Exempt or exposed: The bigger they are, the more they pay

How far does 2,000 nautical miles get you? Far enough to exclude most regional trades from the US port fee. Countries such as Canada, Mexico, Jamaica, and others fall comfortably within this range when exporting to the US.

Market & Trading Calls

• Most US dry bulk imports will be exempt from the port fee under the 17 April revision, particularly smaller vessels on shorter routes.
• Under Annex II, the fee will only be assessed for imports upon the intersection of two criteria: vessel size and voyage distance relative to the US port.
• No exemptions apply to trades (import and export) affected under Annex I, so any vessels operated and/or owned by a Chinese-linked entity are liable.

The blow now falls by degrees and only a fraction of US dry bulk imports is liable to the US port fee after the 17 April revision. This makes the impact more quantifiable.

The United States Trade Representative (USTR)’s initial proposal, which was agnostic to voyage distance, vessel size, or operating profile, would have triggered fees in both trade directions.

Most voyages will be exempt

Most dry bulk imports, especially on geared vessel segments on shorter routes, will be categorised under one or more exemptions under Annex II of the USTR’s Section 301. A Chinese-built dry bulk vessel will not be subject to a fee if it:

• Is equal to or below 80k dwt
• Arrives at a US port from a foreign location less than 2,000 nautical miles away
• Arrives in ballast
• Is enrolled in Maritime Administration (MARAD) programmes or US-flagged
• Sails on routes between the US, the Caribbean, the Great Lakes or US territories

How far does 2,000 nautical miles get you?

It is far enough to exclude most regional trades. A dry bulk vessel must exceed 80k dwt and sail more than 2,000 nautical miles from a foreign port to be liable. So, if only one condition is met, it is not subject to a fee. Countries such as Canada, Mexico, Jamaica, and others described below fall comfortably within this range when exporting to the US. The list of countries is not exhaustive.

In terms of ton-miles, Canadian dry bulk exports will be the largest beneficiary of the short sea trade

Source: Kpler Insight

2024 US dry bulk imports by voyage:

At 1.5%, only a small portion and specifically targeted dry bulk import, will be impacted.

Source: Kpler Insight

The larger the import volume from the farther destination, the larger the fee

Shipments liable for port fees will be because they originate from a farther destination and are carried on vessels sized 80k+ dwt. Those that will remain exposed are generally long-haul shipments from Asia-Pacific or South America carried on larger bulkers.

The primary target: Chinese-built tonnage

Quantifying the impact based on shipbuilder origin is more straightforward. Nearly half of the US dry bulk trade volume in 2024 (import and export) was carried on Chinese-built vessels, indicating China’s 46% market share of the global dry bulk fleet.

By contrast, quantifying the same via Chinese-affiliated operators (Annex I) is more complex. The structures of vessel ownership, operators, and managers are sometimes opaque and fragmented.

The blow falls by degrees

Although softened from its original form, the US port fee is distortive by nature. It is meant to nudge US importers from Chinese shipbuilders.

However, the US cannot yet step competitively into the world of commercial shipbuilding. Shifting from major shipbuilders is more aspirational than practical for now.

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