US importers and shippers await the outcome of the final hearing on the new administration’s proposal to tax millions from Chinese-built vessels – but some carriers will be less worried than others.
Today marks the second, and last, hearing on the US Trade Representative’s proposed 301 rule: a bid to revive US shipbuilding that threatens to slap Chinese-built vessels and Chinese carriers calling at US ports with fees of some $1.5m per call.
Media has already reported how Monday’s hearing heard a hail of criticism from stakeholders fearing fees would make US products uncompetitive.
Peter Friedmann, executive director of the Agriculture Transport Coalition, said: “On Wednesday we will be clear – there’s nothing we produce in agriculture or forest products that can’t be sourced somewhere else in the world. If we can’t deliver affordably, dependably, our foreign customers will find those alternative sources, and we may never regain those markets.
“The proposed fines and denial of ocean carrier capacity for our exports, which will be discussed in greater detail on Wednesday’s hearing, are of great concern… the additional transportation cost imposed by the 301 port call fines will cost US agriculture, and huge swaths of the US, great economic damage,” added Mr Friedmann.
And, according to Alphaliner, the penalties could “distort competition between the big liner operators serving US ports”.
Its analysis of containerships of more than 1,000 teu operated by the top 10 carriers at the 20 biggest US ports in February found that Zim, CMA CGM and Cosco would be worst-hit by fees on Chinese-built tonnage, while Evergreen and HMM could be unscathed.
Last month, Evergreen made 53 calls at US ports, but none with Chinese-built vessels, and HMM made 15 calls but using only Korean-built tonnage.
Alphaliner also revealed that the carriers with the most US calls using Chinese-built vessels were Maersk, with 38 out of a total of 214, Zim with 37 of 73, CMA CGM at 36 of 139, MSC with 34 of 218, and Cosco with 25 out of 72.
“It is obvious that these carriers would like to replace those ships in US liner services if the fee proposal were implemented. This would create a problem for Zim, as the 37 calls with vessels made in China represent just over half its total calls,” said the maritime analyst.
And while MSC has a similar number of impacted port calls to Zim, it is “better equipped” to switch these ships to other trades and replace them by vessels built in other countries, said Alphaliner.
Its data showed that, of MSC’s 91 vessels calling at US ports in February, only 13 came from shipyards in China. Its global fleet comprises 899 vessels.
On the other hand, Alphaliner highlighted, most of the Chinese-built ships in Zim’s fleet are between 5,315 and 7,800 teu, recently acquired on long-term charter from owners such as Seaspan or Navios.
“As the Israeli carrier deploys 48% of its fleet capacity on the Asia-North America trade, there would be few options for redeployment,” it said.
After the hearing, the USTR will review the testimonies and written submissions “to determine the appropriateness and feasibility of the proposed actions”.
Considerations will include: the effectiveness of the measures in addressing the identified issues with China’s practices; potential unintended consequences on US businesses and consumers; compliance with international trade obligations and feedback from global partners.
Mr Friedmann said that in three years, exports would be required to be shipped on US-flagged vessels, and then on US built ships a few years later.
“Today at the USTR, we heard there are no such ships available, and there will not be in time for future exports,” he said after Monday’s hearing.
