Proposed U.S. port port fee could trigger $100

The proposed charging structure of the U.S. Trade Representative (USTR) targets ships built in China could cost the container transport industry more than $100.69 billion a year, raising concerns about widespread damage to global trade.

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The USTR’s February proposal is part of a Article 301 investigation into China’s maritime dominance, determining that China’s practices are “unreasonable” and harmful to U.S. business, and justifying the intervention. The program includes port entry fees, up to Chinese vessels per call, and provides operators with $1 million for their fleet or orders. Experts believe these steep costs will affect almost all major marine airlines in the United States, ultimately driving prices for American consumers.

Another name for tariffs?

McCown, a former CEO of U.S. ship container transportation and a Harvard Business School graduate, warned that the proposed fees would act as de facto tariffs with serious unintended consequences. His analysis submitted to USTR outlines the financial burden with the example of Chinese operator Cosco.

A typical COSCO vessel conducting three West Coast port calls will face a total of $10.5 million per voyage, $105 million per voyage. “Obviously, this fee will make Cosco ships non-competitive and trade involving the ship will be restricted,” McCowan warned.

However, the impact is not limited to Chinese airlines. French transport giant CMA CGM may also face high costs despite its U.S. operations and historical ties as ally – a phone call of $2.75 million per port, which is tied to the fleet’s fleet with Chinese shipbuilding.

Targeted alternatives

McCown

• The cost per inbound container for non-Chinese vessels is $60
• Ships built in China cost $120 per container

He believes that this approach will still generate about $1 billion a year, consistent with existing port maintenance fees while avoiding excessive supply chain disruptions.

The impact of ripples on U.S. exports

McCowan warned that the proposed fees could also undermine U.S. exports. He predicts that higher shipping costs will drive global buyers to alternative suppliers:

• Iowa farmers’ cereals may lose market share in Brazil
• Texas LNG exports can be replaced by Qatar
• West Virginia coal may face competition from Australia

Apart from the challenges, McCowan highlighted the challenges of almost all dry (96%) and refrigerated (100%) transport containers in China, which means global logistics will make the impact far beyond ship operators.

Larger pictures

McCown compared the proposal to a trade sledgehammer, believing that proving unfair practices cannot justify extreme measures that harm the U.S. economy. “Highway death is not what makes cars illegal,” he wrote, stressing the need for a balanced approach.

USTR will hold a public hearing from March 24 to 26, with stakeholders weighing the potential impact of the proposal.

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