Navigating USTR’s Proposed Shipping Fees: Implications for Global Trade

The U.S. Trade Representative’s recent proposal to impose substantial fees on shipping companies and vessels with a Chinese nexus has sent ripples through the global shipping industry, sparking concerns among ocean carriers, freight forwarders, and importers alike. With potential costs reaching up to $1.5 million per vessel call, the implications for trans-Pacific, trans-Atlantic, and intra-Americas shipping lanes could be severe. Industry leaders, including Mediterranean Shipping Co. (MSC) and CMA CGM, have already signaled that such measures could lead to service reductions, higher costs for cargo owners, and increased congestion at U.S. ports.

The proposed measures come in response to findings from a USTR investigation into China’s alleged anti-competitive shipbuilding practices. This investigation, originally initiated under the Biden administration, has continued under the current administration, highlighting a bipartisan consensus on addressing China’s influence in the maritime, logistics, and shipbuilding sectors. The USTR’s proposals are still subject to review, with industry comments being accepted until late March, but the prospect of implementation has already prompted widespread concern.

One of the most significant concerns raised by industry leaders is the potential for widespread service disruptions. MSC CEO Soren Toft has stated that additional costs of over $1 million per U.S. port rotation could render certain routes financially unviable. Carriers will have no choice but to reduce their exposure to these costs, likely by eliminating marginal port calls or consolidating services into fewer port rotations. This could have an immediate impact on importers and exporters who rely on consistent access to U.S. ports.

For example, MSC has indicated that current rotations through California, which typically include both Long Beach and Oakland, may be adjusted, with Oakland potentially being removed from future schedules. Similar cuts could affect ports along the U.S. East Coast, Gulf Coast, and secondary inland hubs. As a result, cargo owners may experience longer transit times and additional inland transportation costs as freight is rerouted to alternative ports.

The financial implications for cargo owners and freight forwarders are also significant. According to MSC, a standard Asia-to-U.S. East Coast service utilizing 8,000-15,000 TEU vessels and making four U.S. port calls would incur an additional $4 million in fees. Spread across an average volume of 10,000 TEUs, this equates to an increase of approximately $800 per forty-foot equivalent unit (FEU). For trans-Atlantic routes, the impact could be even more pronounced, with costs reaching up to $1,000 per FEU, a level that could effectively eliminate freight rate margins.

CMA CGM has echoed these concerns, pointing out that over half of the world’s container vessels are built in China. Given the prevalence of Chinese-built tonnage in the global fleet, virtually every major carrier would be affected by the proposed fees. The policy could force carriers to reconsider future vessel procurement strategies, potentially shifting orders to non-Chinese shipyards or accelerating the scrapping of older tonnage to reduce fee exposure.

The broader economic impact of these proposals could extend beyond the shipping industry. Higher shipping costs will inevitably be passed down the supply chain, increasing costs for U.S. importers and, ultimately, consumers. Given the already fragile state of global supply chains due to geopolitical tensions and economic uncertainty, additional disruptions in ocean freight pricing and availability could create significant challenges for businesses relying on international trade.

Another major consequence of the USTR’s proposals is the potential for port congestion. As carriers consolidate services and reduce the number of port calls, the remaining ports will likely experience higher container volumes. Even a modest five to ten percent increase in volume at major ports could strain terminal operations, leading to delays and inefficiencies reminiscent of the supply chain disruptions experienced during the height of the COVID-19 pandemic.

The regulatory landscape remains uncertain, with the USTR yet to release finalized implementation guidelines. Several key questions remain unanswered, including how a “Chinese operator” will be defined and whether ownership structures such as sale-and-leaseback arrangements will be factored into fee calculations. The industry also lacks clarity on whether fees will apply only to vessels actively calling at U.S. ports or to entire fleets operated by carriers with Chinese-built tonnage.

Freight forwarders and customs brokers are closely monitoring the situation, as the potential changes could significantly alter the cost structure of international shipping. The effects will be particularly pronounced in industries with high reliance on Chinese imports, such as retail, automotive, and electronics. Companies engaged in these sectors must remain vigilant and explore alternative logistics strategies to mitigate potential disruptions.

From a policy perspective, the proposed measures reflect a broader effort to reduce U.S. dependence on Chinese manufacturing and logistics capabilities. The introduction of incentives for U.S.-built vessels and requirements for certain U.S. exports to be transported on U.S.-flagged ships align with long-standing efforts to revitalize the domestic maritime industry. However, critics argue that the measures may have unintended consequences, including retaliatory actions from China that could further complicate global trade dynamics.

While these proposals remain in the early stages, industry stakeholders must begin preparing for possible implementation. Affected parties should consider submitting comments to the USTR before the March 24 deadline, highlighting concerns regarding operational feasibility, cost impacts, and potential disruptions. Engaging in discussions with industry associations and trade groups may also be beneficial in advocating for a balanced regulatory approach.

For now, the industry must navigate an environment of uncertainty, balancing the potential risks of higher costs and reduced service availability with the broader geopolitical objectives underlying these proposals. Freight forwarders and customs brokers play a crucial role in helping cargo owners adapt to these changes, providing insights into emerging regulatory trends and advising on alternative shipping solutions.

PNG Worldwide, as a leading freight forwarder and U.S. customs broker, is actively monitoring the situation and will continue to assess the potential impact of these regulatory developments. The company is committed to keeping its customers informed and will provide updates as the situation evolves. As the industry awaits further clarity from the USTR, PNG Worldwide remains dedicated to ensuring its clients can navigate these changes with minimal disruption to their supply chains.