According to the Swedish Club, the proposed U.S. port fees could lead to legal disputes, disrupt charter rates, impact vessel asset values, and shift global trade flows.
The current proposals by the Trump administration, include a $1.5 million per entry fee for Chinese-built vessels calling at U.S. ports and a $1 million per entry fee for vessels owned by Chinese maritime operators. Stakeholders across the shipping industry must carefully assess the potential implications of these proposed measures and prepare for their implementation, the Swedish Club highlights.
Potential Charterparty Disputes
One of the most immediate consequences of these proposed fees will be the legal disputes between owners and charterers over cost allocation and operational risks. In time charters, charterers typically bear port costs, but given the extraordinary nature of these fees, disputes will likely arise over whether they qualify as standard port charges or as an unforeseen governmental levy that should be absorbed by the shipowner.
The situation is even more complex for voyage charters, where freight rates may have been negotiated before the fees were announced, leading to potential conflicts over whether additional costs should be passed to cargo interests.
Moreover, the unprecedented nature of the fees allows for ambiguity in their definition and, as a result, in is unclear who will bear these costs. It may be that how they are invoiced will provide further clarity as to how they will be defined and whether they will form part of the ‘port fees and expenses’ which are for charterers’ account.
Delays at U.S. ports due to compliance checks and fee processing could also lead to off-hire disputes. Given the unprecedented nature of these fees and the scale of implementation, such delays are quite likely in the initial phase of any roll out. Charterers may attempt to place vessels off-hire if such delays disrupt operations. Owners, on the other hand, may argue that delays caused by government-imposed restrictions are outside their control and should not trigger off-hire claims.
Additionally, the question of deviation could further complicate matters. Some shipowners may seek to avoid U.S. ports altogether, which could lead to claims from charterers that such actions constitute an unjustified deviation or breach of employment obligations. In cases where avoiding U.S. ports becomes commercially necessary, charterers may push back, insisting that the owner either comply with the original voyage plan or provide an alternative solution.
A further challenge arises from the vague definitions in the proposed rules. The U.S. has not clearly defined what constitutes a “fleet” or a “Chinese maritime operator.” It is unclear whether any decisions stemming from the proposed action will include such definitions, or whether regulatory authorities will look to other areas of U.S. law to divine these definitions.
Shipowners may consider restructuring their fleets to separate Chinese-built tonnage from non-Chinese vessels, while charterers may challenge fee applications if they believe that leased tonnage or affiliated companies are being unfairly classified. Charterers may also seek warranties or indemnities related to the presence of any Chinese-built vessels in an owner’s “fleet.”
Market Disruptions
Beyond the legal disputes, the proposed fees could have significant economic consequences, particularly for freight and hire rates. Owners will inevitably attempt to pass on these extra port fees or levies to charterers. This could lead to higher freight rates on U.S. trade routes or increases in cost of goods if charterers have to absorb these costs.
Additionally, this increase will be particularly pronounced in trans-Pacific container shipping, dry bulk commodities such as grain, coal, and iron ore, and energy trades involving LNG, crude oil, and refined products. As a result, some cargo interests may seek alternative routing strategies, redirecting shipments to non-U.S. ports such as Vancouver, Manzanillo, or Caribbean transshipment hubs before moving goods into the U.S. market via rail or feeder vessels.
The introduction of these fees will also create a two-tier charter and S&P market. Non-Chinese-built vessels, unaffected by the fees, will become significantly more valuable, leading to increased hire rates for such tonnage.
In contrast, Chinese-built vessels may suffer declining hire rates as demand for them diminishes, particularly for voyages involving U.S. ports. This divide will likely affect asset values, with Chinese-built vessels facing potential devaluation, making them less attractive on the secondhand market.
The long-term impact of these measures on shipbuilding orders is also concerning.
If the proposal moves forward, shipowners may begin shifting orders away from Chinese yards in favour of South Korean and Japanese builders to avoid future regulatory risk. Over time, this could alter the global shipbuilding landscape, weakening China’s dominant position and strengthening competitors in other regions.
…the Swedish Club points out.
Trade Flow Disruptions and Alternative Routing
Another major risk lies in China’s potential response. If the U.S. implements these fees, China may retaliate by imposing its own countermeasures, such as additional port fees on U.S.-affiliated vessels, restrictions on U.S. energy exports, or diplomatic pressure on allied nations to oppose the measures. Such actions could further fragment global trade, exacerbating inefficiencies and increasing market volatility.
The proposed U.S. port fees on Chinese-built vessels represent a fundamental shift in maritime trade policy, introducing a new layer of complexity for shipowners, charterers, and cargo interests.
The legal disputes surrounding cost allocation, deviation claims, and fleet classification will be significant, with arbitration and litigation likely to play a key role in determining how these costs are distributed.
