Deadline has been reached for submissions by potential testifiers at USTR hearing on port fee plan and responses are overwhelmingly negative
Business leaders warn of potentially catastrophic effects to US import costs, US export competitiveness, and the US economy overall
Multiple shipping companies say they will cease US operations if the port fees go forward
The supply chain disruption in the US was historically severe during the pandemic. It might be even worse if the Trump administration goes forward with its proposed port fee plan targeting Chinese ships and non-Chinese operators of Chinese ships, according to feedback submitted to the USTR.
TARIFFS are bad enough just look at the US stock market but business leaders are warning of catastrophe if the Trump administrations port fee plan goes forward.
The US Trade Representative announced on February 21 that it plans to levy exorbitant port fees in some cases over a million dollars for every US port call by Chinese transport operators, Chinese-built ships, all operators that have any ships on order at Chinese yards, and according to one interpretation of the proposal (based on a presidential draft order obtained by Lloyds List), all operators with any Chinese-built ships in their fleets.
The USTR plan would also mandate that a portion of US exports be carried on US-flagged and, eventually, US-built vessels.
Respondents had until Monday to submit comments to the USTR if they wanted to testify at the hearing on the proposal on March 24. They responded in droves, overwhelmingly negatively, with several predicting a disaster for importers, exporters and the US economy in general if the USTR did not kill the port fee plan.
Some executives also bluntly asserted that if the plan was approved as written, their companies would go out of business or leave the US.
Florida-based Seaboard Marine, the largest US-based, foreign-flag container shipping carrier, which serves the Caribbean and Central and South America, said the proposed rule would have the unintended consequence of putting US-owned carriers like Seaboard Marine out of business, while at the same time pushing more business into the hands of large foreign-owned carriers.
Virginia-based Atlantic Container Line, which operates in the transatlantic trade, said it would be forced to terminate its US services, close its American offices, lay off its American staff and redeploy its ships to other trades.
Dry bulk logistics provider Carver Companies, which employs over 500 people, said, The additional financial burden would likely force us out of business, leading to significant job losses and economic disruption in the regions we serve.
Peeples Industries, which runs a private dry bulk terminal in Savannah, Georgia, said, The proposed action would put our company out of business.
Bermuda Container Line, which operates the Chinese-built Oleander (IMO: 9827334) on weekly service to Bermuda from New York/New Jersey, said, There is almost a certainty that the added financial cost would threaten its survival, jeopardising one of Bermudas only dedicated services, leading to food shortages on the island.
Somers Isles Shipping, a small operator transporting 150 teu per voyage or 4,000 teu per year on biweekly service from Port Fernandina, Florida to Bermuda, said, This fee would simply put us out of business in one voyage.
Hans Laue, president of Florida-based brokerage Gisholt Shipping, warned that the USTR fees would, at the very least, cause the demise of dozens of American small- and medium-sized businesses, resulting in tens of thousands of jobs. The worst case, Laue said: Applying them as proposed could be Armageddon for American industries and American citizens across the board.
Tanker shipping
US President Donald Trump insists he will boost US oil and gas exports, but port taxes would be passed along via charter parties to energy cargo shippers, inflating the cost of US exports and reducing their competitiveness.
The American Petroleum Institute, the US energy sectors top lobbyist, said the USTR plan could undermine President Trumps energy dominance agenda by making it more challenging to export oil, LNG and refined products, and would also hinder the USs ability to import crude oil.
According to NYSE-listed Energy Products Partners, the US export tanker cargo preference requirements would inadvertently guarantee that there will be no drill baby drill. The liquid gold under our feet would stay in the ground.
INEOS, a leading exporter of US ethane, said the proposed port fees risk rendering the export of US ethane gas uneconomical.
Dry bulk shipping
The responses were even more ominous from dry bulk shippers.
The US National Mining Association said, Increased costs, supply chain disruptions and even the outright inability to import or export critical materials could bring the industry to a standstill.
According to the West Virginia Coal Association, It may prove impossible for coal-exporting companies to secure an adequate number of appropriately designed and sized vessels to avoid the proposed port fees. Imposition of the port fees will simply price West Virginia coal out of the seaborne energy market. This rule is not only onerous, but unnecessary and impossible to manage and will serve to punish major export states like West Virginia.
According to the American Soybean Association, The US does not have the domestic-flag capacity to handle our export market at the rate proposed by the USTR. We are extremely concerned that if this proposal goes into effect, US soybeans will be effectively shut out from our global export markets.
Bulker charterer KOGA said that a typical US Gulf-Mediterranean voyage cost on a 10,000 dwt vessel would be $70 per tonne without the proposed port tax, and $170 per tonne with the tax. This increased cost would make such voyages financially unfeasible, it asserted.
IMI, a logistics provider that handles gypsum and cement imports to the US and exports of coal and petcoke from the US, said the broad USTR port-fee criteria would capture virtually every vessel IMI charters and would result in an annual cost burden of $180m-$630m, which will become a direct pass-through expense to IMIs US customers.
Lightship Chartering pointed to the 10m tonnes of rock salt that is imported annually from overseas for road de-icing in the US northeast. The USTR plan would double the cost of imported salt from $20 per tonne to $40 per tonne, it said, adding that local US municipalities would not be able to cover the rise with tax increases.
Peeples Industries president Frank Peeples Jr estimated that freight on dry bulk cargoes from Georgia to Europe on a handysize vessel would rise from $24 per tonne to $55.25 per tonne.
Trading this cargo will no longer be viable. What I cant understand is a rule on bulk vessels that will require a fee greater than the typical bulk freight cost to Europe or even greater than the value of the product itself. This rule seems to assume that many of these commodities on targeted Chinese-built bulk vessels are captive and therefore will be forced to pay. That assumption is wrong. These products at the fee levels proposed will not trade. Full stop.
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"History shows again and again that nature points out the folly of man. Go go Godzilla!" Godzilla - Blue Oyster Cult