Trump once again tries to undermine China's shipping dominance
Trump is preparing to sign an executive order aimed at reducing China's maritime dominance and revitalizing the U.S. shipbuilding industry, including measures to charge for Chinese-made ships and cranes, create a dedicated shipbuilding office, raise workers' wages and improve government procurement processes.
MSC warns that the US levy on Chinese-built ships will hit consumers and ports, and container freight rates could rise by 25%
Soren Toft, chief executive of Geneva-based Mediterranean Shipping, the world's largest ocean shipping company, warned that container rates could spike by 25 per cent if the proposed US levy on Chinese-built ships and the companies that own them is implemented.
Speaking at TPM25, a shipping and supply chain conference hosted by S&P Global in Long Beach, California, Toft noted: "If this fee is implemented in its current form, there will be serious consequences. We will either have to adjust our route network and reduce coverage, or we will have to add additional costs." "At the end of the day, these costs will be borne by the consumer," he added.
The proposed fee, proposed by the Trump administration in late February after a related investigation by the Biden administration, aims to curb China's dominance of the shipping industry by imposing fines and requiring some American products to be shipped on American ships.
Carriers often choose to call at multiple ports when unloading in the United States. Toft said that if they were to be charged up to $1 million for each stop, they might re-route and reduce the number of stops, especially at smaller ports. "For example, when we're in California right now, we usually stop at Los Angeles-Long Beach and then head to Oakland," he said. But if we had to pay another million dollars in fees, we wouldn't be able to go to Oakland." He warned that smaller ports around it, such as the Port of Oakland, which are vital to U.S. exports of agricultural and other goods, would be at risk.
Toft also cited the findings of the World Shipping Council's assessment of the USTR proposal, estimating that the impact of the proposal on the industry as a whole could exceed $20 billion, equating to an additional $600 to $800 in costs per container.
Cma CGM warns that the US port fees imposed on Chinese ships will affect all shipping companies
CMA CGM, the world's third largest container shipping company, warned that the United States proposed to impose new port fees on Chinese-made container ships, a move that will have a serious impact on the entire container shipping industry and all related shipping companies.
Cma CGM stressed that since most of the vessels in the container shipping industry are built in China, the US proposal to impose high port fees on Chinese vessels would have a profound impact on all companies in the industry. The proposal, made by the Office of the United States Trade Representative as part of an investigation into China's expansion in shipbuilding, shipping and logistics, would impose fees of up to $1.5 million on Chinese-made vessels entering American ports.
"More than half of the world's container ships are built in China, so this US proposal will undoubtedly have a significant impact on all shipping lines," Ramon Fernandez, CMA CGM's chief financial officer, said in an interview. His company, CMA CGM, which is controlled by the family of chairman and chief executive Rodolphe Saade, has a large presence in the US and operates several port terminals.
Asked whether the Ocean Alliance would be affected by US policy, Mr Fernandes said there was no sign yet that vessel sharing agreements between CMA CGM and Asian partners such as China Cosco would be called into question by US policy.
With USTR's final decision expected in April, Fernandez declined to comment further on the proposal. But he revealed that the group already foresaw that the new tariffs announced by US President Donald Trump would have some impact on the shipping market this year and could accelerate the shift in trade routes since Trump's first term imposed tariffs on China.
To avoid new tariffs, shipping volumes grew strongly last year, a trend that is expected to continue until early 2025. However, Fernandes also pointed out that the market outlook for this year is not optimistic, given geopolitical uncertainties and the risk of ship overcapacity.
In addition, Houthi attacks in Yemen last year disrupted shipping lanes in the Red Sea, taking up excess capacity and forcing many ships to choose longer routes around southern Africa. Fernandez added that as normal traffic returns to the Red Sea following the Gaza ceasefire, this capacity balance will change and could lead to the company dismantling old ships to meet new challenges.
Delury: More than 80 percent of container ships calling at U.S. ports will be affected
Meanwhile, according to a new analysis by analysis firm Drury, more than 80 percent of container ships currently calling at U.S. ports would be affected by a recent policy proposal from the Office of the U.S. Trade Representative (USTR).
Last month, the USTR announced a sweeping trade policy attack on China, proposing a number of taxes and fees on Chinese-linked ships calling at U.S. ports, including a fee of up to $1.5 million per trip for Chinese-built ships calling at U.S. ports.
Drury's analysis further states that if USTR's proposal is passed, it will directly or indirectly affect the world's nine largest container shipping lines and all container alliances. "With 29 to 31 per cent of container ships operating globally manufactured in China (depending on whether Taiwan is included), these vessels would fall within the scope of the regulation," Mr Drury wrote in his analysis. With the exception of China's Taiwan Evergreen Marine and South Korea's HMM, all shipping companies operate Chinese-built vessels calling at U.S. ports. For shipping companies with Chinese shipbuilding orders, the proposed fee would affect eight of the nine largest alliance shipping companies, with only South Korea's HMM currently not ordering container ships at Chinese yards.
In other words, Drewry estimates that more than 80 per cent of container ships currently calling at US ports will be affected by the planned charges, possibly because carriers are based in China, ships are built in China or operators have ordered ships in China. According to Drury's calculations, these costs will result in an increase of $222 to $500 per container (TEU), or $2 to $3 million per voyage, and these figures are based on three major maritime trade routes. "By comparison, these costs would be seven to 16 times higher than a new carbon tax under the European ETS," Drury also noted.
The USTR said in a Jan. 16 report that China's share of global shipbuilding tonnage increased from 5 percent in 1999 to more than 50 percent in 2023. The report is a study launched during the administration of former US President Joe Biden. The United States argues that this happens because the Chinese government heavily subsidizes the shipbuilding industry and gives preferential treatment to state-owned enterprises, giving them an edge over the private sector in international competition. The USTR also noted that U.S. shipyards built 70 ships in 1975, but today only build five a year.
MSC warns that the US levy on Chinese-built ships will hit consumers and ports, and container freight rates could rise by 25%
Soren Toft, chief executive of Geneva-based Mediterranean Shipping, the world's largest ocean shipping company, warned that container rates could spike by 25 per cent if the proposed US levy on Chinese-built ships and the companies that own them is implemented.
Speaking at TPM25, a shipping and supply chain conference hosted by S&P Global in Long Beach, California, Toft noted: "If this fee is implemented in its current form, there will be serious consequences. We will either have to adjust our route network and reduce coverage, or we will have to add additional costs." "At the end of the day, these costs will be borne by the consumer," he added.
The proposed fee, proposed by the Trump administration in late February after a related investigation by the Biden administration, aims to curb China's dominance of the shipping industry by imposing fines and requiring some American products to be shipped on American ships.
Carriers often choose to call at multiple ports when unloading in the United States. Toft said that if they were to be charged up to $1 million for each stop, they might re-route and reduce the number of stops, especially at smaller ports. "For example, when we're in California right now, we usually stop at Los Angeles-Long Beach and then head to Oakland," he said. But if we had to pay another million dollars in fees, we wouldn't be able to go to Oakland." He warned that smaller ports around it, such as the Port of Oakland, which are vital to U.S. exports of agricultural and other goods, would be at risk.
Toft also cited the findings of the World Shipping Council's assessment of the USTR proposal, estimating that the impact of the proposal on the industry as a whole could exceed $20 billion, equating to an additional $600 to $800 in costs per container.
Cma CGM warns that the US port fees imposed on Chinese ships will affect all shipping companies
CMA CGM, the world's third largest container shipping company, warned that the United States proposed to impose new port fees on Chinese-made container ships, a move that will have a serious impact on the entire container shipping industry and all related shipping companies.
Cma CGM stressed that since most of the vessels in the container shipping industry are built in China, the US proposal to impose high port fees on Chinese vessels would have a profound impact on all companies in the industry. The proposal, made by the Office of the United States Trade Representative as part of an investigation into China's expansion in shipbuilding, shipping and logistics, would impose fees of up to $1.5 million on Chinese-made vessels entering American ports.
"More than half of the world's container ships are built in China, so this US proposal will undoubtedly have a significant impact on all shipping lines," Ramon Fernandez, CMA CGM's chief financial officer, said in an interview. His company, CMA CGM, which is controlled by the family of chairman and chief executive Rodolphe Saade, has a large presence in the US and operates several port terminals.
Asked whether the Ocean Alliance would be affected by US policy, Mr Fernandes said there was no sign yet that vessel sharing agreements between CMA CGM and Asian partners such as China Cosco would be called into question by US policy.
With USTR's final decision expected in April, Fernandez declined to comment further on the proposal. But he revealed that the group already foresaw that the new tariffs announced by US President Donald Trump would have some impact on the shipping market this year and could accelerate the shift in trade routes since Trump's first term imposed tariffs on China.
To avoid new tariffs, shipping volumes grew strongly last year, a trend that is expected to continue until early 2025. However, Fernandes also pointed out that the market outlook for this year is not optimistic, given geopolitical uncertainties and the risk of ship overcapacity.
In addition, Houthi attacks in Yemen last year disrupted shipping lanes in the Red Sea, taking up excess capacity and forcing many ships to choose longer routes around southern Africa. Fernandez added that as normal traffic returns to the Red Sea following the Gaza ceasefire, this capacity balance will change and could lead to the company dismantling old ships to meet new challenges.
Delury: More than 80 percent of container ships calling at U.S. ports will be affected
Meanwhile, according to a new analysis by analysis firm Drury, more than 80 percent of container ships currently calling at U.S. ports would be affected by a recent policy proposal from the Office of the U.S. Trade Representative (USTR).
Last month, the USTR announced a sweeping trade policy attack on China, proposing a number of taxes and fees on Chinese-linked ships calling at U.S. ports, including a fee of up to $1.5 million per trip for Chinese-built ships calling at U.S. ports.
Drury's analysis further states that if USTR's proposal is passed, it will directly or indirectly affect the world's nine largest container shipping lines and all container alliances. "With 29 to 31 per cent of container ships operating globally manufactured in China (depending on whether Taiwan is included), these vessels would fall within the scope of the regulation," Mr Drury wrote in his analysis. With the exception of China's Taiwan Evergreen Marine and South Korea's HMM, all shipping companies operate Chinese-built vessels calling at U.S. ports. For shipping companies with Chinese shipbuilding orders, the proposed fee would affect eight of the nine largest alliance shipping companies, with only South Korea's HMM currently not ordering container ships at Chinese yards.
In other words, Drewry estimates that more than 80 per cent of container ships currently calling at US ports will be affected by the planned charges, possibly because carriers are based in China, ships are built in China or operators have ordered ships in China. According to Drury's calculations, these costs will result in an increase of $222 to $500 per container (TEU), or $2 to $3 million per voyage, and these figures are based on three major maritime trade routes. "By comparison, these costs would be seven to 16 times higher than a new carbon tax under the European ETS," Drury also noted.
The USTR said in a Jan. 16 report that China's share of global shipbuilding tonnage increased from 5 percent in 1999 to more than 50 percent in 2023. The report is a study launched during the administration of former US President Joe Biden. The United States argues that this happens because the Chinese government heavily subsidizes the shipbuilding industry and gives preferential treatment to state-owned enterprises, giving them an edge over the private sector in international competition. The USTR also noted that U.S. shipyards built 70 ships in 1975, but today only build five a year.
