The United States Trade Representative’s (USTR) additional port fees for vessels owned, operated and built in China come into force next week on 14 October.

The fees are a result of a 301 investigation by USTR into the dominance of Chinese shipbuilding, and given the number of China built ships on the water would impact around 35% of the fleet combined in major sectors according to Bimco.

US Customs & Border Patrol (CBP) have confirmed the fees that are applicable to vessels calling US ports from 14 October will be at $50 per net ton for an arriving vessel owned or operated by a Chinese entity. For container ships, whichever is higher of a fee in the amount of $18 per net ton, or $120 for each container discharged, from an arriving Chinese built vessel. A fee in the amount of $14 per net ton for an arriving vessel classified as a vehicle carrier or roll-on/roll-off vessel.

“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,” said Niels Rasmussen, Chief Shipping Analyst at Bimco.

“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,” he explained.

However, while the theoretical level of exposure is high at between 19% and 45% for bulkers and tankers on a small portion of these vessels actually call at US ports. The US only accounts for only 9-19% of each sector’s global ship demand. For containers less than 20% of the vessels that call the US are expected to be subject to the new fees.

Bimco does not expect the new USTR fees to result in an increase in freight rates in any of the major sectors.

“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,” said Rasmussen.

Details on the fees remain limited just a few days away from the 14 October rollout. The CBP has outlined key requirements via its Cargo Systems Messaging Service with it saying the onus on compliance will rest with ship operators.

Fees are to be paid directly to the US Department of the Treasury via the pay.gov secure web portal and not at port entry by the vessel.

Ship operators are “strongly encouraged” to pay fees at least three days prior to vessel arrival and those without proof of payment would be barred from loading or unloading operations on arrival in port in the US.

Sources: SeaTrade Maritime