US ports breathe sigh of relief as tariff exemption saves US$ 130m

The American Association of Port Authorities (AAPA) has applauded the decision by the United States Trade Representative (USTR) to exempt cranes manufactured in China, ordered prior to the tariff announcement on 14 May 2024 and delivered before 14 May 2026, from the 25% tariff on ship-to-shore cranes. AAPA believes that without this exemption, the decision would have unfairly penalised port authorities with outstanding orders. Specifically, the cost of the tariffs would be taken by the customer, meaning ports and terminals, adversely impacting local port authorities.

“Our industry sincerely thanks the Biden Administration for listening to the concerns of America’s ports by making a targeted exclusion to the tariff on Chinese manufactured ship-to-shore cranes,” said Cary S. Davis, AAPA President and CEO. “This wise decision will prevent more than US$130 million in unexpected costs for these public ports with tight budgets. With the medium and long-term health of our economy and supply chains in mind, we are hopeful that the White House will redouble its efforts to, with the help of Congress, create incentives to build out a market for US manufacturing of this key port equipment so we can continue modernising and upgrading our ports. Until ship-to-shore cranes are available from American manufacturers, the Administration should suspend the proposed tariffs on cranes to prevent further harm to our ports and supply chains.”

STS orderbook

The US ports strongly opposed the tariff when it was first announced due to financial repercussions to dozens of STS orders booked already. AAPA said at the time that while the aim of the decision to spur global production of port cranes was welcome, no companies can build large cranes domestically. These cranes are almost exclusively manufactured overseas, with China holding a significant market share.

Based on WorldCargo News recently announced STS crane survey, US ports have 52 STS cranes currently on order for delivery in 2024 and beyond. Of this number 34 units will be produced in China (39 by ZPMC and 9 by Konecranes). Most are scheduled to be delivered in 2024 and 2025, and will therefore arrive before the 14 May 2026 date by which STS cranes must be delivered to avoid the 25% tariff. The possible exception is four very large low-profile STS cranes ordered by the Port of Virginia. These were listed in our STS survey as having a delivery date of September, 2026. It is highly likely, however, that this could be brought forward to avoid the tariff.

The tariffs mainly target Chinese manufacturer ZPMC, which has been at the centre of Congressional investigations due to its links with the Chinese Communist Party and concerns over potential national security risks related to espionage. However, Finland-based crane manufacturer Konecranes would also be subject to the tariffs, as the company fabricates STS cranes for the US market in China. The bigger concern for Konecranes, however, is how “Build America Buy America” (BABA) requirements in grant funding will affect its much larger yard crane business in the US. At the end of July, Konecranes announced it was establishing a network of partners to build a full range of port cranes in the US to satisfy domestic manufacturing criteria.  Konecranes joins PACECO, Mitsui E&S, and the latest contender, Stafford Crane Group, which has announced plans to manufacture STS cranes in the US.

Moving forward, AAPA continues to urge the Biden Administration and Congress to consider long-term solutions, calling for legislation that incentivises the domestic manufacturing of cranes, giving ports the option to buy from US suppliers. Until American-made cranes are available, AAPA believes that tariffs on foreign cranes only hinder port development, and it stands ready to assist in pushing for these changes. There are still big questions, however, over the extent and timeframe for which the US Government is prepared to fund domestic crane manufacturing at the capacity US ports, and intermodal terminals, require.