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Rating
U.S. EYES IMPLEMENTING STEEP PORT FEES FOR CHINESE CONTAINERSHIPS
February 25, 2025
The United States (U.S.) is considering imposing substantial new port fees on Chinese vessels and ships constructed in China that enter its ports to reduce reliance on Chinese shipping.
The U.S. Trade Representative's (USTR) office has proposed fees exceeding US$1 million per port of call in the country following an investigation that examined China's growing dominance in global shipbuilding, maritime, and logistics.
The findings revealed that China's share of global shipbuilding tonnage surged from 5% in 1999 to over 50% by 2023, largely due to extensive state subsidies and preferential treatment for state-owned enterprises, which has pushed out private-sector and international competitors.
In contrast, the report noted a significant decline in shipbuilding activities within the U.S. since the 1970s. The U.S. Trade Representative said that while American shipyards produced 70 vessels in 1975, they now only construct about five ships annually.
In addition to the million-dollar port fee per vessel owned by Chinese maritime operators, the USTR proposal also suggests a charge of US$1,000 for every net tonne of a vessel's cargo capacity.
At the same time, non-Chinese shipowners operating Chinese-built ships would incur a fee of up to US$1.5 million per port of entry, which might vary on the proportion of Chinese-built vessels in their fleet.
Shipowners with more than 50% of their fleet made up of Chinese-built ships would be required to pay a uniform fee of US$1 million for each vessel entry, regardless of its origin. The fee will be reduced to US$750,000 if the Chinese fleet percentage is between 25% and 50% and to US$500,000 if it is below 25%.
Furthermore, maritime operators with upcoming deliveries from Chinese shipyards over the next two years might incur an extra fee of US$1 million for each entry into U.S. ports. The proposal also includes the possibility of refunds of the same amount each time a shipping company sends a U.S.-built cargo ship into its ports.
In its report, the USTR said that China's policy "burdens or restricts U.S. commerce by undercutting business opportunities for and investments in the U.S. maritime, logistics, and shipbuilding sectors; restricting competition and choice; creating economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy; and undermining supply chain resilience."
The probe was initiated in April 2024 at the request of United Steelworkers and four additional unions, seeking to revitalize an industry that has faced significant decline since the 1970s, a period during which Japan and South Korea were leaders in shipbuilding.
The USTR is set to hold a March 24 hearing on fees and shipping restrictions.
Earlier, Lin Jian, the spokesperson for the Chinese Foreign Ministry, responded critically to the U.S. plan. "[T]o serve its political agenda at home, the U.S. has abused Section 301 investigation[s], which seriously violated WTO [World Trade Organization] rules and further undermined the multilateral trading system."
"We call on the U.S. side to respect facts and multilateral rules and immediately stop its wrongdoings," he said.
Analysts have warned that this plan could greatly affect global trade, potentially leading to more supply chain disruptions and increased shipping costs.
Flexport: USTR proposal to add US$3M cost per trip
Reacting to the proposal, supply chain management company Flexport said that of the top 20 ocean carriers, around 30% of their fleets are made up of Chinese vessels.
"Containerships typically make 2 port calls per loop, meaning fees could add more than US$3 million per trip. For context, this is significant relative to the typical revenue of US$10 million per journey."
"If this proposal goes into effect, we anticipate that ocean carriers will try to divert some shipments through Canada and Mexico ports and then import via rail and trucking. However, these ports have limited capacity and would not be able to support all of the capacity currently flowing through U.S. ports," Flexport added.
"We also expect that ocean carriers will look to optimize their fleet, using Korean and Japanese vessels on U.S. trade lanes. Carriers with larger fleets and only a few Chinese-built vessels may unload these ships altogether to avoid being penalized."
