USTR Proposes Major Port Fees on Chinese Vessels, Threatening Indian Trade Dynamics

The United States Trade Representative (USTR) has proposed imposing significant port fees on Chinese-owned cargo ships and vessels built in Chinese shipyards, which could have a major impact on Indian trade. The fees could amount to $1 million or more per port-of-call in the US for these vessels. This proposal comes in response to a USTR investigation into Chinese shipbuilding and maritime practices initiated in March 2024. With over half of all ships delivered globally in 2024 being built in China, this move could disrupt international maritime trade, especially for countries heavily reliant on foreign vessels like India.

If implemented, the proposed fees could severely affect Indian shipments, as the country heavily depends on foreign ships to transport its cargo on international routes and to the US. US-based company Flexport estimates that around 30% of the fleet of the top 20 ocean carrier companies consists of Chinese vessels. This could result in fees adding up to more than $3 million per trip for container ships making multiple port calls per loop. The potential impact of these fees on Indian trade is significant, considering the typical revenue of $10-15 million per journey.

In response to the proposed fees, ocean carriers may seek alternative routes through Canada and Mexico ports and optimize their fleet by using Korean and Japanese vessels on US trade lanes. However, ports in these countries have limited capacity and may not be able to handle the volume currently flowing through US ports. The USTR highlights China’s dominance in sectors like shipbuilding, which has led to a dramatic increase in market share over the years. To challenge China’s targeting of these sectors for dominance, the USTR proposes taking action against certain Chinese services to create leverage for negotiations.

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