SHIPPING: US port fees on China-based ships rattles brokers in tanker markets

HOUSTON (ICIS)–A proposal by the US Trade Representative (USTR) to impose fees of up to $1.5 million per port call by China-based ships sent shock waves through the chemical tanker market.

Some market players felt the proposal is aimed at container ships, but a broker in the liquid chemical tanker space said that if the text of the prosed action remains unchanged, the China-built tankers comprising the fleets of shipping majors Stolt and Odjfell could be targeted.

“The large producers of clean petroleum products (CPP) and liquid chemicals are sending out their lobbying forces to try and make sure that this action does not penalize the tanker companies,” the broker said.

The broker said that the extreme charges per port call could end up forcing those vessels to avoid the US.

The broker said it has contract of affreightment (COA) volumes with some of the carriers and its customers are watching the situation very closely.

Another broker said the charges would be detrimental to the chemical tanker trade in and out of the US if the full regulation goes through.

Because the fee structure is not relevantly based on cargo size, the charges could end up being higher than the FOB (free on board) value of the cargo for smaller parcels.

Most liquid tankers are built in China, Japan and South Korea.

China accounted for more than 60% of global new chemical tanker deliveries in 2021, according to Statista estimates.

There are a handful of operators with stainless steel ships built in Japan, such as MOL, Womar, Fairfield, Iino and MTMM that should be able to continue visiting US ports without penalty fees.

But many of them could be part of larger multi-industry arrangements that could have Chinese-built ships in other segments such as dry bulk, reducing the number of operators who could arrive in US ports without fees.

Brokers said the uncertainty will likely weigh on the industry as it is impossible to predict what will happen under the current presidential administration but is likely to put upward pressure on chemical cargoes which will be passed on to buyers.