Oil Traders Shun Chinese Tankers as Trump Prepares Port Fees

Oil traders are avoiding hiring tankers built in China amid concerns that port fees could be coming for Chinese vessels at U.S. ports as part of a plan by President Donald Trump to revitalize the American shipbuilding industry.

Under the plan – not yet finalized – the Office of the US Trade Representative (USTR) proposes a per-port-entry fee of up to $1.5 million on Chinese-built vessels, and up to $1 million per-port-entry fee on any vessel (Chinese built or non-Chinese-built) for operators that have any Chinese-built vessels in their fleet or orderbook.

The proposal is up for consultation and discussion and has already drawn criticism from many companies and business sectors, including U.S. agriculture producers and the Agriculture Transportation Coalition.

Oil traders will also see an impact as chartering non-Chinese vessels – where and when available – could upend global supply chains at a time when trade wars begin.

Now, oil traders and charterers that are booking vessels to call, load, or discharge cargoes at U.S. ports are seeking vessels not built in China, market sources told Bloomberg.

When there are alternatives, the traders now prefer non-Chinese tankers, with South Korean ships being the preferred option. South Korea-built vessels are already being chartered at higher rates than the China-built ships, according to Bloomberg’s anonymous sources.

South Korea has more oil tankers as a proportion of the global tanker fleet, but China accounts for over 70% of the number of vessels under construction, per estimates from Clarksons Research.

The proposal of the port fees could backfire with threatening the survival of the U.S. cargo carriers, executives testified last month in hearings on the plan.

The World Shipping Council (WSC) CEO, Joe Kramek, said at the USTR hearing,

“These proposals will result in increased costs for U.S. exporters and consumers as well as supply chain inefficiencies, while failing to provide China with effective incentives to alter its acts, policies, and practices.’’

“Economic impacts would reverberate throughout the economy, adversely impacting businesses, consumers, and especially farmers who export price-sensitive commodities,” Kramek added.