- COSCO and Other Giants May Be Forced to Reroute Fleets.
- Over Half of Global Dry Bulk Fleet at Risk of Fee Exposure.
- Capesize Segment Minimally Affected Due to Low US Calls.
A new policy framework by the United States Trade Representative (USTR) would practically render China-owned and China-operated ships obsolete for US-bound cargo. The new fee structure is likely to drive Chinese ships away from US ports, as non-Chinese operators take the gap, reports Drewry.
Significant Impact on Chinese Shipping Titans
The policy will have a huge impact on dominant Chinese operators in the dry bulk market such as COSCO, Pacific Basin, and CDB Leasing, that have a significant presence in the US. These operators might be compelled to find substitute cargo opportunities or markets to buffer the effect of the policy.
Market Exposure and Policy Overview
Worldwide, Chinese-owned and Chinese-operated ships control the dry bulk fleet, representing almost 53% of total capacity. Under former USTR requirements, any owner with a Chinese-built ship in its fleet or orderbook was subject to compliance fees—confining the fee-free group to only 20% of the world fleet.
The new policy has eased these restrictions and added exemptions to mitigate the operational strain. Interestingly, the Capesize segment will be least impacted—not because of exemptions, but owing to its trade profile, which restricts US port exposure.
Limited Capesize Exposure to US Ports
Though some US bulk trades utilise Capesize ships, their usage is minor. Among the Capesize ships under the new policy (ships larger than 80,000 dwt), just 7% of them called at US ports during 2024-Q1 2025.
But if a China-owned or Chinese-operated Capesize ship visits a US port on or after October 2025, it would incur high fees—$3 million per visit, or $1.1 million under Annex II regulations—enforcing a major cost threat.
Industry Realignment Underway
The 180-day transition period presents a critical window to realign operations. Within this timeframe, shipowners are likely to:
- Reassign ships to avoid US port exposure
- Shift US-bound cargo to non-Chinese-built or operated ships
- Investigate new carrier partnerships with exempt carriers
Nevertheless, realignment possibilities differ by operator. Approximately 1,000 shipping companies have only a single Chinese-built ship, and flexibility is low—particularly if that ship is used on a regular basis on US routes.
Major Operators Encounter More Disruption
Major players like COSCO Shipping, Oldendorff Carriers, Star Bulk Carriers, Golden Ocean Group, and Vale have it tougher. Over 70% of their fleets are Chinese-built, so rerouting or replacing ships to adhere to the policy will increase costs and cut efficiency.
Panamax Segment Most Vulnerable
Panamax ships are the most vulnerable under the USTR system because of their volume of trade and being listed under Annex I. They are significantly utilised in US long-haul grain export, such as routes from the US Gulf to Japan.
Imposed charges would increase freight rates on this route by almost $15 per tonne, leading to a 25% hike in spot rates per trip. This would undermine US competitiveness in major export markets for bulk commodities.
Short-Haul Routes and Exemptions Provide Relief
One relief in the policy is also the exemption from fees for short-haul trades below 2,000 nautical miles, which will aid routes between Canada, Mexico, the Caribbean, and the US. These types of routes, normally covered by Handysize and Supramax ships, will likely be exempt.
Ballast ships (going into US ports without cargo) are also exempt from fees. This will benefit repositioned ships, particularly outbound grain route ones, and should assist operators with some cost reduction pressures.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: Drewry
