China and the US have agreed to postpone new port fees on each other’s vessels for one year after US President Donald Trump and Chinese President Xi Jinping met, but a shipping analyst thinks carriers will maintain their current fleet deployments.
Lars Jensen, president of consultant Vespucci Maritime, said the agreement at such a late time may lead carriers to stay with current fleet deployments that were intended to avoid assessment of the fees.
“It is unknown when the vessel fees will be suspended,” Jensen said. “Given this is a time-limited suspension it would likely see shipping lines maintain a deployment stance whereby they to some degree still abide by the restrictions and certainly keep a plan for vessel-reshuffling handy.”
The US Trade Representative (USTR) fees on ships owned, operated, or built in China went into effect on 14 October. China followed soon after.
Jensen said the postponement does point to a certain level of de-escalation between the two superpowers.
“But there is not necessarily a long-term certainty of the trade environment given that some of these agreements are one-year only,” Jensen said.
Market intelligence group Linerlytica said the back-and-forth on port fees between the two countries has not had much of an impact.
“Port traffic in the US and China has not been materially impacted so far, with primarily COSCO’s ships in the US and Matson’s ships in China being the primary targets and only a small number of ship diversions in China over the past two weeks,” Linerlytica said.
Linerlytica also said the agreement could stunt carriers’ efforts to boost container rates.
“The removal of the twin disruptions of punitive tariffs against Chinese container imports and uncertainty over the port tariffs could work against carriers’ efforts to raise rates as the market enters the traditional slack season in November with carriers still slow in removing surplus capacity,” Linerlytica said.
Robert Khachatryan, founder and CEO of Freight Right Logistics, said he thinks the agreement is a good sign, showing some progress, but he does not think it will hold up.
“While this is a step in the right direction, the fact that this happened is a problem in terms of unpredictability,” Khachatryan said. “A massive amount of work has been done by lawmakers and industry just to implement the fees and to bolster American shipbuilding. Not to mention all the changes the carriers have implemented to redeploy and reflag vessels. At least for now all that effort seems to have been unnecessary.”
Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), which are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers.
They also transport liquid chemicals in isotanks.
Source: ICIS by Adam Yanelli,
