WPC 2025: US port fees on Chinese ships seen damaging US exports

This content is part of the WPC 2025 series, in which we explore key themes from the 40th annual World Petrochemical Conference.

The proposed imposition of US port fees on Chinese-built and Chinese-operated ships could dramatically impact US chemical exports and result in China being the biggest beneficiary, panelists said.

The potential fees would result in the cost of a smaller vessel, currently paying a port fee of around $20,000, soaring to about $500,000, said Udo Lange, CEO of chemical tanker operator Stolt-Nielsen, in a panel session focused on supply chain issues on March 18. For larger ships, the current fee of around $40,000 would soar to between $1.5 million and $3.0 million, he said.

"If you pay these fees, they will lead to a 30% increase on certain chemicals in deep sea, and on the shorter routes [with] the smaller ships, it's around a 70% increase. So the outcome of that is, of course, that US exports are not competitive anymore and China, funnily enough, would be the winner of this," Lange said.

The US Trade Representative has proposed charging $1 million per instance for vessel operators from China to enter a US port. Fleets with Chinese-built vessels would be charged up to $1.5 million per entrance based on the percentage of such vessels in the fleet. The USTR said the rule would boost shipbuilding efforts in the US and reduce dependence on China's fast-growing commercial fleet. China owned over 19% of the world's commercial fleet as of January 2024, the USTR said.

Fellow WPC panelist Gina Fyffe, CEO of trader Integra Petrochemicals, said, "one of the big losers in this if the port tax comes in will be almost certainly the US, and that will happen quite quickly." Looking at the global chemical tanker and gas tanker fleet, Fyffe noted that a "large percentage of the gas fleet was built in China." As a result, tariffs imposed would result in "no ethane, no LPG, no ethylene. So who's that hurting?" she said.

Lange noted that the chemical industry is the second largest manufacturing industry in the US and that the port fees would impact 25% of US GDP overall. US chemical exports are valued at around $160 billion, he said.

The stainless steel tanker fleet of 850 vessels represents about 1% of the global fleet, which consists of about 20,000 ships in total, he said.

"The risk on the other side is massive," he said. "You affect 25% of GDP. And building chemical tankers is more complicated than containerships. So building an industry would probably take around a decade."

Although Stolt-Nielsen "love the idea of having shipbuilding in the US... this is probably not the segment you want to start with," he said.

Tariff impact

China was prepared for tariffs, said Fyffe.

"This isn't the first time the Chinese have been through this. There were tariffs on Chinese products already. This is just tariffs on top of those tariffs. I believe the Chinese have been building contingencies for quite some time," she said.

Domestic demand "is not fantastic and they're still starting up plants," Fyffe said. "But at the same time, they're willing to export. If there was a mistake that many of us made, it was not realizing that China was going to continue building and was going to head for self-sufficiency across a wide range of products. "

The fact that economies globally and the Chinese economy in particular haven't done as well as everybody had hoped has "just made things a bit worse," she said.

Nobody wins in tariff disputes, she said.

"I think the people that are going to pay the price are the end consumers, because product will move one way or another. It might just go to different markets," she said. It's also going to be less efficient, she added. "We're getting into a period of inefficiency and we're already in a period where we are making very short-term decisions. Managing by tweet and having to anticipate the unknown, with the unknown changing week by week," she said.

What happens in China matters in global trade for two reasons, according to panel moderator Daniel Evans, vice president and global head of fuels and refining at S&P Global Commodity Insights. "Firstly, global trade is heavily dependent on China. China's exports account for about a third of containerized trade, so anything that hits China hits global trade," Evans added.

"The second thing is that China has come to dominate shipbuilding. In some sectors, almost half the ships on the water are Chinese-built. So recent proposals to levy some very significant fees on Chinese-built vessels or Chinese-operated vessels making US port calls would be hugely disruptive, driving up cost, driving down demand," he said.

The impact would also not just be a short-term one, he said. "China also dominates the orderbook. So these measures would likely lead to cancellations, leaving ships in service for longer, hurting some of the emission reduction targets."