Independent journal on economy and transport policy
04:47 GMT+2
This page has been automatically translated by Original news
TRADE
BIMCO, the application of specific harbour taxes to Chinese ships that scale in the USA will prove a disaster for the American economy
I was uncertain about the impact of the measures proposed on Chinese dominance in shipbuilding
Londra
March 17, 2025
The imposition by the U.S. of specific harbour taxes and other charges to Chinese ships or built in China that land in the U.S. ports would have no other effect than making transport costs for American imports and exports much higher and, more generally, would have negative effects on the U.S. economy, while it is very uncertain their impact on the Chinese predominance in the field of shipbuilding.
It highlights a letter that today the international shipowning association BIMCO, which represents almost 2,100 associates who operate 63% of the world merchant fleet, has sent to the ambassador of the United States Trade Representative, Jamieson Greer, who is part of the office of the US president as an adviser for international trade. The letter was sent in response to the request for comments made by the US Trade Representative on the action that in recent days proposed under the investigation under Section 301 of the Trade Act of 1974 whose conclusions were submitted mid-January when the US Presidency was about to move from Joe Biden to Donald Trump(of 17 January 2025). In the light of those conclusions the US Trade Representative proposed to impose certain taxes and restrictions on international shipping services connected with Chinese naval operators and made with ships built in China, as well as to promote the transport of American goods on American ships.
In the letter sent to Greer, who was appointed at the end of February by Trump, it is remembered that "for decades the associates of BIMCO have ordered the construction of new ships in the within of an international competitive market in which the Asian shipyards have acquired an increasing market share, especially in China in recent years. The tonnage quota built in China of the fleets of international operators has increased in the last decade, initially with the purchase of types of ships less complex followed by more complex types of ships. Due to the very competitive nature of the international shipping market, the increase of the convenient ships of Chinese origin has had for effect relatively lower costs for the marine transport, positively supporting the world trade and the global economies, including the United States of America".
In the letter, signed by Lars Robert Pedersen, Deputy Secretary General and Director of the Institutional Affairs of BIMCO, the shipowning association emphasizes that "the ships already built of Chinese origin will not disappear from the world fleet if the proposed harbour taxes will be introduced. If this happens, a global shortage of tonnage would be determined to meet the needs of world shipping and super-inflated shipping costs. To avoid it, the marine transport sector will try to avoid paying taxes. The charge of taxes on the ships that dock in the ports of the United States because of the Chinese origin of the ships that make you port of call, of the convertibility to China of the operator, of the percentage of ships of Chinese origin in the fleet of the operator and of the percentage of Chinese contracts in the order book of the operator, will significantly increase the cost of the marine transport from and to the United States of America, even if the operators will implement strategies of elusion. We expect - clarifies the BIMCO - that the operators will react and try to avoid the negative effects of such harbour taxes on their activity".
"Most operators in the world - continues the letter - has in own fleet one or more ships of Chinese origin, which means that when they dock in a port of the United States, they would be subject to a harbour tax. Port taxes are transferred to the supply chain, so the costs would be transferred to the US importers of foreign goods and, ultimately, to the US consumer. We also detect, that the second option relative to port taxes for ships managed by Chinese operators is probably prohibitive for the continuation of trades with the ports of the United States. A tax of 1,000 dollars per net tonnage applied, for example, to a super oil tanker of 300,000 tons of gross flow equivalent to more than 100 million dollars per port. If the tariff structure was implemented as a proposal, trade by sea from and to the United States of America would become less efficient and less economically sustainable. It is possible that some operators would avoid having Chinese tonnage in their fleets and would dedicate their maritime operations to the US market. Other operators could do the opposite, increasing their share of Chinese tonnage and dedicating their maritime operations to trades not with the USA. The totality of the world fleet would not change, but the total cost of the marine trade would increase because of the lower competition in an American market now less accessible. In this regard it is worth keeping in mind that the American import/export represents about 12% of the world's maritime trade, so the consequences of the reorganization of the marine trade will have a much greater impact on the American import/export regarding trade in the rest of the world".
Specifying that some sectors of the marine transport are more adaptable than others, in the letter the BIMCO observes that, "to this regard, the field of the containerized transport, which presents relatively few very large operators, could be less prone to a segmentation of the market and would rather try to reduce to the minimum the number of harbour ports of call in the United States by ship. This would inevitably lead to port congestion, to the block of the flow of commerce and to a greater need for internal redistribution. A fewer ports of call in the ports will also have a negative impact on the harbour jobs, with some ports that will become potentially not attractive for foreign trade".
Moreover, in the letter it is evidenced that "highest transport costs for American imports of raw materials will be, because of the relatively low value of such goods, much more affected than the imported goods of higher value. This effect - BIMCO emphasizes - is in contrast with other objectives declared by the US administration, such as the increase of national production with the relative necessity of more raw materials".
Referring to the actions proposed by the US Trade Representative to promote the export of U.S. goods, in the letter it is noted that this would include "to stimulate the construction and management of ships flying American flag and built in the United States. So far - recalls the BIMCO - this activity has been limited and mainly to the service of the American national transport as required by the Jones Act. We note, however - the letter continues - that the tonnage currently available to meet the export requirements proposed is limited as to number, size and types. Few marine operators, if none, will be able to prove that their annual share, per calendar year, of U.S. exports will satisfy the request of carrying 20% on ships flying American flag and built in the United States. This means - the BIMCO remarks - that in reality few, if not any, American export could be realized after the implementation of the measures, not least the energy export, in particular of liquefied natural gas, since no tanker flying U.S. flag and built in the United States is in operation or in order. US chemical industry access to vital export markets will also be severely hampered. If in the future a requirement to transport US exports to American flag ships and built in the United States is realistic or not goes beyond the purpose of this comment".
"The U.S. naval construction - still remembers the BIMCO - has not been competitive for a long time, as evidenced by the lack of tonnage built in the United States in the world fleet. However, we find that if it was necessary to carry US exports on tonnage built in the United States and flying US flag and that this tonnage was available, the cost of transport would increase significantly and would impact the competitiveness of US exports on the world market. This is especially true for raw materials of low value such as wheat and soybean."
"In summary - it is the warning that the letter concludes - the proposed actions will impose much higher transport costs on American imports and exports and will have negative effects on the US economy in general; their impact on Chinese dominance is much less certain".
- Via Raffaele Paolucci 17r/19r - 16129 Genoa - ITALY
phone: +39.010.2462122, fax: +39.010.2516768, e-mail
VAT number: 03532950106
Press Reg.: nr 33/96 Genoa Court
Editor in chief: Bruno Bellio No part may be reproduced without the express permission of the publisher