The Impact of Proposed US Fees on Chinese-Built Ships on Container Rates

By Laura Curtis (Bloomberg) —

The head of the world’s biggest ocean carrier warned that proposed US fees on Chinese-built ships and the companies that own them could raise container rates by 25% if imposed.

“If it comes out in the present form, it’s going to have significant consequences,” said Soren Toft, CEO of Geneva-based MSC Mediterranean Shipping Co. “Either we will have to revise our network and withdraw coverage, or we will have to add that cost on top.”

“Ultimately, the consumer will have to pay,” Toft said in Long Beach, California. He spoke at TPM 25, a shipping and supply chain conference hosted by S&P Global.

Following on a Biden administration investigation, the Trump administration in late February kicked off a potential escalating scale of fines for using China’s commercial ships. The Office of the US Trade Representative plan is aimed at curbing China’s dominance in the maritime industry, and would also mandate that a portion of US products be moved on American vessels.

Carriers typically call at multiple ports as they unload cargo in the US. If they are charged a $1 million fee for each stop, Toft said they’re likely to re-design routes to make fewer stops — cutting out smaller ports.

“I mean, here we are in California today. You’re typically calling at LA-Long Beach and then proceeding to Oakland. But we can’t proceed to Oakland if that costs another million dollars,” he said.

“The peripheral ports will be at risk,” he said. Smaller locations, including the Port of Oakland, have been vital for US agricultural exports and other commodities.

Toft cited a World Shipping Council assessment of the USTR proposal and estimated the total industry impact is likely to be more than $20 billion, potentially translating to an extra $600 to $800 per container.

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