I recently wrote about USTR’s port fee proposal for Chinese ships – will it stick and what is the endgame..??
This was based on the US Trade Representative’s (USTR) proposal targeting Chinese-built ships and Chinese shipping companies, imposing port fees that range from $500,000 to a staggering $1.5 million per call..
The proposal covers not just Chinese companies like Cosco, but any shipping line with a Chinese-built ship or an order placed in a Chinese yard could be caught in this web..
If this Section 301 action moves forward, the consequences are expected to be massive, not just for China, but for global ocean shipping and, ultimately, American importers and exporters..
How much is it going to cost..??
Drewry has done some work on this and has come up with a formula of how damaging these new port fees costs may be against Chinese ships or lines using Chinese-built ships..
In his LinkedIn post, Philip Damas, Head of Supply Chain Advisors practice and Managing Director at Drewry believes that “more than 80% of current containerships calling at US ports would be hit by US tariff fees as they are envisaged, either because the operator is based in China, or the ships are built in China, or the operator has ordered ships in China.”
Based on this fact, for the typical size of containerships that are operating on the key trade routes of Trans-Pacific (Asia-NAWC & Asia-NAEC) and Trans-Atlantic, the estimated port fee would be between USD222-USD500 per TEU per sailing equating to between USD2million-USD3million per sailing..
Based on the above, if we take JUST the Port of Los Angeles’s 2024 volume of 10,297,352 TEUs, the estimated port fee would range between $1.83 billion and $4.11 billion..
As per Drewry, these costs are about 7 to 16 times that of Europe’s new Emission Trading Scheme carbon taxes..
While further insight is awaited following USTR’s request for public comments, the impact of the proposed penalties on shipper-carrier contracts and surcharges, and the distortion of the North American container shipping market are available from the Drewry Benchmarking Club..
The burning question though is that, if this proposal goes through, can the US consumer sustain this cost as this will almost definitely be incorporated into the freight costs by the carriers..
