South Carolina Ports Authority officials recently announced they will, again, delay purchasing truck chassis to update the ailing pool that services Charleston.
In October, S.C. Ports Authority CEO Jim Newsome indicated it planned to leave the South Atlantic Chassis Pool as early as March 2022, a date that included a six-month delay from previous timelines. Newsome and others anticipated the target date would provide ample time to build a pool, essentially from scratch.
The South Atlantic Chassis Pool currently provides equipment for inland facilities in Wilmington, North Carolina, and Jacksonville, Florida. Although the South Carolina organization initially anticipated it could acquire upwards of 13,000 chassis within 12 months, the effort proved too ambitious. Only one month after the October delay was announced, the Ports Authority extended the timeline into 2023 as inflation appears to put building a pool out of reach.
The South Carolina Ports Authority board of directors reportedly appropriated upwards of $160 million to purchase 12,900 state-of-the-art chassis. Members estimated the per-chassis cost to hover around $12,500. Like many others struggling to negotiate the worst inflation in 30 years, the project now appears unaffordable.
“At a certain point, we just have to say ‘no’ on price. We can’t just pay whatever somebody wants to charge us for a chassis, pay a price which doesn’t make sense given what you can recover per day leasing a chassis versus buying a chassis,” Newsome reportedly said. “There’s more demand for improved chassis than there is supply, for sure, but when you get above $20,000 a chassis, it doesn’t make sense to buy them.”
Like commercial motor vehicle and trailer manufacturers, chassis makers are suffering under the yolk of high raw materials costs. Hot-rolled steel stood at 99.6 on the Producer Pricing Index (PPI) in October 2020, when Port officials may have felt comfortable about chassis buys. According to the U.S. Bureau of Labor and Statistics, the PPI on hot-rolled steel showed negligible movement for more than a decade. But the supply chain bottlenecks, escalating energy costs, and other factors appear to have spiked the PPI to 334.6 in just 12 months. By the end of October 2021, the Ports Authority is being priced out despite having $160 million in cash on hand.
Adding insult to injury, a group of American chassis manufacturers filed a grievance with the Federal Trade Commission (FTC), claiming China International Marine Containers corporation deliberately flooded the U.S. market with inexpensive chassis to bankrupt their companies. The group reportedly claims the chassis manufacturer was buoyed by money from China’s communist government. The FTC reportedly uncovered the communist-backed corporation secured 85 percent of the U.S. chassis market.
Although South Carolina Ports Authority officials are seemingly between a rock and a hard place, Barbara Melvin has worked diligently to broker a reasonable deal.
“We wanted to make sure we were getting the best deal,” Melvin reportedly said. “Of course, the chassis manufacturers were wanting to make sure that they were covering their costs, but I would say we are very close to overcoming these challenges.”
Source: joc.com, fleetequipmentmag.com
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