The US shipping industry is becoming familiar with Section 301 of the US Trade Act, a provision enabling the US to address unfair foreign trade practices. Following an investigation launched last year, the US Trade Representative (USTR) determined in January 2025 that China has engaged in such practices within shipbuilding and the maritime sector. The USTR has now released a proposed action plan and is seeking public input until March 24th, reports Gibson.
Aggressive Proposal
A highly aggressive proposal has been proposed, featuring disproportionately high fees targeting Chinese operators and/or China-built vessels, including those on order. The specifics are still subject to change, but the final version may incorporate one or more of the following measures:
- $1 million per US port entry: Charging Chinese operators this amount for each US port call.
- Up to $1.5 million for Chinese-built ships: Charging this amount for each port call by any Chinese-built ship, possibly with a reduced fee option based on the percentage of Chinese-built ships in the operator’s fleet. It is unclear whether this reduced fee is instead of or in addition to the $1.5 million.
- $1 million for orders at Chinese yards: Charge this amount for each port call for operators with over 50% or 25% of their order book at Chinese shipyards.
The definition of “operator” is ambiguous, potentially referring to an entity that owns or effectively controls a vessel. This vagueness may be intentional.
With 20-25% of the global tanker fleet (above 25,000 dwt, excluding LR1/Panamaxes) built in China, tanker operators are significantly exposed to these potential changes. Chinese operators are especially vulnerable as they are specifically targeted in one section of the proposal. Chinese companies own at least 15% of the global VLCC fleet, with smaller ownership shares in other tanker segments.
Crude Oil
East:
- VLCC: The VLCC market softened after a positive start. Increased early-week activity gave way to a lack of fresh demand and a large number of available ships. Charterers have the advantage, and a near-term recovery is unlikely. Current rates are estimated at WS58 for AG/China and WS31.5 for AG/USG.
- Suezmax: Suezmaxes in the AG are firmer. Owners of modern, approved tonnage will aim for rates above WS60 for C/C voyages. Eastern runs have tightened, and rates are expected to surpass WS105 next week.
- Aframax (Asia): The Asian Aframax market is quieter, but the tonnage list is reduced. Charterers are working privately, and potential replacement cargoes could push rates up. Ballasting to Vancouver for expected increased March exports is also a factor. A recent TD14 run was fixed at WS115. Rates are expected to remain steady.
West Africa:
- VLCC: VLCC activity in WAF has decreased. The IE week in London likely contributed. Increased activity is expected next week as charterers cover end-of-March stems. WAF/East rates are estimated around WS58.
- Suezmax: West African Suezmax markets are firmer, supported by an improving USG market. Maintaining rates above WS85 for TD20 runs will be challenging, but a repeat of this level is possible.
Mediterranean:
- Suezmax: Med inquiry is limited, and rates have declined. Owners will aim to push rates back above the recent WS100, though this is questionable. Libya/Ningbo is steady, with owners targeting around $5.4 million.
- Aframax: The IE week impacted the Med Aframax market, slowing information flow. The market dipped to WS122.5 for Ceyhan runs. Itinerary delays and a more positive US outlook could lead to a slight rebound.
US Gulf/Latin America:
- VLCC: USG VLCC owners faced a challenging week with softening rates. Uncertainty exists due to the US plan to target Chinese-built ships. Brazil activity remained steady but could face pressure due to low fixing activity elsewhere in the Atlantic. USG/China is estimated at $8.10 million, and Brazil/China at WS58.
North Sea:
- Aframax: A busier end to the week post-IE cleared the market somewhat, but fixing remained steady at WS110. US interest is growing but not enough to significantly impact Atlantic tonnage balance.
Clean Products
East:
- MRs: The Middle East Gulf MR market saw increased activity and stronger rates due to a tighter vessel list. Off-market activity during IE week and limited prompt availability led to rates of WS222.5 on subs for TC17, WS160 for TC12, and Western numbers just below $2.3 million. The market feels steady, though a quiet end to the week might soften sentiment.
- LR2s: The LR2 market is very tight at the front end. Open spec TC1 ships should expect rates to retest previous highs. Rates are assessed at WS127.5. Western runs dipped but are expected to recover to the $3.3-3.4 million range (depending on date).
- LR1s: LR1s are also tight at the front end, particularly for naphtha and jet fuel suitable ships. Owners are looking to push rates. Charterers have controlled stem flow, but the reset hasn’t been tested. TC5 is at WS140-142.5, and UK Continent runs are around $2.75 million.
UK Continent:
- MRs: MR cargo activity was limited during IE week. Tonnage availability was restricted, keeping rates relatively stable. TC2 is at WS155, and West Africa runs hold a 20-25 point premium. Charterers may struggle for prompt coverage, but more options are expected further out. Monday’s inquiry levels will be key to rate direction.
- Handysize: Handy tonnage supply was limited. TC23 closes around WS200-202.5, but MR competition for short-haul business should limit further increases.
Mediterranean:
- Handysize: The Mediterranean Handy market faced a tough week with limited inquiry and ample tonnage, leading to a rate decline. Rates for cross-Mediterranean voyages have dropped significantly to WS150. Early next week’s cargo inquiry will be crucial for determining the rate floor.
- MRs: Limited charterer options have kept MR rates buoyant compared to the UK Continent. Transatlantic runs are around WS170-175, and this premium is expected to continue.
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Source: Gibson
