In Depth: U.S. Port Fee Hike Loosens China’s Stranglehold on Shipbuilding

[para. 1] In October 2024, mounting U.S.-China economic tensions erupted on the seas as both the U.S. and China imposed steep new port surcharges on each other’s shipping vessels. The first casualties included Cosco Shipping Jasmine, a Chinese container ship docked in Savannah, Georgia, and Manukai, a U.S.-flagged ship in Ningbo, China, each hit with multi-million-dollar fees, while American cruise ships diverted to avoid Chinese charges. These incidents marked the opening of a tit-for-tat retaliation cycle, turning global shipping lanes into the newest front in the U.S.-China trade war[para. 1][para. 2][para. 3][para. 4].

[para. 5] The U.S. action followed an April Section 301 investigation by the USTR, accusing China of distorting the market, resulting in port surcharges and restrictions on Chinese-built ships for American energy exports, effective October 14. China responded in late September with reciprocal fees and legal revisions, again effective October 14, targeting U.S.-linked vessels. These moves formally ended a 20-year bilateral maritime pact dedicated to equal treatment[para. 5][para. 6][para. 7].

[para. 8] Negotiations to delay or mitigate the new policies failed, leaving over 30% of the world fleet potentially impacted. Shipping lines face scrambling realignments: reflagging vessels, rerouting cargo, and board reshuffles to dodge surcharges [para. 8][para. 9]. Industry experts warn the new norms risk disrupting global trade even as governments claim shipbuilding protection motives [para. 10].

[para. 11] The U.S. policy’s immediate effect on Cosco, China’s shipping behemoth, has been dramatic. Ships like the OOCL Sunflower raced to reach U.S. ports before the penalty deadline, burning extra fuel to save millions[para. 11][para. 12][para. 13]. Cosco faces an initial $4.25 million fee per U.S. port call for certain vessels, with costs set to rise steeply by 2028. With up to five annual calls allowed per ship, surcharges for a single vessel could reach nearly $60 million per year[para. 14][para. 15]. Across Cosco’s transpacific fleet, fees could total $1.53 billion annually by 2026, equal to over 5% of expected revenue and threatening profitability [para. 16]. Despite this, Cosco is not pulling out of the U.S. market [para. 17], but is already rerouting ships to Canada or Mexico to limit U.S. port exposure and costs [para. 18][para. 19].

[para. 20] The ripple effects extend worldwide. About 35% of ships at U.S. ports could be subject to new U.S. surcharges, 70% being Chinese-owned/operated and 30% Chinese-built, impacting global players like Maersk, Zim, and Seaspan Corp. Many have started “flag-swapping” ships or adjusting their fleets to limit fees[para. 20][para. 21][para. 22][para. 23][para. 24][para. 25]. Vessel operators, not port authorities, are responsible for payment, with steep penalties for non-compliance[para. 21]. Maersk projects $17.2 million yearly surcharge per vessel for multiple U.S. calls by 2028, doubling current costs[para. 25]. Major alliances are shedding Chinese-built tonnage from U.S. routes and rerouting cargo to Canada or Mexico for onward movement to the U.S. [para. 26][para. 27][para. 28][para. 29][para. 30].

[para. 31] Similarly, China’s system mirrors the U.S. approach but targets American-built/flagged/owned (above 25%) vessels with escalating yearly port fees. While these ships comprise less than 1% of the global fleet, broader ownership definitions capture many international companies[para. 31][para. 32][para. 33]. Already, shareholdings are being adjusted to limit exposure[para. 34], and some lines are rerouting U.S.-flagged ships to Korean ports [para. 35]. The practical enforcement of ownership rules remains murky [para. 36].

[para. 37] U.S. lines like Matson, specializing in China-U.S. trade, now face rising Chinese surcharges—up to 100 million yuan per ship per year by 2028—but vow to maintain service [para. 37]. The leisure sector is also affected, with U.S.-owned luxury cruise ships facing disproportionate financial and symbolic blows[para. 38][para. 39]. On top of these reciprocal fees, China has opened investigations into foreign assistance to U.S. restrictions and blacklisted some entities, suggesting the dispute may deepen soon [para. 40].

[para. 41] The U.S. aims to challenge China’s dominance in shipbuilding. China controlled 74.1% of new vessel deliveries by tonnage in 2024 (48.2 million DWT, worth $43.38 billion) [para. 41]. Although Chinese yards remain highly competitive due to scale and pricing, orders for large vessels are drifting towards South Korea and Japan as exporters seek to hedge new geopolitical risks [para. 42][para. 43][para. 44]. However, orders for smaller ships and regional trading craft—exempt from U.S. tariffs—are surging [para. 45]. Global shipping majors (MSC, Maersk, CMA CGM, etc.) continue buying from China, underscoring its entrenched market position[para. 46].

[para. 47] Looking forward, other countries like India, Saudi Arabia, and Vietnam are investing in domestic shipbuilding, but face significant challenges competing with China’s mature sector [para. 48][para. 49]. The ongoing U.S.-China maritime confrontation risks reshaping shipping and shipbuilding for years to come [para. 50][para. 51].