Rate increases unlikely but USTR fees could impact 35% of global trade fleet: BIMCO

When fees from the Office of the United States Trade Representative (USTR) targeting Chinese dominance of the maritime sector come into effect 14 October, 35% of ships in the combined bulk, crude tanker, product tanker and container fleet could be subject to additional fees when calling a US port. Even though these ships provide 44% of the combined fleet’s capacity, US importers and exporters should not expect increasing freight rates,” says Niels Rasmussen, Chief Shipping Analyst at BIMCO.

 Of the ships that could be subject to the port fees, 70% are either Chinese owned or operated while 30% are built in China. More than half of the Chinese built ships are exempt due to their size or US ownership. 

“Bulk carriers are more exposed to the increasing costs as 45% of the ships could be subject to the USTR fees. Because more ships are exempt, or because fewer ships are Chinese owned or operated, only 30% of crude tanker and container ships, and 19% of product tankers, could be subject to the fees when arriving at a US port,” says Rasmussen.

Although between 19% and 45% of bulkers and tankers could be subject to the fees, the global impact may be minimal. So far this year, the US markets make up only 9-19% of each sector’s global ship demand and only 16-24% of US exports and imports have historically been catered to by ships that could face USTR fees.

While future redeployment could reduce the exposure, a review of the planned sailings on east/west container trades by the 10 largest operators reveal that less than 20% of ships scheduled to call the US would be subject to the new fees. Most of those ships are owned or operated by COSCO Shipping Lines or Orient Overseas Container Line or owned by Chinese leasing banks. Despite this, COSCO Shipping Lines has committed to maintaining services and competitive rates while several other liner operators have already confirmed that the fees will not lead to freight surcharges. 

“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. 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. Implementation confusion could, however, cause rate increases in the short-term,” says Rasmussen.