News / USTR port fees loom, and some carriers will face a massive bill

Carriers running Chinese-built tonnage, not to mention Chinese-operated carriers themselves, need to take a look at the numbers Alphaliner crunched this week, which underscore the very real economic impact of US port call fees.

Without adopting mitigation strategies, carriers running Chinese vessels will cumulatively face $3.2bn in charges – equivalent to Hapag-Lloyd’s 2023 net profit – under the US Trade Representative (USTR) port call fee structure, due to take effect in the middle of this month.

Alphaliner’s breakdown of USTR fees by carrier

As The Loadstar has previously reported, with 100% of their fleet subject to the fees, Chinese carriers Cosco and subsidiary OOCL would be the biggest losers, facing annual fees exceeding $1.5bn from 14 October.

While Linerlytica suggests this could be closer to $1bn, analysis by HSBC found Cosco may be on the line for $1.5bn, with OOCL looking at  $654m every year – but other carriers would take a significant hit too.

Using Chinese-owned or operated vessels, the next three biggest losers would be CMA CGM ($285m), ONE ($364m), and Zim ($488m), while CMA ($50.3m), MSC ($73.1m), and Yang Ming ($49m) would take the biggest hits due to use of Chinese-built tonnage for US port calls.

The work put together by Alphaliner on this is interesting but, as it admits, it tells the story of what happens if carriers do not take mitigating steps – a prospect that appears somewhat mixed, with moves under way by some carriers to reorient trades to avoid fees.

Maersk, MSC, and Premier Alliance members have all sought to redeploy China-built vessels from US trades, MSC having phased out the 9,411 teu MSC Jeongmin from its Mediterranean to US west coast California Express service.

Reports have suggested that Chinese carriers are turning to alliance partners and use non-Chinese vessels for services with US port calls, while another tactic being mooted would see carriers develop transhipment processes via Canadian, Caribbean, and Central American hubs.

I n this event, the biggest losers may well end up being US customers and US consumers, who would find themselves waiting longer for goods and likely paying more.

Cosco – together with CMA CGM and Zim – has yet to take any sort of steps to shield itself from the charges, with The Loadstar reporting last month that the Chinese carrier was banking on Beijing resolving the issue before the fees become a reality.

Should that optimism fall short, it bears noting that Cosco and OOCL, together with CMA CGM and Maersk, have stressed that the enforcement of the Section 301 USTR fees, as they are formally known, will have “limited-to-no-effect” on coverage or costings.

It is also worth noting that Taiwan’s Evergreen and South Korea’s HMM, neither of which operate Chinese-built vessels, would be untouched by the USTR fees.