The contours of Washington’s plan to revitalize the US shipbuilding industry are unclear and the US Trade Representative (USTR) has yet to make concrete proposals on expected measures, including levies. Still, the sector is already preparing for imminent additional risk, with new clauses that state companies hiring Chinese ships will bear the cost of any taxes in part or in full, the people said. They asked not to be identified as the discussions are not public.
Some new provisions in leasing contracts — not unlike those currently used to cover cargo-related expenses — will establish that all duties and taxes, if proposed by the USTR and introduced, will be for charterers to cover, the people added. Another version caps the amount that a shipowner pays, with the charterer covering the remaining fee.
The shipping industry has adapted swiftly to significant shocks in recent years, from upheaval in the Middle East to punitive curbs on Russia’s oil complex. Even so, the ambiguity around the US proposal has been a source of considerable frustration for the industry that remains the backbone of global trade.
Among questions plaguing shipowners is how exactly a Chinese vessel will be defined in the final instance.
The USTR is currently recommending different fees, starting with a levy of as much as US$1 million (RM4.43 million) per ship per port visit. That could ultimately add up to US$3.5 million per port call, if they are Chinese-built with a Chinese operator which in turn also has a ship on order from a Chinese manufacturer, according to Clarksons.
More than a third of the tonnage from ships currently trading were built by China, Clarksons data show.
A USTR hearing in Washington this week, ahead of final proposals due in April, brought together US lawmakers, labour unions, steel manufacturers and shippers, with many at odds over the hefty levies. While there has been broad concern over China’s dominance, several voices fretted that the blanket tax could snarl global supply chains and severely damage sectors of the economy.
Some in the industry, especially with high-value shipments like oil, may be able to absorb the additional cost. Some container shipowners also think that the large volume of goods that boxships can carry means that the levy, when spread across the cargoes on a ship, is nearly negligible. The largest container ships can carry nearly 24,000 20-foot containers, a standardised unit also known as TEUs.
Others, especially those trading cheaper goods such as fresh fruits, fear they may have to pass on costs to customers and in turn hurt their businesses.
The proposed tax “is an adjustable figure that will be basically passed on to the consumer or the customers,” said Moritz Fuhrmann, co-chief executive officer at MPC Container Ships ASA, during a panel discussion at a Singapore maritime conference this week.
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