China has just today, October 14, implemented new port fees on U.S.-owned vessels docking at Chinese ports. This decision marks a direct response to the U.S. plan to levy precisely such fees on Chinese vessels. In fact, the Ministry of Transport in China called these new fees “countermeasures.” They think these actions are a response to what they view as “wrongful” practices of the United States.
Effectively, the as-yet-unknown new vessel fees primarily aim at the few vessels with the strongest connections to the U.S. These links may be through ownership, operation, flag, or building. The fee schedule increases exponentially with the length of the vessel. By 2028, it will reach 1,120 yuan (about $157) per net ton, rising annually until then. The U.S. proposal charges ships owned or operated by Chinese entities a $50 per net ton fee on each roundtrip to the U.S. This fee will be raised by $30 per net ton annually until it reaches 2030 levels in 2028. Under the rules of both countries, each ship will pay fees no greater than five times per year.
China’s fee announcement is reminiscent of the U.S. port congestion fee proposal. This latest action highlights the deepening rift between the two countries as they prepare for their next round of trade negotiations. It’s a move that according to Kun Cao, deputy chief executive at Reddal, consulting firm, is “not just a symbolic move.”
China’s Ministry of Transport has oohed and aahed! They paint these charges as “discriminatory,” arguing that they unjustly discriminate against Chinese maritime interests. Some analysts doubt the increased U.S. port fees will have much impact on aggregate trade. They demand that their freight rates stay flat in the face of rising expenses. They remain completely avoidable to the tune of at least $3.2 billion next year alone for the world’s ten largest carriers.
These new port fees come at an important juncture for U.S.-China relations. Both countries are scheduled to begin charging each other’s vessels on the same date. The possibility of these fees increasing significantly has the potential to disrupt the decades-long trade boom between these two economic powerhouses.
