AAPA, BIMCO Warn of Side Effects From U.S. Port Fees for Chinese Ships
America's seaports have weighed in against the Trump administration's steep proposed fees on Chinese-built shipping, which could amount to an additional $3.5 million per port call if fully implemented. In comments to the Office of the United States Trade Representative (USTR), the American Association of Port Authorities (AAPA) warned that the unprecedented fees would make U.S. exports less competitive, and it provided the industry's first hard numbers for what the proposal might cost in lost revenue.
In a statement, AAPA president and CEO Cary Davis warned that the fee structure would do little to counter China's dominance in shipbuilding, and said that it would have few near-term effects on domestic shipyard production. "A fee on foreign vessels will simply not bring back American shipbuilding. Our existing shipyards are working at or near capacity, and higher demand for American vessels will not enable them to produce more ships with the same resources," Davis said, noting AAPA's support for alternative support policies like the SHIPS Act.
After the USTR announced the fee proposal last month, AAPA joined a multi-industry study to assess the impact of the fees, conducted by Trade Partnership Worldwide. The early results suggest a double-digit decline for American exports because of the increased cost of shipping. The study's initial conclusions suggest that if the fees fully enter into effect, agricultural exports will drop by about 16 percent, petroleum and coal exports will fall by eight percent, and U.S. goods exports overall will drop by about 12 percent.
U.S. goods exports amount to roughly $2.1 trillion per year, so a 12 percent drop would be a revenue decline of about $250 billion annually for U.S. exporters - equal to about one percent of U.S. GDP.
The plan as written would likely reduce traffic to smaller secondary ports, AAPA said, and would risk squandering federal investments in channel deepening and port infrastructure in midsize seaports on the Gulf and East Coasts.
"AAPA respectfully urges the Office of the United States Trade Representative (USTR) to reconsider its approach to countering Chinese dominance in the global shipbuilding industry by narrowing the scope of the proposed fees or reversing course," the association said.
The Louisiana Maritime Association (LaMA), which represents Lower Mississippi River maritime service companies, warned that American maritime workers could lose out in the near term, even if the fees eventually succeed in boosting future U.S. shipyard activity.
"The fallout will affect railroads, pilots, towage (tug) companies, barge companies and many small, independent businesses such as line handling companies, dock, terminal and facility workers," warned LaMA. "The myriad of United States companies dependent on the shipping industry could (and reportedly already are) lose business based on the anticipation of the implementation of this USTR action."
BIMCO reviews effects of port fees
Shipping association BIMCO also weighed in this week, and it provided a detailed overview of the likely effects.
"The proposed actions will impose much increased transport costs on US imports and exports and have negative effects on the wider US economy; their impact on Chinese dominance is much less certain," said BIMCO deputy secretary general Lars Robert Pedersen in a statement. "The ships already built of Chinese origin will not disappear from the world fleet if the proposed port fees are introduced."
Pedersen predicted a splitting of the global shipping market into two halves: some shipowners would put together fully non-Chinese fleets in order to call in the U.S. without the penalties. Meanwhile, other shipowners would use Chinese tonnage to serve the rest of the global market, without making port calls in the U.S., and at lower price.
"The totality of the world fleet would not change, but the overall cost of maritime trade would increase due to less competition in the now segregated US market," he cautioned.
The boxship sector, which has consolidated into less than 10 large operators, is less likely to divide up the market in the same way, he said. Instead, ocean carriers will concentrate port calls into the largest hubs, avoiding the extra fees that would come with each call at secondary ports. Those smaller ports would go underutilized while congestion would grow at the major trade gateways, he warned.
Pedersen noted that a U.S.-built requirement for U.S. export shipping would raise costs "significantly," and would affect the competitiveness of American exporters - particularly farmers. Inexpensive commodities like grain and soy would be most affected as a percentage of cargo value, he warned.