News / With USTR port fees looming, will carriers impose surcharges? ask shippers

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14 October is shaping up to be one of the most important dates in this year’s shipping calendar, as it is not only the deadline for the White House to file an appeal against a court’s recent tariff judgment, but also the implementation date of the US Trade Representative’s 301 penalties on Chinese-built ships.

While the tariffs appear to remain in limbo, there is no such fog surrounding the USTR’s port fees, which will see Chinese carriers – registered in China and Hong Kong but not Taiwan – levied $50 per net ton for any ship calling at a US gateway, while China-built vessels will face a $120 per teu fee.

However, a Chinese operator deploying a Chinese-built ship to the US will only pay one of the options, whichever is higher.

With that date just over five weeks away, shippers and freight forwarders remain in the dark as to how carriers are preparing to handle the increased costs the fees will inevitably bring, Bjorn Vang Jenson, VP of ocean freight at freight forwarder Easy Speed International Logistics, said during a roundtable organised by Hapag-Lloyd last week.

“I think all shippers out there – and that includes me – are really dying to know how various carriers are planning to address it,” he added.

“I guess it depends on two scenarios,” he continued: “One is whether you have enough ships in your fleet that you can redeploy to where the problem goes away.

“I imagine Hapag and Maersk could simply deploy non-Chinese-made vessels into the US, but some carriers cannot; they will be facing a competitive or a financial disadvantage, big time. That worries me a little bit – what my customers want to know is, will there be a surcharge or not?”

To which Hapag-Lloyd CEO Rolf Haben Jansen replied: “Yeah, that’s a good question, but there will not be from us.”

He explained that both Hapag and Maersk’s transpacific fleet comprised vessels built in South Korea, “so we will be able to fully mitigate the impact of USTR 301”.

However, he added that for some Asian and European carriers, “that’s probably going to be a little bit more difficult.

“I think the most likely outcome – even if some may deploy slightly bigger ships – is still going to be that we have somewhat fewer services directly into the US; also because the market is weak.

“I would expect capacity is going to be a little bit tighter. As from October, that may also mean that the rates do not slide as much as some people might anticipate, but of course that remains to be seen, because in the end that’s just a supply-demand question,” Mr Habben-Jansen explained.

Meanwhile, in a sperate call, Freightos head analyst Judah Levine noted that other alliances had begun to respond to the 14 October deadline.

“We’ve seen the Premier Alliance adjust some services: some that had meant to be kind of an east-west pendulum are now two separate standalone services; and Chinese-built vessels won’t be used to make US port calls.

“We may see more along those lines before 14 October,” he said, adding that it was the Ocean Alliance, which includes Shanghai-headquartered Cosco and Hong Kong’s OOCL, which remained the most vulnerable to the new fees.

“Chinese operators have a much bigger challenge, since any of their port calls, regardless of the vessel they use, would be impacted.

“We’ve seen indications they will make adjustments so they won’t incur port fees, or that those port fees will be mitigated or minimised as much as possible. This would likely mean that CMA CGM would handle alliance services and port calls within the US.

“It’s still possible there will be increased costs for these carriers, which would likely be passed on to the shippers and carrier customers. The extent to which it will have an impact on freight rates, of course, remains to be seen,” he explained.

However, Mr Vang Jensen had a warning for carriers planning on introducing a 301-related surcharge.

“I think most likely it will be hard to impose a surcharge, because in a weak market, surcharges tend to disappear.

“I also tend to think – pure speculation – that no carrier already on the radar screen for having Chinese-operated or owned vessels is going to stand up and wave a big flag by imposing surcharges when they’ve seen what happened to Wal-Mart, when [it] said ‘tariffs are going to increase our prices’; when they’ve seen what happened to Apple and other companies that publicly say this is going to result in higher costs.

“There’s already been pushback to statements that the 301 fines will have to be passed along – the big BCO trade associations were actively pushing back against that idea, so it will be very difficult, I think, for those types of costs to be passed on,” he said.