Port fees become the new tariffs in US-China maritime showdown
China Imposes New Port Fees on US-Linked Vessels
In a significant escalation of maritime tensions, China has begun enforcing special port fees on vessels owned, operated, built, or flagged by the United States. This new regulation took effect on Tuesday, coinciding with similar fees imposed by the US on Chinese-linked ships. Notably, Chinese-built vessels and empty ships entering Chinese shipyards for repairs are exempt from these charges, a last-minute adjustment that may mitigate the overall impact on the shipping industry.
Details of the New Fees
The Maritime Safety Administration (MSA) of China will implement these fees at the first Chinese port of call for affected vessels. To determine eligibility for the fees, the MSA will utilize a newly established US-Linked Vessel Information Report Form, which requires detailed ownership and operational information submitted through China’s National Single Window platform. This move follows a Friday announcement by Beijing, which was a direct response to the US’s recent imposition of similar fees on Chinese vessels.
China’s decision to exempt its own-built ships from the new fees significantly reduces the number of vessels subject to these charges. Analysts suggest that this exemption may lessen the anticipated market disruption, particularly in the dry bulk sector. However, the stipulation regarding US ownership is more complex. Ships with US entities holding 25% or more of equity, voting rights, or board seats are targeted, raising concerns among American shipping directors who have begun stepping down from their positions.
Dr. Roar Adland, head of research at broker SSY, highlighted that many publicly listed companies could be affected due to the structure of their shareholdings, which often involve nominee accounts linked to large US investment banks. This could mean that a significant portion of the global fleet may fall under the new fee regime, complicating the landscape for shipowners and operators.
Sector-Specific Impacts and Market Reactions
In the container shipping sector, Israeli carrier ZIM, listed in New York, is expected to face the most significant financial burden from the new Chinese port fees. This comes at a time when ZIM is also grappling with increased US port fees. Meanwhile, in the tanker and dry bulk segments, Swedish bank SEB anticipates that larger vessels will be more affected by the new charges. Approximately 65% of bulk imports to China are transported by capesize vessels, while 83% of crude oil imports are carried by Very Large Crude Carriers (VLCCs). Notably, a substantial portion of these vessels are Chinese-built, which may help mitigate the overall impact of the fees.
SEB’s analysis indicates that the exemption for Chinese-built vessels will allow owners to adjust their fleets based on vessel origin, potentially reducing initial disruptions. The market is expected to adapt to these new inefficiencies, as evidenced by recent increases in capesize and VLCC rates. As both the US and China continue to impose port fees, experts warn that this tit-for-tat approach could lead to a “spiral of maritime taxation,” distorting global freight flows and complicating international shipping operations.
As tensions rise, the implications of these new regulations extend beyond shipping, signaling a shift in how trade and environmental policies are utilized as tools of statecraft. The evolving landscape presents challenges for shipowners and charterers, who must navigate this increasingly complex regulatory environment.
