The Office of the United States Trade Representative (USTR) has announced a proposal for new port fees targeting Chinese shipping companies and vessels.  

 The proposal, which is being presented for public consultation, suggests fees of up to $1.5 million per port call for any operator with even one Chinese-built ship, or $500,000 to $1 million per port call (depending on the percentage of Chinese-built ships in the fleet). Up to $1 million per port call or up to $1,000 per net ton of vessel capacity for Chinese vessel operators. There’s a potential $1 million refund per port call for operators with a U.S.-built vessel.

• Flexport estimates that of the top 20 ocean carriers, around 30% of their fleets are made up of Chinese vessels.  
• Carriers could incur up to $3 million in fees on routes to the US, per Flexport.
• Port call fees of $500k to $1.5 million would translate to about $100 to $300 per 40’ container for a 10k TEU vessel, with carriers likely to pass those additional costs on to shippers, per Freightos.
• Should this proposal go into effect, some shippers will likely shift to ports in Canada and Mexico – and then truck goods into the U.S., per Flexport.
• Some carriers will use Chinese made vessels on non-US voyages.
• A commerce secretary proposal has put forth that all foreign vessels pay a US port tax, per Freightos.

KEEP IN MIND: The month-long pause the Trump administrations threatened 25% tariffs on Canada and Mexico expires on March 4.  These, plus proposed port fees could be crushing for U.S. manufacturers who rely on imported materials.

OUTLOOK:  This proposal, if enacted, is more likely to hurt US manufacturing by disrupting their supply chains than actually harm carriers or Chinese ship builders.  We’re betting the US will hit the ‘pause button’ on this.