FACTBOX: US port fees on foreign ships to shake up trade flows, freight markets

The US Trade Representative has announced additional port fees on foreign vessels and marine equipment that mainly target Chinese shipping, which are set to alter trade flows and freight market dynamics.

The measures, unveiled following a yearlong Section 301 investigation, aim to boost US shipbuilding and counter China's dominance in global maritime sectors amid trade tensions between the world's two largest economies.

"We view the USTR 301 port fees proposal as both significant and symbolic, indicating that China's growing maritime influence is finally under scrutiny by the US," S&P Global Commodity Insights analysts said. "Should the port fees be implemented, the consequences are likely to severely disrupt global trade, particularly affecting US EXIM trade."

US energy and agricultural producers, as well as many other market players, have pushed back on the USTR, arguing those fees would result in higher import and exports costs for American companies and hurt the economy.

The USTR published its first proposal on the port fees in February before watering them down significantly last month, having received some 600 public comments, most of them negative.

The fees will come into force on Oct. 14 based on the current proposal, and the USTR has suggested they are not subject to further review aside from those on Chinese-made cargo-handing equipment.

But in hearings earlier this month, some trade groups, including the International Chamber of Shipping, still called on the government agency to rethink the proposal as the US and China could find trade resolutions in summer.

Without further revisions, Chinese shipowners and operators are expected to stop trading in the US due to high costs, while third-country shipping firms deploy non-Chinese-built ships to the US.

USTR port fees

Prices

Wet bulk

• USTR port fees will likely affect freight costs for US crude and fuel oil imports from Brazil, Argentina, West Africa, Middle East and Asia on Aframaxes, Suezmaxes and VLCCs, according to analysts.
• Platts assessed the VLCC rate on the Arab Gulf-US Gulf Coast route at $13.09/mt and the Suezmax rate on the West Africa-USGC route at $17.98/mt May 21.
• For clean trades, Scorpio Tankers estimates only 7% of US exports and 9% of US imports on LRs and could be affected by the measures.
• The LR1 rate for shipping 55,000 mt of refined products from the Persian Gulf to the US Atlantic Coast was assessed at $66.36/mt and LR2 rate for shipping 75,000 mt was at $59.33/mt May 21, according to Platts.

Dry bulk

• The USTR proposal is set to cover Kamsarmaxes, Capesizes or larger ships transporting goods like steel and cement to US ports.
• The Platts Capesize T4 Index was $14,336/d and KMAX 9 Index for Kamsarmaxes was $11,582/d for non-scrubber ships on May 21.
• Overall impact on freight markets could be limited as the US only accounts for 2% of global dry bulk imports, of which 90% on ships below 80,000 dwt, according to consultancy Maritime Strategies International.

Container

• Container lines overwhelmingly oppose the USTR proposal, which will cover the main global trade lanes to and from the world's largest economy, aside from shortsea feeder trades.
• Even for non-Chinese firms, S&P Global Market Intelligence estimates the fees on average could push up freight rates by 9% on the Asia-US Atlantic Coast route, 6.2% on the Asia-US West Coast, and 10.5% between the US Atlantic Coast and Europe.
• Platts assessed the North Asia-North America East Coast rate at $5,000/FEU, the North Asia-North America West Coast rate at $3,800/FEU, and the North Continent-North America East Coast rate at $1,700/FEU on May 20.

Trade flows

Wet bulk

• Commodity Insights data shows 22% of US crude oil exports and imports and 19% of refined products were carried on Chinese-built tankers in 2024, when total international oil flows reached 12.3 million b/d.
• US oil loadings on Chinese-built tankers grew from 900,000 b/d in 2020 to 1.4 million b/d in 2024, while US discharges rose from 700,000 million b/d to 1.1 million b/d.
• Total seaborne LPG exports from the US amounted to nearly 66 million mt in 2024, of which 7.2 million mt on ships owned or operated by Chinese companies.

Dry bulk

• US seaborne dry bulk exports in 2024 reached 300 million mt, of which 46% were carried by ships built in China, according to Commodity Insights.
• Chinese-built ships were responsible for 45% of US agricultural exports, 52% of coal exports, and 42% of minor bulk last year.

Container

• The World Shipping Council's figures suggest 988 containerships with 6.54 million TEU as of March were deployed to international services to or from US ports, of which 278 ships with 1.45 million TEU were built in China.
• Chinese-built cranes, containers and chassis made up 32.2% of US imports of those goods in 2024, increasing by 5.5% year over year, according to Market Intelligence.

Infrastructure

Wet bulk

• Global oil tanker fleet -- when Handysize ships and larger were taken into account -- comprised over 7,400 ships as of March, and Chinese-built ships accounted for 23% of their gross tons, according to Commodity Insights.
• The order book for oil tankers amounted to almost 1,040 ships with 51.5 million gross tons, of which 70% under construction in China.
• The LPG/LNG tanker fleet comprised over 2,468 ships, and Chinese-build ships made up 9% of their gross tonnage.
• Gas carriers' order book reached 635 ships with almost 53 million gross tons, including 34% being built by Chinese yards.

Dry bulk

• The world's dry bulk fleet was composed of 12,700 ships as of March, Commodity Insights data shows. Chinese-built ships accounted for 48% of their gross tonnage.
• Dry bulk order book amounted to 1,142 ships with over 52 million gross tons, of which 70% in China.

Container

• Global container fleet consisted of more than 6,400 ships as of March, with Chinese-built tonnage accounting for 28% of their gross tonnage, Commodity Insights figures suggest.
• Nealy 700 containerships with 76.8 million gross tons were on order, of which 68% being built in China.