The World Shipping Council (WSC) has voiced strong opposition to the U.S. Trade Representative’s (USTR) proposed port fees on Chinese-built vessels and fleets containing Chinese-built vessels or having vessels on order from China, citing concerns over inflation, job losses, and harm to U.S. farmers and exporters.

The primary industry trade association representing the international liner shipping industry said that while it supports efforts to strengthen the U.S. maritime sector, it argues that the plan would backfire by disrupting the broader economy.

"WSC supports the goal of building a strong and vibrant U.S. shipbuilding and maritime sector. A strong U.S. maritime sector will have positive ripple effects across the entire maritime industry. However, WSC strongly opposes the proposals in this proceeding for port fees and for requirements to use U.S.-flagged or U.S.-built vessels," Joe Kramek, WSC CEO, said in a prepared testimony for the recent USTR hearing on the proposal.

He added that these proposals will result in increased costs for U.S. exporters and consumers and supply chain inefficiencies "while failing to provide China with effective incentives to alter its acts, policies, and practices."

"Economic impacts would reverberate throughout the economy, adversely impacting businesses, consumers, and especially farmers who export price-sensitive commodities," Kramek added.

The USTR has proposed a per-port-entry fee of up to US$1.5 million on Chinese-built vessels and up to US$1 million on any vessel (Chinese-built or non-Chinese-built) for operators that have any Chinese-built vessels in their fleet or order book.

The USTR has also proposed restricting the carriage of exports from the U.S. to a very small number of U.S.-flagged/U.S.-built vessels.

The WSC chief executive warned that the proposed port fees, if adopted, would "generate congestion at larger ports while reducing service at smaller ports as vessel operators minimize the number of U.S. port calls their vessels make on each route."

This could result in the doubling of shipping rates on some routes.

He noted that an average-sized (6,600 TEU) container ship whose route now includes six port calls in the U.S. would incur fees that would approximately double the combined inbound and outbound spot rates for shipping between New York and Rotterdam.

Kramek noted that constraints in U.S. shipyard capacity, labor shortages, and backlogs would make increasing domestic production difficult. 

He also said the proposal exceeds the scope of Section 301 of the Trade Act of 1974, which is intended to address foreign trade practices, not raise government revenue or demand for domestic goods.

"Generating demand for domestic products and raising government revenue–whether to support a domestic industry or for other purposes–are not permissible bases for actions under Section 301 of the U.S. Trade Act of 1974, which was enacted for the purpose of 'inducing elimination of the foreign acts, policies, and practices at issue'", he said.

The WSC, which represents more than 90% of global container shipping capacity, urged the Trump administration to consider "forward-looking" and alternative strategies to achieve its goal to revitalise the U.S. maritime industry.