Looming tariffs on Chinese-manufactured container cranes will significantly increase prices and could impact future projects at ports across the Gulf Coast, according to port officials.
In July, Port Houston approved the purchase of eight electric ship-to-shore container cranes for more than $113 million, the largest order in the port’s history.
The cranes are being manufactured by Zhenhua Heavy Industries Co. (ZPMC); a China-based, state-owned company and the world’s largest manufacturer of container cranes, accounting for over 70% of the world market.
Under tariffs on Chinese imports initiated by the Biden administration in May, the eight container cranes could be subject to an extra 25% duty, significantly raising their price, according to Port Houston CEO Charlie Jenkins.
Ship-to-shore cranes are used for loading and unloading containers and are considered critical for port productivity.
“At this time we are not certain the 8 ship-to-shore cranes awarded in July are susceptible to the tariff, but if so, we estimate the cost to be $28.5 million,” Jenkins told FreightWaves in an email. “The 8 cranes purchased are a critical part of our capital investment plan to grow capacity one step ahead of forecasted demand and support the expected larger vessels into Houston with the completion of Project 11.”
Project 11 is a $1.1 billion expansion of the Houston Ship Channel, which will allow the channel to accommodate an additional 1,400 vessels per year and could generate up to $134 billion more annually in economic impact once completed by 2028.
Jenkins said the 25% tariff on Chinese-manufactured cranes will not have an impact on Project 11, but it is “unknown if other projects could be delayed.”
Along with Port Houston, the Port of Freeport in southeast Texas could see an additional $6 million in cost on two container cranes it has ordered from China-based manufacturers because of the 25% tariff.
The Port of New Orleans, which is expanding and planning the $1.8 billion Louisiana International Terminal (LIT), said the tariff could have a significant impact on the project’s budget and viability.
The LIT, which will be capable of handling 2 million twenty-foot equivalent units annually and ultralarge container vessels, aims to position New Orleans as one of the top international container gateways in the Gulf of Mexico.
The U.S. trade representative (USTR) announced the tariff increases in May on an array of Chinese imports, including ship-to-shore cranes, electric vehicles, lithium-ion EV batteries, steel and aluminum, semiconductor chips, solar cells, and medical products.
“In response to China’s unfair trade practices and to counteract the resulting harms, President Biden is directing his trade representative to increase tariffs under Section 301 of the Trade Act of 1974 on $18 billion of imports from China to protect American workers and businesses,” the USTR said in a news release.
Port authorities, terminal operators and industry groups across the U.S. immediately pushed back against the tariff on ship-to-shore container cranes.
The American Association of Port Authorities (AAPA) sent a letter jointly with major ports from across the country to U.S. Trade Representative Katherine Tai in July urging her to reconsider the tariff on cranes.
“Simply put, the AAPA is confident that the tariff, if imposed, will not meet its stated objectives,” Cary Davis, head of the AAPA, wrote in the letter. “Instead, it will only result in negative outcomes, including grave harm to port efficiency and capacity, strained supply chains, increased consumer prices, and a weaker US economy.”
Last month, Tai announced that Chinese-made ship-to-shore cranes ordered prior to May 14, 2024, and cranes that enter the U.S. prior to May 14, 2026, would be excluded from the tariffs.
The ruling helped Port Houston save duty fees on three ship-to-shore cranes it recently received from Chinese manufacturers, but the port still faces import tariffs for the eight cranes it ordered in July.
“The bottom line is we’re working very diligently on this issue with a number of our stakeholders,” Jenkins said during the Port Houston commission meeting Sept. 24. “We will continue to work to exempt these cranes and find the opportunities to do so. It is a big financial burden.”
AAPA commended Tai’s decision. AAPA and port officials noted that one of the major issues with the tariff is there are currently no U.S. manufacturers of ship-to-shore cranes.
“Now, our organization continues to encourage the Biden Administration and Congress to thoughtfully consider long term alternatives,” AAPA said. “Until there is an American manufacturer, USTR should not impose tariffs on cranes that do nothing more than tax port development.”
In July, Finland-based crane manufacturer Konecranes announced plans to begin building port cranes in the U.S. The company currently builds cranes for the U.S. market from a factory in China.
“Konecranes expects the network to grow in states including Ohio, Virginia and Wisconsin in the coming years, and has received initial indications of interest from several customers,” the company said in a news release.
Konecranes did not provide a timeline for when it would open a factory in the U.S.
