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Equipment influx coming for stressed US chassis market: utive
American Shipper
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Relief is coming to ultra-tight US chassis supply that has been a contributing factor in port and rail congestion for well over a year, according to a longtime US chassis utive. Bernard Vaughan, who for decades served as the chief lawyer for chassis provider Flexi-Van Leasing, told the New York-New Jersey Port Industry Day this week that significant additional capacity is coming into the market as multiple manufacturers ramp up new production and refurbishment capacity.

This follows a year when new capacity was very limited following a 221 percent duty imposed on Chinese imports in the spring of 2021, which within a few months all but stopped the flow of new chassis into the US from the dominant producer country, putting significant added stress on the intermodal supply chain.

“The good news is a lot more capacity is coming into the business,” said Vaughan, who for 30 years was chief legal officer for Flexi-Van and is now principal at Vaughan Advisors. “While it’s not going to solve all the problems in this complex chain, there will be a material increase in the number of chassis available.” Vaughan pointed to under-investment in new chassis by leasing companies as one cause for the shortage, in addition to the duty imposed on Chinese imports. What he described was a major realignment under way whereby the market is rapidly diversifying away from China as a supplier of chassis. “US-based capacity has increased to the maximum extent possible, the refurbishment industry is going gangbusters — we had an aging chassis fleet so there are many chassis that are sui for refurbishment — and then you have new entrants coming into the market,” he said. “There was a period in time when chassis leasing companies did not make the economic decision to invest in chassis and so we were working on borrowed time. That has thankfully changed.”

“Notwithstanding the fact that the price of new chassis has gone through the roof, manufacturers are committed to producing and demand is very, very strong,” Vaughan added. “Most of the manufacturers I talk to, their order book is full.” When looking for a new chassis for a client, “I had one manufacturer tell me ‘I am going to do you a favor and we’re going to give you 100 chassis at the of the second quarter of 2023,’” he told Port Industry Day. Vaughan said one source of additional supply is refurbishment. “Companies are making major, major investments in refurbishing old chassis,” he said, which involves sandblasting and installing new components. “To the casual observer it looks identical to a brand-new chassis; there is a lot of that activity going on.” Another new source is trailer manufacturers who are converting production lines to chassis output. “Trailer manufacturers who historically had avoided the business or exited the business are now getting back into the business of building chassis, principally because of the demand and the pricing ramifications,” he said, pointing to Hyundai Translead in Mexico as an example. Vaughan cautioned that if components on new chassis originate in China, it could become a legal risk. “Many of these parts are made in China and as we all know there have been pretty substantial tariffs issued against Chinese manufacturers,” he said. “It’s an question and a risk factor from an attorney’s point of view” whether China tariffs would apply.

He cited two “major new participants” that have recently come into the US market. One is the US subsidiary of Thailand-based Panus, which is ramping up capacity to 12,000 units per year into the US market within a year or two. “They are absolutely operating now,” Vaughan said. Another is Brazil-based Randon, which Vaughan said is the largest semi-trailer manufacturer in Latin America that recently purchased New Jersey-based Hercules Chassis. Hercules has had a long-term relationship with Flexi-Van Leasing and the Port of Virginia to manufacture marine chassis.

Still another is China-based CIMC, the target of US tariffs, which has begun manufacturing at two facilities in the US rebranded as CIE Manufacturing. One facility is in southwestern Virginia in Emporia, and the second is Southgate, California, near Long Beach. “In a period of three years they [CIMC] have doubled capacity of both of those facilities and are building chassis now with American parts, or non-Chinese parts,” Vaughan said. CIE also brings in subcomponents and frames from Thailand.

Other new manufacturers such as Dorsey Intermodal, a subsidiary of Pitts Enterprises, is sourcing chassis from Vietnam.

The South Carolina Ports Authority signed a contract with Dorsey to manufacture 12,900 chassis for its proprietary chassis pool that launched its first phase last month. Vaughan said based on conversations within the chassis market, he estimates new production capacity that has come online is between 50,000 to 90,000 new units per year, with 90,000 being the ultimate extent of capacity and 50,000 being a more realistic number of units that will be produced.

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