China’s ZPMC warns of port shutdown if crane tariff goes through

WASHINGTON — Imposing a 100% tax on the world’s primary supplier of container gantry cranes could lead to supply chain chaos and major damage to the U.S. economy, according to China’s Shanghai Zhenhua Heavy Industries Co. (ZPMC).

In comments filed with the U.S. trade representative, ZPMC, which according to the U.S. government has the largest share of the ship-to-shore (STS) crane market, warned that USTR’s proposal to impose a 100% tariff on its cranes would prevent ZPMC from providing new or replacement cranes, parts and components that allow U.S. ports to operate efficiently and compete with other ports.

“The tariffs will significantly increase costs for U.S. port customers, and lead to low efficiencies in port supply chain operations due to material reliance on aging equipment or even a complete halt of port operations,” ZPMC told USTR, ahead of a hearing the agency is holding on the tariff proposal on May 19.

“The additional costs on U.S. ports will significantly increase the costs of consumer products, increase the costs of U.S. exports, and create serious inflationary pressures on the U.S. economy.”

As a state-controlled company unburdened by the profit-turning pressures of its international competitors, ZPMC can offer significantly below-market prices for cranes that typically cost $10 million to $12 million or more, a marketing director for an international crane manufacturer told FreightWaves in 2022.

ZPMC-built cranes are operating at the largest U.S. container ports, including those in Los Angeles, New York, Virginia, Baltimore, Seattle, Miami, Houston, Charleston, South Carolina, and Tampa, Florida.

In addition to the 100% crane tariff, USTR is proposing a 20%-100% tax on Chinese-made ocean containers and on the truck chassis used to haul them to and from the ports.

The gantry crane and container equipment tariff proposal follows a report issued in January by the Biden administration that found the U.S. is vulnerable to its overreliance on Chinese production of such equipment, giving China the power to manipulate maritime markets.

The report led USTR in April to issue a multiphase scheme for port fees on Chinese-linked shipping based on the size of ships.

Port wants time to adjust

U.S. ports, meanwhile, are also worried about the ramifications of the proposed tariffs, particularly given that there currently are no U.S. producers of STS cranes.

Cary Davis, president of the American Association of Port Authorities, told USTR he plans to testify at the upcoming hearing “how these steep tariffs will deter ports from building out the infrastructure necessary for America and our maritime industry to compete globally.”

Port of Virginia CEO Stephen Edwards told USTR that as the size of the container ships the port routinely services climbs from 16,000 twenty-foot equivalent units to 20,000 TEUs, it will struggle to keep up without STS cranes that China and ZPMC are capable of building to support them.

To give non-Chinese manufacturers time to catch up, Edwards intends to propose that the tariffs be phased in over 12 months, “consistent with the exclusion for cranes that fulfill contracts executed prior to May 14, 2024, and that are delivered prior to May 14, 2026” under an existing 25% tax on Chinese STS cranes that went into force last year.

He also will suggest that the tariffs be treated as industry-specific taxes “and be assessed in lieu of, rather than in addition to, broader country-wide duties.”

Related articles:

• US targets Chinese-made container cranes in spy crackdown
• Ports call out ‘sensationalized’ targeting of foreign container cranes
• White House to Trump: Get ready for more supply chain shocks 

Click for more FreightWaves articles by John Gallagher.

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