China Faces Add'l Fees For Their Vessels - Rates To Increase ?

I am forecasting a modest $150 to $200 increase in base freight rates due to this...

As of March 4, 2025, there is a proposed additional fee for Chinese cargo vessels entering U.S. ports, outlined by the U.S. Trade Representative's (USTR) office. This proposal stems from an ongoing investigation into China's dominance in global shipbuilding, maritime, and logistics sectors, which the USTR claims has been bolstered by significant state subsidies and preferential treatment, impacting U.S. and international competitors.

The proposed fees vary depending on the vessel's ownership and construction origin:

• Chinese-owned vessels (e.g., operated by companies like China Ocean Shipping Co Ltd - COSCO) could face a fee of up to $1 million per port entry, or alternatively, $1,000 per net ton of cargo capacity, whichever is applicable based on the ship's size.

• Non-Chinese operators using Chinese-built ships could be charged up to $1.5 million per port entry.

• Additional graduated fees apply to operators based on the percentage of Chinese-built ships in their fleet: $1 million per entry for fleets with over 50% Chinese-built ships, $750,000 for 25-50%, and $500,000 for less than 25%.

• Operators with vessels on order from Chinese shipyards for delivery within the next two years could face further fees of up to $1 million per entry.

These fees are not yet in effect; they are part of a proposal published in the Federal Register on February 21, 2025, with a decision expected around April 2025. The aim is to counteract China's shipbuilding practices, which have increased its global tonnage share from 5% in 1999 to over 50% in 2023, while U.S. shipbuilding has declined significantly.

This could raise shipping costs significantly, given that China builds over half of the world’s container ships. Industry experts warn of potential supply chain disruptions, increased costs for U.S. importers and exporters, and possible diversions to ports in Mexico or Canada, though recent U.S. tariffs on those countries might limit that workaround. The final implementation depends on approval from the U.S. administration, and the exact impact remains uncertain until then