China's dominance in shipbuilding remains steadfast, yet its market share experiences a decline due to the potential threat of US port fees.
In a move aimed at reshaping the global shipbuilding and shipping landscape, the United States has implemented a new fee regime for oil and LNG tankers calling at its ports. This tariff-like charge primarily targets Chinese-built vessels, potentially impacting their competitiveness in the lucrative U.S. market.
The fee, which does not appear to be a general port usage charge, will escalate over several years, starting with a grace period from April 17, 2025 to October 13, 2025, during which no fee will be levied per net ton. From October 14, 2025, the fee will rise to $18 per net ton, increasing incrementally to $33 per net ton by 2028.
However, certain vessels are exempt from this fee, including U.S.-flagged or U.S.-owned vessels in several security programs, vessels arriving empty, smaller vessels below certain size thresholds, and specialized export vessels like chemical bulk liquid carriers.
The new fee could disproportionately affect Chinese-built tankers given the U.S.'s significant role as a leading exporter of crude oil and LNG. This targeted tariff-type fee is likely designed to influence the competitiveness of foreign shipbuilding and shipping operations involving Chinese-built vessels.
Despite the decline in market share, China's competitive advantages in the global shipbuilding industry are still recognised by analysts. In the first half of 2023, China secured 68.3% of new vessel orders in the global market, a decrease from the previous year's 74.7%. The decrease is largely attributed to a decline in orders for oil and LNG tankers.
The U.S., on the other hand, continued its dominance in the global oil and LNG export market in 2024, with record high crude oil and LNG exports. The country remained the world's largest LNG exporter, averaging 11.9 billion cubic feet per day, and exceeded an annual average of 4.1 million barrels per day in crude oil exports.
Shipowners are reportedly cautious about choosing shipyards for their tanker orders due to the U.S.'s prominent role in the oil and LNG export market. The U.S.'s high crude oil and LNG exports in 2024 may have contributed to the decline in orders for oil and LNG tankers in China, potentially impacting China's competitive edge in the global shipbuilding industry.
Wu Jialu, chief analyst at Citic Futures, commented on the cautiousness of shipowners, stating, "The U.S.'s dominance in the global oil and LNG export market continues to influence shipowners' choices of shipyards for tanker orders."
As the U.S. and China navigate their respective roles in the global oil and LNG market, the new fee regime for Chinese-built tankers at U.S. ports is set to shape the competitive landscape in the years to come.
The new fee regime for Chinese-built oil and LNG tankers at U.S. ports could impact the competitive edge of Chinese shipbuilding industry in the global market, as it may discourage shipowners from choosing Chinese shipyards for their tanker orders. The escalating tariff-like charge on foreign vessels is likely designed to influence the competitiveness of foreign shipbuilding and shipping operations, potentially altering the global industry landscape.
