How massive new US port fees could impact container shipping

CONTAINER shipping could be acutely impacted by the US Trade Representative plan to levy massive port fees on US calls by Chinese ships and vessels of operators who have Chinese vessels or newbuilds on order at Chinese yards.

“The proposed levy on Chinese ships calling at US ports could trigger moves to switch out Chinese- built ships from US trades that would cause widespread disruptions over the coming months,” warned Linerlytica on Monday.

“Chinese carriers would be most affected by the levies and their potential exodus could create a void in the market, as they account for 17% of container imports from the Far East. The proposed trade action would hit Cosco especially hard,” wrote Linerlytica.

According to Jefferies analyst Omar Nokta, “These fees would likely require reorganising fleet patterns. The most affected sector is likely containerships, given multiple port calls”.

That said, it is questionable how much advantage would be to gained from redeployments.

There is still a lot of confusion on the proposed USTR port fee plan. Given the vague way the draft is currently written, it looks like redeployments might help max out fees for some ships, but in most cases, would not remove the fees. Depending on how the final rule is written, redeployments may not help that much.

Three categories of proposed port fees

There are three categories of proposed port fees: one for Chinese transport operators, one for operators of on-the-water Chinese-built ships, and one for those with ships on order at Chinese yards.

The first category would specifically ensnare China’s Cosco Group, the world’s fourth-largest ocean carrier (including subsidiary OOCL). It would charge up to $1m per US port call. According to Linerlytica, 51% of the Cosco Group’s containerships currently call at US ports, by far the highest percentage of any of the top 10 liner operators.

The next category of fees — for container shipping operators with Chinese-built ships — would hit multiple top-10 carriers, not just Cosco.

The USTR draft plan seems to offer two options. In one case, operators with 50% or more Chinese-built ships in their f leet would pay $1m per port call (for any of their ships, not just the Chinese-built ships), those with 26%-49% would pay $750,000 per call, and those with over 0% to 25% would pay $500,000 per call.

According to Linerlytica data on the percentage of Chinese-built tonnage (based on teu) in f leets, Cosco would fall into the $1m-per-call category; CMA CGM, ONE and Zim would fall in the $750,000-per-call category; and the rest of the top 10 liners would fall in the $500,000- per-call category.

It is not clear from the way the USTR draft plan is written whether Cosco would have to pay for its role as a Chinese maritime provider in addition to its penalty for owning Chinese-built ships (which would total $2m), as there is a statement that Chinese-built ships would pay “up to $1.5m”.

There is also what appears to be an alternate provision in which carriers with 25% or more Chinese-built ships would pay $1m per call, and those below 25% would pay nothing.

Based on Linerlytica data on the top 10, this alternative would be neutral to Cosco; positive for MSC, Maersk, Hapag-Lloyd, Evergreen, HMM and Yang Ming (which would otherwise fall in the $500,000-per-call category but in this scenario would pay nothing); and worse for CMA CGM, ONE and Zim (which would pay 33% more).

The third category of fees, which is specifically described as “additional” fees, is for carriers with ships on order at Chinese yards. Again in this case, there appears to be two proposals.

One is for an additional $1m per US port call for operators with 50% or more of their newbuilding orders at Chinese yards, $750,000 for those with 26-49% of orders in China; and $500,000 for anything above 0% up to 25%.

According to Linerlytica data on the top 10 carriers, MSC, Maersk, CMA CGM, Cosco, Hapag Lloyd and ONE would all fall in the $1m-per-call category for shipbuilding; Evergreen would be in the $500,000 category; and HMM, Zim and Yang Ming have no Chinese orders, and would thus be free from these fees.

There is also an alternate USTR proposal that would charge $1m per call for all carriers with more than 25% of orders at Chinese yards. This would be neutral for all of the top carriers except Evergreen, which would escape port fees under this scenario.

Add it all up and the USTR proposal looks considerably worse for the Ocean Alliance (Cosco, CMA CGM, OOCL, Evergreen) than for the Premier Alliance (HMM, ONE, Yang Ming), Gemini (Hapag-Lloyd, Maersk) or MSC.

Surcharges would hit US exporters much more than importers

How much could shippers pay in surcharges?

Assuming an average ship size for a US call of 6,000 teu, a containership levied $1m per call would have to pay $334 per feu per call. At $2m per call, it would pay $667 per feu per call. At $3m per call (which might theoretically be the case for Cosco ships), it would pay $1,000 per feu per call.

In the US east coast market, services from Asia typically call at two to four US ports, multiplying the financial consequences for carriers, and thus the consequences for US importers and exporters.

Assuming new port fees translate into new surcharges for shippers, it is unclear how that would be split between US importers and exporters, but US exporters would clearly feel much more pain.

If there was a $300 per feu surcharge on imports and exports due to the USTR action, it would equate to 8% of current Drewry World Container Index spot rates from Shanghai to Los Angeles, but 43% of current spot rates from Los Angeles to Shanghai.

That added cost could squeeze low-margin, low-value US containerised exports. AsPeter Friedmann, executive director of the Agriculture Transportation Coalition, previously told Lloyd’s List, “There’s nothing we produce with our agriculture or forest products that can’t be sourced elsewhere in the world, and when you lose a market, you don’t get it back right away.”

#COSCO #OOCL #CMACGM #ONE #Zim #MSC #Maersk #HapagLloyd #Evergreen #HMM #YangMing #Containers #UnitedStates #China

Lloyd's List Daily Briefing 26 February 2025