In a conversation with Seatrade Maritime News, Hookham revealed that US and Canadian representatives expressed concern and frustration during the GSF's recent council meeting. The expected outcome of the levy is that carriers will pass the charges on to their customers, creating a ripple effect. "Initially, it will hit US shippers and importers, but ultimately, the costs will be passed on to consumers, either through cash flow pressures on businesses or price inflation," Hookham warned. "It’s a situation that won’t end well for anyone."
According to fleet data from consultancy MDS Transmodal, 26% of all vessels calling at US ports in February were built in China. This equates to 301 ships, representing 20.2% of the total capacity on these routes.
One potential workaround, Hookham suggested, would be for major carriers to establish US subsidiaries that operate feeder services from ports in Canada, Mexico, or even the Caribbean, including Kingston, Jamaica. These services could connect with mainline vessels and transship goods to the US. However, this strategy may falter if the Trump administration enacts 25% tariffs on goods from these countries, Hookham added.
The financial impact of such charges could be significant. Analyst Darron Wadey from Dynaliners modeled the potential costs for just one port, New York. In 2022, over 2,200 container ships called at the port. If 30% of those vessels were Chinese-built, applying a generic tariff of $750,000 per visit would result in an additional $500 million in annual costs to the US supply chain for that port alone.
Wadey also pointed out that Chinese carriers might be forced to cancel US port calls to avoid the charges. While Canada and Mexico could be alternatives, the viability of these routes is questionable. Cutting back on US services could harm a carrier’s standing within shipping alliances and affect its commercial offerings.
The USTR’s rationale for imposing these charges is to promote US shipbuilding. However, Wadey remains doubtful that this will lead to a resurgence of the industry in the US. He highlighted that countries like Japan and South Korea lack the yard capacity to handle the potential shift in orders, and India, while emerging as a potential player, has not yet demonstrated the ability to build large container ships consistently.
Wadey emphasized that shipbuilding is unlikely to return to the US in the near future. "We are a long way from having shipyards that can quickly spring up and start rolling out fleets of 'Liberty Ships'," he said. "Even if it were possible, the economics and experience of US yards make it hard to justify such a significant shift."
In a rough calculation, Wadey pointed out that the largest US boxships, two 3,600 TEU vessels delivered in 2010, cost around $210 million each—about the same price per ship as CMA CGM’s latest order for a series of 18,000 TEU units.