The United States’ decision to impose port fees on Chinese shipping companies and vessels built in China has indeed sparked concerns within the shipping industry about a potential downturn, reports The Chosun Daily.
Additional Fee
The Office of the U.S. Trade Representative (USTR) announced on April 17th the imposition of new port fees targeting Chinese shipping companies, operators of Chinese-built vessels, and foreign-built car carriers. These fees will be phased in starting October 14th, following a 180-day grace period.
Under this policy, vessels owned or operated by Chinese companies will face a port fee of $50 per ton, with subsequent annual increases. Additionally, beginning October 14th, all vessels constructed in China, irrespective of the operator’s nationality, will be subject to a fee of $18 per ton. These new costs are anticipated to reduce the demand for both Chinese shipping services and Chinese-built vessels, thereby potentially weakening China’s influence within global maritime logistics.
The impact of previous trade actions is already being observed. Following the imposition of tariffs up to 145% (and as high as 245% on some items) on Chinese goods by U.S. President Donald Trump, container traffic at Chinese ports has begun to decline. China’s Ministry of Transport reported on April 15th that container volume at Chinese ports experienced a 6% decrease in the second week of April, falling to 5.94 million TEUs compared to the preceding week. Furthermore, reports indicate a rapid increase in shipping cancellations between the U.S. and China.
This decline in container traffic is contributing to a drop in freight rates. The Shanghai Containerized Freight Index (SCFI), a key benchmark for the industry, stood at 1,394.68 points as of April 11th. While still above the estimated breakeven level of 1,000 points, the SCFI has fallen significantly by 65% from its peak of 3,733.80 in July 2023.
South Korean shipping companies, including HMM and SM Line, have expressed concerns that weakening shipping demand and falling freight rates could signal a broader market downturn. While these companies have options to mitigate the direct impact of the U.S. port fees by adjusting routes or engaging in cargo space sharing, they remain wary of potential broader structural challenges in the market. Their direct exposure to Chinese-built vessels is relatively limited. HMM operates only four Chinese-built vessels out of its fleet of 82, and SM Line has two out of 14. Both companies reportedly plan to deploy these specific vessels on routes that do not involve the U.S. to avoid the new fees.
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Source: The Chosun Daily
