US scrap metal shippers will see varying degrees of exposure to US Trade Representative's (USTR) revised proposal for port fees on Chinese-built and operated ships.
USTR finalized a plan 17 April to apply a $50/net ton (nt) fee on Chinese operators and owners and a $18/nt fee on Chinese-built ships that dock in the US. The fees will begin in mid-October with incremental increases over the next three years.
The agency determined that China's dominance of the maritime, logistics, and shipbuilding sectors has reduced supply chain resilience by displacing foreign firms, lessening competition, and creating dependencies on the country.
The number of US-flagged or -built ships has decreased by 34pc since 2010 to 185 in 2024, US Bureau of Transportation statistics data show. US-flagged or -built vessels accounted for 0.4pc of the global fleet in 2019.
The fees are less severe than the industry anticipated, but sweeping exemptions will result in uneven impacts for bulk and container shippers.
Fees largely spare bulk shippers
Bulk scrap metal shippers will have the least direct impact from the new policies because ships arriving empty or in ballast and vessels carrying 80,000 deadweight tons (dwt) or less will be excluded from the charges associated with using a Chinese-built ship.
Chinese-built ships account for 41pc of the 14,661 active vessels in the dry bulk global fleet, according to global ship tracking analytics firm Kpler.
Bulk scrap exporters most commonly use Handysize vessels, but some occasionally fix bigger ships. The average weight of a bulk ferrous scrap export vessel in 2024 was 33,500 metric tonnes (t), according to manifest data. Even the largest Supramax vessel booked by east coast scrap exporters in 2024, the Denak D, would still qualify for the weight exemption.
Most market participants are still working through the notice and waiting for more details regarding the exemptions. The USTR has not responded to requests for clarification on exemptions.
Chinese-owned and Chinese-operated vessels would still be subject to the fees.
Bulk shippers will be exposed to this direct cost, unless they shy away from Chinese-owned or operated vessel fixtures. But competition for these vessels will likely raise freight rates and availability as other commodity sectors shift their bookings as well, market sources said.
Mills see some exposure on metallics
US steelmakers importing bulk scrap will also broadly be spared from higher port fees related to Chinese-built vessels because of the weight exemptions, but some mills will be more exposed on imports of pig iron.
Pig iron shippers occasionally use Kamsarmax vessels over 80,000dwt. But the vast majority of US pig iron imports travels in smaller vessels, such as Supramax or Ultramax size, which tend to have capacities well below the 80,000dwt limit.
USTR offered exemptions to short-haul voyages under 2,000 nautical miles, which will help to relieve costs for shipments on the Great Lakes or between the US Gulf coast and Mexico.
Mills would still be exposed to fees on any Chinese-owned or Chinese-operated vessel.
Fees put container shippers at risk
US container scrap exporters are the most vulnerable to the USTR's finalized plan on Chinese ship operators' vessels calling at US ports.
Chinese built vessels account for about 50pc of all container ships globally, a market source said.
USTR plans to impose a fee of $120 for each container discharged on a Chinese-built vessel beginning in mid-October with annual increases over the next three years reaching $250 for every container in April 2028.
US shippers typically load about 25t in containers on the east coast and around 20t on the west coast.
Containerized traders are bracing for higher freight costs later this year once the fees go into effect.
USTR proposed exemptions for container vessels with a capacity no greater than 4,000 twenty-foot equivalent units (TEU), but most of the ships servicing the US export market are minimum of 8,000 TEUs, market participants said.
The added port fees will likely get passed through to US customers via higher freight costs, a freight forwarder said. But for the short-term, blank sailings and new vessel capacity coming online has helped to keep rates steady, according to market participants.
These added costs, paired with broader concerns of a flagging economy have begun to worry market participants over possible margin compression in the fourth quarter.
