The inclusion of ship-to-shore gantry cranes in the fourth tranche of Chinese tariffs would increase the costs by millions, AAPA President and CEO Nagle said.
Port officials urged the Trump administration on Monday to remove gantry cranes from the latest round of proposed Chinese tariffs during the first day of the United States Trade Representative’s Section 301 hearings.
The ship-to-shore gantry cranes were removed from the third tranche of tariffs against China, but were included in the fourth list of tariffs of up to 25% across $300 billion in annual trade value. The tariffs would increase the cost of cranes by “millions of dollars that might otherwise be spent on infrastructure improvements,” said Kurt Nagle, president and CEO of the American Association of Port Authorities, in his written testimony.
“These tariffs would have severe consequences for public port modernization programs,” said Nagle, who is scheduled to testify Friday. “We urge you to once again delist port equipment, especially if made exclusively outside the United States. Ship-to-shore cranes (tariff code 8426.19.00) are of special concern due to their high cost, and no U.S. manufacturer exists.”
Both John Reinhart, CEO and executive director of the Virginia Port Authority, and Glenn Wiltshire, active chief executive and port director of Port Everglades, have purchased cranes from Shanghai Zenhua Heavy Industries Co. Ltd. (ZPMC).
Port Everglades ordered three low-profile post-Panamax rail-mounted container-handling gantry cranes for an initial amount of $41.4 million in December 2017 and has an option over the next five years to buy up to three additional cranes for a maximum amount of $55.1 million. The port has yet to exercise the option, Wilshire said. The first three cranes are under construction and are scheduled for delivery next March.
The port also is investing $471 million to add additional berths, and the U.S. Army Corps of Engineers is nearing the start of construction of a $438 million deepening and widening project to dredge the port’s channels to accommodate Neopanamax ships, Wilshire said.
“A 25% duty would immediately increase port costs by $10,350,000 for a current gantry crane order,” Wiltshire said in his written testimony, adding, “Without the removal of gantry cranes from HTSUS 8426.19.00, the resulting budget increase will require the reallocation of funds from other critical infrastructure projects underway at the port, directly affecting U.S. workers who would otherwise be employed on those projects and hamper Port Everglades’ investments in an expansion project necessary to serve existing customers and keep the port globally competitive.”
The Port of Virginia executed the $19.5 million option for two additional gantry cranes for its Norfolk International Terminal (NIT) set to be delivered in September 2020. Four ship-to-shore cranes were delivered to the port’s Virginia International Gateway (VIG) in January, Reinhart explained. He said in his written testimony that 100% of the crane technology and more than 25% of its total value is provided by American and European companies.
The Port of Virginia will have invested nearly $1.5 billion over 10 years through 2024 in terminal expansion, dredging and infrastructure spending, including a $700 million investment in NIT and VIG to expand container capacity by 40%, according to his testimony.
“Simply put, the cost of imposing tariffs on gantry cranes presents a significant risk to continued economic growth for the communities of Virginia and beyond as well as the national economy by threatening a major East Coast port project and would be counterproductive to U.S. objectives to address China’s egregious violations of intellectual property and forced technology transfers,” Reinhart said in written testimony.
Nagle said port equipment also is covered by 8426.12.00 (mobile lifting frames on tires and straddle carriers) and 8426.10.00 (transporter cranes, gantry cranes and bridge cranes) and he urged the administration to delist those codes as well.
Marine cargo containers, which were removed from the second tranche of tariffs, also were included on the fourth list. Mark DePasquale, CEO of the National Portable Storage Association, said in written testimony the committee found last year that shipping containers were low-tech products and did not involve high risks of intellectual property infringement; marine cargo containers produced in China were not subsidized; no company in the U.S. produces marine cargo containers from scratch for use in international commerce; tariffs would not spur investment in U.S. container manufacturing; and container manufacturing in third countries is relatively nonexistent.
“In the period since the Section 301 committee last considered these issues, nothing has changed,” he said in written testimony.
Steven Blust, president of the Institute of International Container Lessors, said in written testimony the duties on marine cargo containers would have “substantial negative effects on U.S. consumers and the general public.”
“If imposed, these duties would apply to containers that have been retired from active international service and are available for various purposes within the United States, including temporary storage for retail outlets, modular housing and storage of personal belongings,” he said, adding, “Leased containers are accepted for off-hire and resale in particular locations because our members know that the container can be sold and repurposed there. Imposing up to a 25% tariff on these containers would make it significantly less likely that containers would be repaired and made available to the U.S. cargo export market or sold and repurposed in the heartland of America.”
The public hearings are scheduled to run through Friday and then resume June 24 and 25. More than 1,700 comments have been made on the request for comment as of Tuesday morning since it was published in the Federal Register on May 17.
