As the Donald Trump administration decided to impose port entry fees starting on the 14th (local time) on China-owned vessels, China-built vessels, and foreign-built car carriers, the Chinese government also decided to levy a "special port service fee" on U.S.-built vessels, adding uncertainty to the global shipping market. Domestic shipping companies are concerned about rising entry expenses and declining cargo volumes.
The Office of the United States Trade Representative (USTR) said it would impose a fee of $50 (about 71,000 won) per net ton (the volume of space used for passenger and cargo transport) on vessels owned or operated by Chinese shipping companies and on vessels built at Chinese shipyards.
In addition, when car carriers built overseas call at U.S. ports, a fee of $46 (about 66,000 won) per net ton will be imposed. The number of assessments per vessel is limited to five times a year, and there is a grace period for payment until Dec. 10.
In response, starting on the 14th the Chinese government decided to impose a special port service fee of 400 yuan (about 80,000 won) per net ton on U.S.-built vessels.
The U.S. government described the purpose of the entry fee as "curbing unfair subsidy practices in China's shipbuilding and shipping industries and reviving the domestic shipbuilding industry." In July, the government asked that the entry fees for car carriers be limited to those built in China, but the request was not accepted.
Domestic shipping companies, including HMM, have a low share of U.S.- and China-built vessels, so the direct impact of the entry fees is expected to be limited. However, they worry that overall cargo volumes may fall as transportation expenses rise. A shipping industry official said, "When unexpected expenses such as entry fees arise, we have to pass the additional expense on to shippers (cargo owners), which means reopening freight rate negotiations."
Hyundai GLOVIS, Korea's largest car carrier, is expected to face unavoidable expense increases. As of the end of June, Hyundai GLOVIS operates a total of 96 car carriers (35 owned, 61 chartered), and deploys about 30 of them on U.S. routes. Last year, it made 170 calls to the United States, and the United States accounted for about 30% of total car carrier revenue.
Among Hyundai GLOVIS's car carriers, a mid-sized 7,000 CEU (Car Equivalent Unit) class vessel has a net tonnage of about 19,000 tons. Applying the new USTR criteria, each time such a vessel calls at a U.S. port, a fee of $874,000 (about 12.5 billion won) will be imposed. Even with the limit of five times a year, that adds $4.37 million (about 62.5 billion won) in additional expenses.
A Hyundai GLOVIS official said, "There is a grace period until December, so we do not have to pay the entry fees immediately. We are studying efficient operations management, including how to deploy vessels to the United States."