Background

Amid unprecedented and continuing disruptions in global supply chains, a U.S. maritime official has expressed concern that the truck chassis and cargo containers at the heart of those supply chains are overwhelmingly produced by China and suggested various trade-related actions that could be taken in response.

Federal Maritime Commissioner Carl Bentzel released recently a report finding that the three largest Chinese manufacturers control over 86 percent of the world’s supply of intermodal chassis and over 95 percent of ocean cargo containers in the global market, including U.S. domestic train and truck intermodal containers, and that these companies are “heavily subsidized by the Chinese government and … state-owned enterprises.” When demand for containers increased in recent years as consumer purchases skyrocketed, the report states, these manufacturers “were notably slow in ramping up production,” which added to supply chain disruptions and raised “the question of whether this was part of a deliberate strategy to manipulate prices.”

In this context, Bentzel said, U.S. policymakers should consider what the longer-term consequences are to the U.S. and other nations of relying completely on Chinese manufacturers as the source for containers and chassis. For example, the report notes that while the level of control manifested by the Chinese government and Chinese manufacturers is mitigated by China’s interest in supporting its exporters to reach overseas markets, especially the U.S., this mitigating interest “does not extend to other trade markets in Asia, or other overseas markets that compete with Chinese exports, nor does it ultimately diminish the potential level of market manipulation.”

The U.S. already has AD and CV duty orders in place against chassis from China, but Bentzel said “further trade action” should be considered as well. This could include antitrust reviews by the Department of Justice or a complaint filed at the World Trade Organization by the Office of the U.S. Trade Representative.

Bentzel also highlighted the potential of the Foreign Shipping Practices Act, which he called “a broad trade remedy [that] has not been employed often or recently.” The FSPA addresses conditions created by foreign governments or the practices of foreign carriers or maritime service providers that adversely affect the operations of U.S. carriers in U.S. oceanborne trade in ways that do not exist for foreign carriers operating in the U.S. When such conditions are found, this law authorizes the FMC to (subject to presidential approval) impose sanctions against foreign carriers such as limiting sailings to and from U.S. ports, restricting the amount or type of cargo carried, suspending the carrier’s tariffs and service contracts, imposing fees of up to $1 million per voyage, and refusing entry or departure clearance.

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