U.S Plan To Levy Hefty Port Fees On Chinese Ships Might Disrupt Indian Shipping Trade

India’s shipping trade could face disruptions if the United States’ proposal to levy massive port fees on Chinese shipping companies and ships built in Chinese shipyards is implemented.

The United States Trade Representative (USTR) mentioned that the U.S would charge Chinese ships and also 3rd country flagged ships built in China, $ 1 million or more per port-of-call in the U.S.

This is a topic of concern since more than half of all vessels delivered in the world last year were constructed in China.

This development comes at a time when international shipping is still recovering from the Suez Canal Crisis. However, the U.S sees the plan as a way to promote American shipbuilding while keeping Beijing’s rapidly advancing maritime sector in check, which produces thousands of ships annually.

If the proposal comes into force, Indian shipments could be badly affected since Indian shipping trade is massively dependent on foreign ships which carry Indian goods to the U.S.

Flexport, a Freight-forwarding and logistics company based in the U.S, estimated that of the top 20 ocean carrier companies, about 30% of their fleet consists of Chinese ships.

Container Vessels usually make two to three calls per loop, meaning the fee could add over three million dollars per trip, which is significant given the revenue of 10-15 million dollars per journey.

If the plan goes through, Flexport says that ocean carriers would divert a few shipments through Mexican and Canadian ports, then via rail and trucks. However, these ports have limited capacities and would not be able to handle the capacity presently going through the U.S. ports.

Ocean Carriers will also likely try to optimize their fleets, using Korean and Japanese ships on U.S. trade routes.

Companies with massive fleets and only a few Chinese-built ships may unload these vessels to avoid penalties.

China has focussed on shipbuilding, which has taken its market share with dramatic effect, raising its share from less than 5% in 1999 to more than 50% in 2023, increasing its ownership of the commercial world fleet to over 19% as of Jan 2024.

China also controls the production of 95% of shipping containers and 86% of the world’s supply of intermodal chassis.

References: Daily Shipping Times, India Shipping News

Source: Maritime Shipping News