Plans to levy China-built ships would have hit 30% of arrivals last year
- China-built ships accounted for nearly 30% of US arrivals last year
- Multipurpose and vehicle carrier sectors, with high China newbuilding orderbook share, will also take a hit
- USTR levy will impose increased transport costs for US shippers
US Trade Representative hearing on China-built ships levy set for March 24. With every sector having a share of ships built, or building, in China all would be subject to a port fee
CHINA-BUILT ships accounted for nearly 30% of US arrivals last year, implying all major shipping sectors would be significantly impacted by US Trade Representative proposals to levy fees on China-built ships.
While China-built general cargo vessels accounted for the largest share of those port calls, analysis of Lloyd’s List Intelligence vessel-tracking data suggests all vessel sectors will need to make contingency plans to limit the effect of millions of dollars of additional costs potentially to be imposed by the USTR later this year.
China’s growing dominance of the orderbook also suggests this is likely to be a growing problem if the proposals are pushed through.
New orders surged by more than 50% on a deadweight tonnage basis last year compared with 2023, which had already seen a 37% increase on 2022. One striking feature of 2024, however, was that China significantly grew its orderbook, boosting its share of the global shipbuilding market by 9.7%, according to the latest analysis from shipbroker BRS.
China’s dominant position came at the expense of Japan, which lost 4.3% compared with China and South Korea, which was down 5.1%.
These figures are likely to come under intense scrutiny next week when the USTR proposals will be discussed at a public hearing.
Industry respondents have by now all submitted their comments on the proposals that are ultimately designed to subsidise a revival of US merchant shipbuilding.
Almost all appear to have replied negatively, including shipowner association BIMCO, which represents some 2,100 members and 63% of the global merchant fleet, in deadweight terms.
In its submission earlier this week, BIMCO deputy secretary-general and director of regulatory affairs Lars Robert Pedersen said, “For decades BIMCO members have contracted the construction of new ships in a competitive international market where Asian shipyards have taken an increasing market share, particularly in China in recent years.
“The share of Chinese-built tonnage of international operators’ fleets has increased in the past decade with less complex ship types being procured initially, followed by more complex ship types.”
He says that due to the highly competitive nature of international shipping markets, the increase in cost effective ships built in China has effectively provided lower maritime costs, supporting global trade and economies, including the US.
“The ships already built of Chinese origin will not disappear from the world fleet if the proposed port fees are introduced. If they had, it would have created a global shortage of tonnage serving the world’s transport needs and hyper-inflated shipping costs. Rather, the shipping industry will seek to avoid paying fees,” added Pedersen.
As with most other industry respondents, he believes charging fees on China-built vessels calling at US ports or those with Chinese ownership links, together with a charge on an operator’s share of new tonnage on order at Chinese shipyards, will significantly increase the cost of transport to and from the US.
Cargo-carrying vessels built in China accounted for 29% of non-domestic calls to US ports last year, data from Lloyd’s List Intelligence shows.
Pedersen said he expects operators will seek to avoid the negative effects of port fees as most have one or more vessel of Chinese origin.
Of the three biggest vessel sectors — bulk carriers, containerships and tankers — the former has the highest share of China-built ships calling at US ports.
According to Lloyd’s List Intelligence data, 42% of all bulker port calls at US ports in 2024 were undertaken by vessels built by Chinese shipyards.
The USTR plans are expected to at least double shipping costs for US bulk cargo exporters, with coal and soyabeans making up the majority of US exports carried in bulk carriers.
The American Soybean Association stated in its recent submission to the USTR that, should the proposals go into effect, then export markets for US soyabeans will be effectively shut out.
Some 23% of combined crude oil tanker and product tanker port callings in to the US in 2024 were provided by China-built ships, according to Lloyd’s List Intelligence data.
In his comments to the USTR, Atlantic Container Line chief executive Andrew Abbott said that the levy would cause “a freight rate explosion” that would dwarf the Covid-era rate increase and devastate the supply chains of US shippers.
ACL operates five container/ro-ro cargo vessels solely between the US and northern Europe. Its single liner service could be paralysed by the USTR levy since all of its ships were built in China.
Container line operators are expected to reduce the number of US port calls to reduce exposure to charges and are likely to then call at major ports only. This could lead to congestion at the big container terminals.
American exporters of containerised cargoes are expected to be hit hard by the proposals since the US is chiefly a shipper of lower value goods, at low freight rates.
With the highest share of China-built tonnage is the multipurpose general cargoship sector. Lloyd’s List Intelligence data shows that 54% of US port calls in the sector were provided by ships built in China.
The MPV sector is a vital link for non-containerised US trade with the Caribbean and Central America and is also used by the energy sector for the shipment of oil industry equipment and other so-called “out-of-gauge” cargoes. The orderbook for MPVs is strongly focused on Chinese shipyards.
The vehicle carrier sector is another important sector for US commerce but has a relatively low percentage of China-built ships. However, this is set to change given that China has won some 85% of the newbuilding orderbook for pure car and truck carriers. This orderbook represents around 30% of the existing fleet in service.
