Chinese yards largely unscathed from US port fees

Non-Chinese shipowners can breathe a sigh of relief that they can still order most ship types risk-free in China, according to HSBC, following last week’s decision by the US Trade Representative to water down penalties on Chinese-linked tonnage. 

The competitiveness of Chinese yards remains intact, according to the global bank. 

“The diluted port fees will reduce the uncertainty on newbuild decisions for non-Chinese carriers which should be positive for Chinese shipyards,” HSBC suggested, with Splash reporting yesterday that Mediterranean Shipping Co (MSC), the world’s largest containerline, has been one of the first companies to head back to China for orders, signing for six 22,000 teu newbuilds at Hengli Heavy Industry. 

The USTR decided to ease the most punitive measures against Chinese-linked tonnage following a public hearing last month, which attracted huge criticism. 

The less severe financial penalties – for non-Chinese owners – have reduced any potential competitive advantage that had emerged for Korean yards under the initial USTR proposal, HSBC pointed out. 

“We continue to expect Chinese yards to maintain their leading position in most vessel segments,” HSBC maintained in a shipbuilding update, arguing that pending new orders for Chinese yards will resume especially with the price gap emerging versus their Korean and Japanese peers lately. 

“While the [USTR] announcement is thorough, its vague language creates uncertainty, making it difficult to assess the full scope and implementation of the proposed fees,” analysis from Greece’s Xclusiv Shipbrokers suggested. 

Subject to a scheduled public hearing on May 19 and a subsequent final ruling, the proposed US port fees are scheduled to come into effect on October 14, with a gradual three-year phase-in period.