Xeneta analysts warn proposed fees by the Trump administration on China-built container ships importing goods into the US may have unintended consequences. This could include port congestion, increasing freight rates and shifts in global trade patterns.
The Trump Administration has announced plans for a USD 1 million fee every time a vessel operated by a China carrier enters a US port. The Federal Notice also threatens further substantial fees for China-built vessels operated by a carrier from any nation. A third section in the notice proposes an additional charge levied against carriers based on the percentage of new ships on order being built in China.
‘Ocean container carriers will take action to avoid the fees, such as calling at fewer ports, which could cause major congestion and delays in the US,’ says Peter Sand, Chief Analyst at Xeneta, an ocean and air freight intelligence platform.
He adds: ‘We saw a similar situation last year when carriers cut port calls in Asia and handled more containers per call at Singapore in an effort to offset the impact of the Red Sea crisis and diversions around Africa. The intentions were good, but the severe congestion caused by handling more containers in Singapore rippled across global supply chains and saw average spot rates from the Far East to US East Coast spike more than 300 per cent.’
‘Trump is weaponising trade against China, but you have to wonder if they truly understand the consequences of this policy because there is a high risk it will cause major disruption and make container shipping more cumbersome and expensive for US importers.’
Also read: ‘Trump’s America First trade policy is hurting US shippers’
Importing through Mexico and Canada
Sand has stated shippers could also take action to avoid the fees by importing goods into the US via Mexico and Canada.
Full year imports from China to Mexico in 2024 were up fifteen per cent compared to 2023 at 1.42 million TEU. Into Canada, imports from China are up sixteen per cent at 1.8 million TEU.
Sand: ‘Shippers have been using Mexico and Canada as a back door into the US to avoid tariffs on imports from China. Trump has vowed to stop this trend by imposing tariffs of 25 per cent on imports from Mexico and Canada and make using these nations as a backdoor less attractive.’
‘If shippers now face new port fees on top of the tariffs when importing directly into the US, it could change the situation again and fuel further growth in imports from China to Mexico and Canada,’ explains Sand. ‘Ironically, Trump may be indirectly driving one of the very things he’s trying to guard against.’
Impossible to predict repercussions
Sand adds: ‘We could even see it cause an uplift in goods being shipped into the US by air.’
‘The potential repercussions and unintended side-effects of these port fees are impossible to predict with any degree of certainty, which makes it such a challenging situation for both US importers and carriers,’ Sand states.
Also read: ‘Trump Presidency threatens spike in container shipping markets’
COSCO hit hard, European carriers build a lot in China
Data analysed of carrier fleets by Xeneta shows COSCO will be hit hard due to it not only being the only Chinese carrier in the global top 10, but also having almost two thirds of its fleet built in China and ninety per cent of its orderbook coming from Chinese yards.
No other top 10 carrier has more than fifty per cent of its fleet coming from China, giving them more options to reallocate ships between trades and adjust schedules to minimise port calls for China-built ships. On the orderbook side, the European carriers (MSC, Maersk, CMA CGM and Hapag-Lloyd) will also be hit, with all having more than half of current orderbook in Chinese yards.
With the exception of ONE, the other Asian carriers will not be impacted by the orderbook fee.
Sand concludes: ‘The threat of even higher costs to import goods into the US should be taken very seriously, but it remains to be seen whether it becomes a reality due to the impact it will have for US businesses and, ultimately, consumers. We understand from talking to Xeneta customers that they are watching and listening to every word that comes out of the US Administration, but there is so much uncertainty that they are keeping their options open and being patient before taking any rash decisions on their supply chains.’
Picture: Share of China-built container ships per carrier (by Xeneta).
Also read: Perfect storm fuelled by record container shipping demand
