This is because more than half of the Chinese-built ships are below a stipulated size or are US-owned, and several liner operators have pledged not to raise rates
[SINGAPORE] Shippers are not expected to pay higher freight rates when the United States port fees targeting Chinese-related ships kick in, even though 35 per cent of the combined bulk, crude tanker, product tanker and container fleet could be subject to the additional fees, shipping trade body Bimco has said.
This is because the affected carriers are under pressure not to pass on the higher costs to shippers, and uncompetitive operators will leave US trades, it added.
The US Trade Representative (USTR) will levy fees on Chinese-owned, operated or built vessels calling at US ports from Oct 14, in its drive to curb China’s dominance in shipbuilding.
Niels Rasmussen, chief shipping analyst at Bimco, pointed out in an analysis published on Wednesday (Oct 8) that of the ships that could be subject to the port fees, 70 per cent are Chinese owned or operated; the remaining 30 per cent are built in China.
But he noted that more than half the Chinese-built ships are exempt because they are below a stipulated size, or because they are US-owned.
Rasmussen also gave a breakdown by the type of vessels exposed to the raised costs: 45 per cent of bulk carriers, 30 per cent of crude tanker and container ships, and 19 per cent of product tankers.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Fewer ships in the latter two groups will be affected because fewer of them are Chinese owned or operated.
Bimco’s review of the planned sailings on east-west container trades of the top 10 operators showed that under 20 per cent of ships scheduled to call at the US would be subject to the new fees.
Most of these vessels are owned or operated by Chinese carriers Cosco Shipping Lines and Orient Overseas Container Line, or owned by Chinese leasing banks.
SEE ALSO
Rasmussen said: “As several liner operators have already committed to not increase rates and Cosco Shipping Lines likely must follow suit to remain competitive, we expect no freight rate increases in the container market.”
Cosco Shipping Lines and its subsidiary Orient Overseas Container Line have pledged to maintain competitive market-level rates and surcharges in view of the USTR fees, and non-Chinese operators including Maersk have said they would neither levy a surcharge nor make changes to their service.
“In the bulker and tanker sectors, we expect that most ships subject to USTR fees will leave US trades as they cannot remain competitive. Freight rate increases will therefore likely be avoided in these sectors as well. Confusion over implementation could, however, cause rate increases in the short-term,” Rasmussen added.
Meanwhile, the US Customs has made it clear that ship operators bear the burden of determining whether a vessel needs to pay the port fee.
The new fees that will be phased in will start off at US$50 a net tonne for ships that are Chinese-owned or operated. For China-built vessels, the fee will be two-tier – US$18 a net tonne or US$120 for each container discharged, whichever is the higher.
Cosco Shipping, Orient Overseas could be staring at over US$2.1 billion in US port fees, an earlier HSBC analysis indicated.
