The imposition of reciprocal port fees by the US and China on each other’s linked ships is directly leading to higher freight rates, increased fuel consumption (bunker consumption), and greater greenhouse gas (GHG) emissions for global traders like Cargill.
Impacts of Reciprocal Port Fees
The new port fees, imposed since October 14, 2025, have an immediate and measurable effect on shipping economics and operations.
- Operational Inefficiency: According to Cargill Ocean Transportation’s President Jan Dieleman, the new restrictions create a situation where fleets are segregated: “We have a fleet that can’t really go to China. We have a fleet that can’t really go to the US.” This prevents vessel operators from deploying ships in the most efficient manner, necessitating longer voyages to carry cargo.
- Higher Costs and Emissions: The longer distances directly result in higher freight prices, increased fuel use (bunker consumption), and a corresponding rise in associated greenhouse gas emissions.
- Market Volatility: The late announcement by the Chinese transport ministry on October 10 prompted a scramble for tonnage, which caused immediate spikes in freight rates. For instance, the Global VLCC Index for non-scrubber, non-eco ships jumped from $54,405 on October 8 to $87,323 on October 14.
- Fleet Exposure: S&P Global Commodity Insights estimates that a significant portion of the global fleet is potentially exposed to the Chinese port fees, including nearly 10% of the global tanker fleet (712 ships) and up to 5.5% of the Panamax dry bulk fleet.
Regulatory Clarity and Definition Issues
Cargill, which operates a chartered fleet of nearly 600 dry bulk carriers, is facing challenges in fully assessing its exposure due to ambiguity in the Chinese regulation.
- Fee Scope: China’s fees apply to ships built or flagged in the US, or those owned or operated by entities where US companies, organizations, or individuals hold 25% or more of the equity.
- Ambiguous Definitions: Cargill is still assessing the regulation’s impact because Beijing has not yet provided clear definitions of shipowners and ship operators, or clear rules on determining the equity structure. This complicates the determination of which ships in their chartered fleet are considered “US-linked.”
Decarbonization Outlook
The executive noted that the current environment is also impacting global efforts toward sustainability.
- Delayed Investment: The International Maritime Organization’s (IMO) decision to delay the adoption of new decarbonization rules in mid-October is expected to discourage investments in producing sustainable marine fuels.
- Demand Uncertainty: The lack of a cost on maritime GHG emissions (which the IMO’s Net-Zero Framework was designed to place) creates demand uncertainty, making prospective producers hesitant to invest in production plants without long-term offtake commitments from shipping companies.
- Shift to Regional Rules: Dieleman warned that if a global approach is not possible, national and regional governments may begin developing their own emissions regulations, which would make the industry more complicated, though it could still help the transition through bilateral “green corridor” deals.
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Source: S&P Global
