CBP Rules Alabama Chassis Maker Avoided Tariffs

May 17, 2023

Senior Reporter

[Stay on top of transportation news: Get TTNews in your inbox.]

The U.S. Customs and Border Protection agency has ruled that chassis manufacturing company Pitts Enterprises and subsidiary company Dorsey Intermodal knowingly imported predominantly finished chassis from China that were being marketed as having been made in a Vietnamese factory.

The ruling brings to a close a nearly yearlong investigation into the manufacturing origin of the Asian-made chassis after a complaint was filed by South Gate, Calif.-based CIE Manufacturing — formerly known as China International Marine Containers or CIMC — against Pitts. The complaint alleged that Pittsview, Ala.-based Pitts took this action to avoid paying additional tariffs on inbound Chinese manufactured products, a charge that Pitts itself lodged against the company then known as CIMC a few years ago.

The CBP decision on Pitts arrived after government inspectors in February traveled to Vietnam and reviewed operations of the company's supplier there, Thaco Industries.

The ruling means Pitts cannot sell thousands of chassis, and company president JP Pierson said the manufacturer is now is facing severe financial hardship. He said Pitts is seeking an administrative review from CBP, and a separate review — what's known as a "scope review" — with the Department of Commerce.

Pierson

"Pitts is hopeful the CBP administrative review of the initial determination, and the Commerce scope ruling supported by the petitioner, will reverse the erroneous CBP determination and shut down the misuse of U.S. trade remedies against Pitts by CIMC, itself found by Commerce to have engaged in unfair pricing and benefited from Chinese government subsidies," Pierson said.

Pierson was referring to a 2020 case in which CIMC was accused of importing thousands of Chinese-made chassis into the U.S. market in anticipation of increased tariffs. In that case, the United States International Trade Commission determined there was "a reasonable indication" that U.S. trailer manufacturers were "materially injured" by the import of container chassis that are allegedly subsidized by the government of China and sold in the U.S. at "less than fair value." That complaint was filed by a coalition of five chassis manufacturers that included Pitts, Cheetah Chassis Corp., Hercules Enterprises LLC, Pratt Industries Inc. and Stoughton Trailers LLC. That complaint alleged that CIMC sought to avoid the imposition of so-called Section 301 duties by flooding the U.S. market with chassis. Section 301 allows the U.S. president to impose tariffs on imports from countries that engage in what are determined to be unfair trade practices.

Pierson insists this proceeding against his company is more about retaliation from CIMC, but a former leader of CIMC maintains the case has merit.

Sonzala

"Pitts and others put up a false accusation about CIMC dumping chassis in the United States, and most of the time we were producing a higher quality and higher-priced chassis," said Frank Sonzala, who has been involved in the trucking and chassis industry for more than 40 years and served as CEO of CIMC and then the renamed CIE from 2016 through 2022. "In this case, I think there were 9,000 chassis that came over, and everything on them came from China through Vietnam. These were made in China and sold by a Vietnamese company."

American Trucking Associations SVP for International Trade Policy Bob Costello noted that the CBP ruling against Pitts brings forward another example of actions that hurt U.S. chassis buyers.

"As a complainant in the U.S. International Trade Commission's case against CIMC a few years ago — a case that I thought was very weak at best — they hurt U.S. buyers of chassis. After CBP's investigation, it appears they have injured these same buyers a second time," he said of Pitts.

Costello also stressed the financial stakes for carriers who must invest in chassis. "Despite softer international and domestic freight volumes, there is still a significant amount of demand for chassis replacements," he said. "As an economist, I can tell you that tariffs rarely, if ever, work. They simply drive up prices of the same goods from both domestic and international producers with little to no additional supply."

Costello

Costello added, "I feel extremely bad for the U.S. buyers of chassis – they are the ones that get hurt the most from unnecessary tariffs and then a complainant is caught evading the same tariffs they pushed for just two years ago."

What remains unclear is how the port and drayage industries will be impacted by the CBP ruling. The South Carolina Ports Authority had ordered an estimated 11,000 chassis from Dorsey to replenish its fleet amid plans for a launch of its internal chassis pool this year. Thousands of those chassis are now in storage until this case is finalized.

In November 2022, Pitts said it would stop importing marine chassis into the U.S. until further notice.

Want more news? Listen to today's daily briefing below or go here for more info: