The United States has decided to impose millions of dollars in entry fees on Chinese shipping companies and Chinese-built vessels using its ports, raising concerns about a downturn in the shipping industry. Domestic shipping companies do not own a significant amount of Chinese vessels, so they are not heavily impacted by the entry fees, but they will inevitably feel the effects if the shipping market itself declines. In contrast, domestic shipbuilders are expected to benefit from reduced demand for Chinese vessels due to this U.S. measure.
On the 17th (local time), the United States Trade Representative (USTR) announced it would impose entry fees on ▲ Chinese shipping companies ▲ shipping firms operating Chinese-built vessels ▲ foreign-built car carriers. The fees will be gradually introduced starting October 14, following a 180-day grace period.
Initially, the USTR will collect an entry fee of $50 (approximately 71,000 won) per ton (t) on vessels operated or owned by Chinese corporations, and this fee will increase annually. For firms from other countries that own Chinese-built vessels, an entry fee of $18 per ton will be applied starting October 14.
As entry fees are imposed, demand for Chinese shipping companies and vessels is expected to decrease, leading to a reduction in China's influence in the global shipping and shipbuilding industries. In fact, cargo volumes of container ships in China declined from the first week after U.S. President Donald Trump imposed tariffs of 145% (up to 245% for specific items). On the 15th, China's Ministry of Transport reported that container throughput at Chinese ports fell by 6% to 5.94 million TEU (20-foot equivalent units) during the second week of April (7th-13th) compared to the previous week. The number of canceled freight transport routes between the U.S. and China is also said to be on the rise.
With the decrease in container traffic, maritime freight rates are also declining. The Shanghai Containerized Freight Index (SCFI) hit 1,394.68 points on the 11th. While this is above the break-even point of 1,000 points for shipping companies, it is a 65% drop compared to the high point of 3,733.80 points last July.
Domestic shipping companies are concerned that the shipping market will deteriorate due to weakened shipping demand and falling rates. While they could respond to the U.S. entry fees by adjusting their routes or sharing cargo space, they cannot avoid a structural downturn. HMM and SM Line, which operate routes to the Americas, do not have a significant proportion of Chinese vessels. HMM has only 4 out of 82 vessels that are Chinese, while SM Line has 2 out of 14. They plan to deploy the Chinese vessels on other routes instead of America routes.
Experts are concerned that the shipping industry may enter a downturn as the Trump administration's mutual tariffs are compounded by the port fee measures. Lee Jae-hyuk, a researcher at LS SECURITIES, noted, "U.S. tariff policies and retaliatory tariffs from various countries and responses to export regulations are expected to impact global shipping demand, particularly in the container and car shipping sectors where demand is likely to slow down."
Conversely, there are also projections that Korean shipbuilders may benefit from this measure. If the burden of U.S. entry fees increases, there is a significant possibility that shipping companies will opt for Korean-built vessels over Chinese ones. An example can be seen where American energy giant ExxonMobil canceled its plan to order two liquefied natural gas bunkering vessels (LNGBV) after the U.S. entry fees were announced.