News / Chinese retaliation against US port call fees unlikely to hurt much

Photo: Seaspan

China’s retaliation against US-owned or flagged ships for the USTR port fees is unlikely to temper the impact on Cosco and Hede Shipping.

On 28 September, China’s state council issued a decree that fees would be imposed on ships from countries that discriminate against Chinese ships. US ships could also be barred from entering China.

The shipping lines expected to be targeted are US carrier Matson and CMA CGM unit APL’s US-flagged ships.

However, a Linerlytica report today suggests that given the relatively smaller fleet of Matson and APL in comparison with Cosco’s, China’s retaliation is unlikely to make a major difference.

The consultancy calculates that the total fees payable by Chinese operators in the US could reach $1.15bn in the first year, compared with just $180m for US operators – if the fees set by China are similarly based on net tonnage.

Meanwhile, many non-Chinese carriers are removing ships from US calls, with the USTR 301 port fees for Chinese-built ships set to take effect from 14 October.

MSC, CMA CGM, ONE and Zim are among carriers making last-minute changes to fleet deployments. The vast majority of the non-Chinese operators are able to avoid the USTR fees, barring a few exceptions: only four non-exempt ships are scheduled to arrive in the US in the October window – three operated by Zim and one by Hapag-Lloyd.

Cosco, however, has pledged to maintain its transpacific capacity, suggesting an imminent rate war in the face of falling prices, and Hede is maintaining its sole transpacific HDS2 service with just a single ship, blanking four sailings in each five-week cycle.

Linerlytica commented: “Both Hede and Cosco are unwilling to pull capacity from the US, despite the looming USTR port fees. CMA CGM and MSC are leading carrier efforts to hike rates from 15 October, to the $1,800 to $2,200 per 40ft level, but the lack of action on the capacity front is likely to curtail any rate gains.”

It added: “The US government shutdown has not affected cargo shipments into the US, with US Customs and Border Protection agency remaining operational during the shutdown.”