Monday, November 28, 2022
HomeContainer Market TrendsTotal reliance of USA on China for container and chassis manufacturing questioned

Total reliance of USA on China for container and chassis manufacturing questioned

The primary causes of supply chain disruption were the massive swing of cargo in the spring and summer of 2020, the challenge in handling cargo volumes with existing intermodal chassis, and supply limitations on containers.

This was one of the observations by Carl Bentzel in a report assessing the control of China in the manufacturing of shipping containers and intermodal chassis.

Carl Bentzel is a Commissioner with The Federal Maritime Commission (FMC) appointed by President Trump to serve a term of five years as a commissioner. He has been working in Washington, DC on shipping issues for over 30 years, including the House in the Senate and has a lot of experience in maritime shipping matters.

Commissioner Bentzel has also been quite vocal on matters of Demurrage, Detention & Managing Port Operations, and talking about the impact of Supply Chain disruptions and mitigation.

This report which Commissioner Bentzel has authored in his personal capacity as an individual Commissioner and not as an official publication of the Federal Maritime Commission alerts the public to the current market imbalances in global container manufacturing with a view to generating policy debate on the longer terms implications to the United States on the complete reliance of the USA on China’s manufacturing of containers.

Chinese manufacturers control 86% of the global chassis supply and 95% of the global container manufacturing market and the US Department of Commerce has determined that the Chinese container and chassis manufacturers are state-owned and controlled and are the recipients of large government subsidies. The report raises the question whether the slow down in ramping up the container and chassis production at the height of the demand was part of a deliberate strategy to manipulate prices.

The report is based on information obtained from published statistics, stakeholder websites, Maritime Transportation Data Initiative meetings with U.S. government officials, ocean carriers, intermodal equipment providers, marine terminals, port authorities, railroads, intermodal trucking lines, shippers, industry analysts.

The global supply chain is too interdependent not to have broad access and manufacturing capabilities for intermodal operational equipment. The United States should assess whether given market dominance that further trade action be contemplated and whether to invest more aggressively in next generation container manufacturing technology.” Bentzel says in the report.

The report also touches upon potential avenues for regulatory or trade actions to counter the monopolistic market control in container manufacturing. The report clarifies the expansive authority that the FMC has in order to take action against the activities of foreign governments, foreign carriers, and foreign maritime service providers for restrictive trade practices that adversely affect U.S. carriers in foreign trade.

These trade actions are based on two FMC statutes – Section19 of the Merchant Marine Act, 1920 (Section 19), and the Foreign Shipping Practices Act (FSPA). “The FSPA is the most pertinent to the container manufacturing market situation as it addresses conditions created by foreign governments or the practices of foreign carriers or foreign maritime-service providers that adversely affect the operations of U.S. carriers in U.S. ocean borne trade that do not exist for foreign carriers operating in the U.S.” says Bentzel in the report.

As per the report, the FMC is authorized to investigate those conditions, gather information, make determinations, and impose or request sanctions against the responsible government or party and if the FMC is able to make a determination that conditions do adversely affect U.S. carriers in foreign commerce, the FMC can impose sanctions against a foreign carrier including :

  1. limiting sailings to and from U.S. ports or restricting the amount or type of cargo carried;
  2. totally or partially suspending some or all of the foreign carrier’s tariffs and service contracts (which suspends its right to trade);
  3. totally or partially suspending its right to operate under any agreement filed with the Commission;
  4. imposing a fee not to exceed $1 million per voyage, and
  5. refusal of entry or departure clearance.

Of course, all this depends on the cooperation, recommendations of various Govt agencies, and ultimately the approval from the President of the United States.

The USA and other countries of course are free to compete against the Chinese manufacturers and manufacture containers and chassis on their own and break the Chinese monopoly, but the question of “who will bell this cat” remains unanswered.

The full report can be downloaded here..

Be part of the discussion and share your views about the article here..

This site uses Akismet to reduce spam. Learn how your comment data is processed.

RELATED ARTICLES
- Advertisment -
Manifest 2023

Most Popular

Recent Comments