Global tanker freight may spike amid escalation in China-US port fee dispute

Global clean and dirty tanker freight rates that have significantly declined so far this month may recover during the rest of the year, backed by China's port fees on US-owned ships, seasonal winter demand, and some diversification of oil purchases by countries such as India, market participants said Oct. 10.

While the levying of US port fees on Chinese-owned ships from next week is mostly factored in by the market and has provisions for exemptions, China's decision for a tit-for-tat on a three-day notice has taken the maritime world by surprise, with fears that it can potentially be highly disruptive.

"Fees are extensive and will prevent trade," according to a tanker market outlook from shipping brokerage E.A. Gibson released after the Chinese announcement. The brokerage estimates that the proposed Chinese port fee of around $56 per net ton on US-owned ships when calling its ports will translate into over $5.9 million for VLCCs and $1.9 million for LR2s and Aframaxes.

While there is still a lack of clarity on which ships may qualify for an exemption from being defined as US-owned, of particular concern is that several major global shipping companies are listed on American stock exchanges.

According to a Chinese government notification, the vessels owned or operated by enterprises or organizations in which US enterprises, organizations, or individuals directly or indirectly hold 25% or more equity, voting rights, or board seats will be eligible to pay such fees.

Several major tanker companies such as Scorpio, Ardmore, Teekay and Torm have sizeable American ownerships because of listing on stock exchanges, and the Chinese decision can significantly disrupt the overall trade as their tankers may avoid Chinese ports until clarity emerges on the port fees. A senior Ardmore executive said the company is analyzing the Chinese announcement "very closely and it is too early to provide comment." Sources in the rest of these companies are yet to respond to a request for comment.

If the 25% American equity is a qualifying factor for fees, "it will be a nightmare to quantify," said Ralph Leszczynski, research director with Genoa-based shipping consultancy and brokerage, Banchero Costa, or Bancosta.

Technically, this means that even if an American individual indirectly, perhaps through some investment fund, owns 25% of a Singapore-based shipping company, then that will also be subject to the fees, Leszczynski said. So, there will be a need to check in depth the detailed shareholder structure of every single shipowner and operator in the world, he said.

However, executives of a few such shipping companies and analysts said they are hopeful that it will not be the case. They pinned these hopes on the Chinese government's notification that stated the measures for the detailed implementation of this proposal will be formulated separately. Leszczynski said the port fees may eventually be levied only on US-headquartered and US-registered companies, which form only a minuscule part of the global fleet and exclude companies listed on the American stock exchanges. This is because these measures can hurt Chinese trade itself, brokers said. Around 14% of the global VLCC fleet and 15% each of the Aframax-LR2s and MRs are US-owned, or operated if the US stock exchange-listed companies are included, said E A Gibson.

A Chinese source dealing with Medium Range, or MR-size cargoes, said that the impact of this decision will be felt across vessel sizes because the country is a major importer of naphtha and exporter of jet fuel, gasoline and diesel.

Declining freight to get support

The Chinese announcement came at a time when the maritime world was heaving a sigh of relief that a ceasefire in Gaza was being given shape, which would make voyages through the Suez Canal and the Red Sea more secure and less expensive. The dirty tanker freight across the Asia-Pacific has recently been on a decline after reaching year-to-date highs.

In September, VLCC daily earnings for scrubber-fitted Eco ships on the benchmark Persian Gulf-China route rose to their 2025 highs of more than $100,000, according to the Platts Global VLCC Index, or GVI 7S, before slipping below $70,000/day earlier in October.

Until recently, both crude and clean markets were very strong, having started to turn up in August, much earlier than normal, said Ole-Rikard Hammer, Oslo-based senior oil and tankers analyst with Arctic Securities.

August saw very strong earnings for Suezmaxes, while the VLCCs led the way up in September, reaching extreme highs, London-based director of shipping consultancy, Maritime Strategies International, or MSI Ltd., Tim Smith said in a report late September.

MSI forecasted the daily average spot VLCC earnings, considering voyages to China from the US and the Persian Gulf, at $61,400 in the current quarter, almost 50% higher than in the second quarter of 2025.

MSI said that the estimated second-quarter Long Range 2 tanker earnings of $31,200/d on the Persian Gulf-Japan route are likely to be higher by around 30% in the current quarter at $40,500/d. The brokers estimate the current daily earnings on this route at $15,300, assuming bunker prices of around $478/mt in Singapore.

US operators in quandary

There is a bit more concern over reference to "US-operated" ships in China's notification, though it can still be addressed, said Bancosta's Leszczynski.

While US shipowners are limited, the US-operated fleet is substantial because oil majors control a large number of tankers, the E A Gibson report said. Platts Oct. 10 assessed the benchmark Persian Gulf-China VLCC route 16 Worldscale points higher day-on-day at w86.

A substantial part of the refined products trade involving China uses MRs, and though brokers expect 45 more such tankers to be delivered this quarter, their freight has already started to go up after the Chinese announcement. The benchmark Persian Gulf-East Africa route was assessed w8.5 higher Oct. 10 at w182.5 by Platts.

Related story: China to impose port fees on US-linked ships in tit-for-tat move with short notice