffs for chassis were “not such a great idea”, given the lack of manufacturing capacity in the US.
“Domestic chassis are coming, but production is not going to be quick enough,” added Mr Widdows.
Nevertheless, notwithstanding the current shortages of newbuild chassis, Mr Bentzel believes that, in the longer term, the shift from the reliance on Chinese manufacturers will be beneficial.
“The long-term value of not having to rely on monopolistic control in the market for chassis manufacture will outweigh the temporary short-term costs,” he said.
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