Proposal for U.S. Port Charges on Chinese-Built Ships

As members may be aware, the United States Trade Representative (USTR) has released a draft proposal outlining regulations to impose charges and fees on Chinese-built ships and vessel operators utilizing such ships. This initiative stems from findings by U.S. authorities that China employs unfair trade practices to gain an advantage in the global shipping market. The proposal remains subject to a public consultation period ending March 24, 2025, after which the U.S. President will make a final decision.

While the current proposal is a draft and lacks detailed guidance on the final scope or implementation of these charges, we summarize its key elements as follows:

1. Vessel Operators: Operators of Chinese-built vessels will face a fee upon entering U.S. ports, calculated as either:
   1. Up to $1 million per port entry for any vessel operated by the company, or
   2. Up to $1,000 per net ton of the vessel’s capacity.
2. Chinese-Built Vessels: Fees for Chinese-built vessels will be assessed per port call, with a maximum of $1.5 million on a sliding scale determined by the proportion of Chinese-built vessels in the operator’s fleet. Alternatively, a flat fee of $1 million per vessel will apply if Chinese-built vessels constitute more than 25% of the fleet.
3. Chinese Shipyards: An additional fee may be levied on operators with vessels on order from Chinese shipyards over the next 24 months. This fee would be calculated similarly to those for operators and existing vessels.

The impact of these regulations will largely depend on how the final definitions of “Chinese-built vessels” and “vessel operators” are crafted. Key considerations include:

• The proposal currently lacks a clear definition of “Chinese-built vessel”. While it evidently targets vessels constructed in Chinese shipyards, it remains uncertain whether the origin of a vessel’s value (e.g., components or materials) will factor into the definition. If so, as seen in previous U.S. tariffs, this could significantly broaden the regulations’ scope.
• The regulations apply to operators based on the percentage of Chinese-built vessels in their fleets. Consequently, any operator with at least one Chinese-built vessel would incur fees proportional to the number of such vessels. This would mean that even a non-Chinese vessel would incur charges in the event that a difference vessel within the fleet fell within the definition.

At this stage, the precise scope and scale of the regulations remain unclear. However, it is anticipated that some version of these measures will be enacted following the public consultation and subsequent review by the USTR. We recommend that members in any event ensure that their charterparty contracts included specific provisions dealing with the liability for port charges and fees and clarify if possible to what extent their fleet would potentially fall within the scope of the regulation based on the available information and again note the consultation period will end on 24 March 2025.

We will of course keep members informed of any developments and in the meantime invite you to contact claims@nnpc.nl for further advice and assistance.