US could charge Chinese-owned ships up to $1.5 million per port call

LONDON : The office of the US Trade Representative (USTR) is accepting public comment on proposed actions against Chinese-owned ships after a Section 301 investigation determined China’s acts, policies and practices to be unreasonable and to burden or restrict US commerce.

The USTR proposal was published on Friday in the Federal Register and includes proposed service fees of up to $1.5 million per US port call for vessels built in China, and up to $1 million per port call for China-based operators.

Section 301 is a provision of the Trade Act of 1974 that allows the US to investigate and act against trade practices by foreign companies that are deemed unfair.

According to analysts at market intelligence group Linerlytica, the proposed charges could trigger moves to switch out Chinese built ships from US trades that would cause widespread disruptions over the coming months.

Linerlytica said Chinese carriers account for about 17% of US container imports from Asia.

“The proposed trade action would hit COSCO especially hard, while Taiwanese and Korean carriers would benefit from the move as only a small proportion of their fleet are Chinese built, allowing for actions to circumvent the levies,” Linerlytica said.

USTR is now accepting public comment and will hold a public hearing on the proposed actions on 24 March.

Brokers in the liquid bulk market are aware of the USTR proposed actions and are taking a wait-and-see approach before making any hard decisions.

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

Action taken against container ships could also impact chemicals markets because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets.

They also transport liquid chemicals in isotanks.

Source: ICIS