Shipping companies that bring cargo into The Bahamas and the Caribbean are facing a multimillion-dollar threat, as the United States Trade Representative (USTR) proposes trade action that will impose a port fee of $1 million per port call on any Chinese-built vessel calling at US ports, according to a letter sent to Tropical Shipping customers that was seen by The Nassau Guardian.
A Seatrade Maritime News report on the impending action by the US explains that “USTR’s findings, in a study initiated in Spring 2024, support the idea that China has sought to dominate maritime and logistics businesses, and is therefore ‘actionable’ under Section 301 of trade legislation in Section 19 of the US Code of Federal Regulations.”
Tropical Shipping’s letter to customers warns that with most of its vessels that ship throughout the Caribbean having been built in China, ocean freight costs could balloon if this change is made.
“Dear valued Tropical customer. We want to bring to your attention a proposed trade action from the United States Trade Representative (USTR), Section 301, set for adoption by the United States government under executive order in the next month,” the letter explains.
“If adopted, this tariff would impose a significant port fee of USD$1 million per port call on any Chinese-built vessel calling at US ports. This tariff would have a far-reaching financial impact on exporters to the Caribbean.
“As you may be aware, most of the vessels serving the region were built in China. As a result of this tariff fee, ocean freight rates from Florida will increase by thousands of dollars per TEU (twenty-foot equivalent unit).
“At Tropical, we have been aggressive in our advocacy with the USTR’s proposal, and continue to raise our voice on behalf of our customers and businesses like ours.”
For larger shippers, some of which are US-based companies, the fallout could be to the tune of hundreds of millions in added fees per year.
A broker in the Seatrade Maritime News article discussing the proposed fee structure asserted: “’the smaller to medium-sized operators trading to/from America to destinations like the Caribbean, Latin America, South America, Europe and Africa (all non-China) with multiple port calls per week would not survive very long. Why should a 500 TEU container ship pay the same as a 25,000 TEU container ship? Even at $1,000/net ton, a 500-container vessel would still pay close to $1 million.”
Tropical Shipping said its CEO Tim Martin wrote to the USTR on the matter. Martin said in his letter to the US trade body: “Based on Tropical Shipping’s years of experience and deep understanding of relevant market dynamics, the proposed action will adversely impact American shipping companies and American exporters; reduce competition for American-owned ocean cargo transportation, and shift US port business to other parts of the world; adversely impact American workers in US port operations, warehousing, trucking, and all other aspects of logistics; raise the cost of goods exported from the United States to the Caribbean, which would cause a shift in the USD $92.3 billion export business away from the United States to other countries; increase shipping costs for US exporters; and decrease the competitiveness of American shipping companies and producers of products in the United States.”
The Caribbean is keeping a watchful eye on policy changes in the US that could affect the cost of living in The Bahamas. Minister of Economic Affairs Michael Halkitis said on Wednesday that geopolitical uncertainty means the country must be in a position to weather any possible fallout.
“We have come a good way,” Halkitis said in the Senate during debate on the mid-year budget.
“I think we are on a positive track, but this is no time to rest on our laurels. We have to continue to work, to maintain discipline… because you have natural disasters, you have health crises, and then we always talk about geopolitical uncertainty.”
