The South Carolina Ports Authority has been forced to lease 5,000 chassis from providers Flexi-Van Leasing and TRAC Intermodal ahead of the March launch of its proprietary chassis pool, filling a void created when its primary manufacturer stopped fulfilling orders amid a government investigation.
The move by SC Ports follows a tumultuous period that began last October when the US Customs and Border Protection (CBP) launched a formal probe into Pitts Enterprises after it found probable cause the US manufacturer evaded duties on chassis built in Vietnam, but with subcomponents from China.
“With the existing [chassis] fleet and the new lease agreements, which allow for additional assets, if necessary, SC Ports has the chassis capacity to support our customers’ needs,” SC Ports said in a statement to the Journal of Commerce. “We’ve seen a reduction in street dwell times, which supports this number of assets.”
Pitts ceased importing chassis into the US pending the outcome of the CBP investigation after providing only 6,000 chassis of the South Carolina order. Pitts argues that it did nothing wrong because the chassis made for SC Ports were constructed in Vietnam with subcomponents from China. The CBP investigation will determine whether enough of the chassis originated in China that Pitts should have paid duties and tariffs.
SC Ports faced the March deadline
The sudden halt in chassis deliveries left SC Ports in the lurch just months before it was due to launch an in-sourced chassis pool similar to the Port of Virginia. SC Ports was dealing with a March 11 deadline, the day its current membership in the South Atlantic Chassis Pool expires.
The proprietary chassis pool covering the Port of Charleston and inland ports will have 11,000 units. While that’s shy of the goal of 12,900 units set out in 2022, the port believes the downturn in import volumes means demand for chassis is muted right now.
SC Ports says all the chassis leased through Flexi-Van and TRAC will be high-quality chassis with the latest safety features. The port had previously decided to leave the South Atlantic Chassis Pool because it said too many chassis were old, unreliable, and lacked critical features such as anti-lock brakes, LED lights, and radial tires.
The leasing deal makes sense for Flexi-Van and TRAC because the softening port volumes and declining international intermodal business have freed up chassis after two years of unprecedented demand. Now, the chassis used by SC Ports will generate revenue for the two providers instead of collecting dust until volume picks up again.