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The U.S. Trade Representative’s proposal targeting Chinese maritime interests

The U.S. Trade Representative’s (USTR) proposal targeting Chinese maritime interests, particularly Chinese-built ships, port fees, and related sanctions, represents a significant escalation in the ongoing trade tensions between the U.S. and China. The proposal, if implemented, could have far-reaching consequences for both the global shipping industry and U.S. trade dynamics. However, the dominant position of Chinese shipyards in the global market, combined with the ongoing international demand for Chinese-built vessels, suggests that such measures may not be as effective as intended. The Chinese shipbuilding industry holds a dominant position in the global market, accounting for a substantial share of the order book in key shipping segments. According to our data, Chinese yards make up around 70% of the orderbook for bulk carriers and tankers over 10,000 DWT, 75% of the container orderbook over 5,000 dwt and 37% of the gas carrier orderbook over 3,000 DWT. Additionally, Chinese shipyards control a large portion of the gas carrier orderbook, further consolidating their dominance. In 2026, it is projected that Chinese shipyards will deliver 65% of new vessels across these categories. This robust market share is driven by a combination of factors, including competitive pricing, efficient production processes, and technological advancements in shipbuilding.

Despite the USTR's proposal to impose port fees on Chinese vessels, the reality is that most shipowners already own Chinese-built vessels or are in the process of constructing new ones in Chinese yards. Chinese-built vessels currently make up 43% of the bulk carriers over 10,000 dwt, 23% of tankers over 10,000 dwt, 35% of container carriers over 5,000 dwt, and 15% of gas carriers over 3,000 dwt in the active fleet. If we focus on vessels aged 0-10 years, Chinese-built vessels represent 54%, 33%, 59%, and 21% in these segments, respectively. The total fleet of vessels under 10 years old has a 45% share of Chinese-built ships. This market dominance is unlikely to be significantly disrupted by the imposition of port fees or other regulatory pressures. The Chinese shipyards have made significant investments in expanding their production capacity, ensuring that they are well-positioned to meet the increasing demand for fleet renewal driven by environmental regulations and the need for more fuel-efficient ships. Furthermore, some Japanese and South Korean shipyards have even partnered with Chinese yards, sharing designs and technical know-how to improve construction processes and maintain competitiveness in the market. If the USTR’s proposal moves forward, it is likely to create significant disruptions in the global shipping market, particularly in the tanker and container vessel segments, by leading to higher freight rates, which could fuel inflation and raise logistical costs for U.S. businesses. Moreover, many shipowners may avoid U.S. ports altogether to bypass the added costs, potentially leading to an imbalance in vessel supply and demand. This could strain global shipping capacity and result in higher costs for U.S. trade, undermining the U.S. government’s goals of boosting domestic production and strengthening exports.

This disruption could have long-term implications for global supply chains. The Chinese shipbuilding industry is a critical component of the global logistics infrastructure, and any disruption to the flow of Chinese-built vessels could have cascading effects on supply chains, leading to less efficient global trade. This could ultimately hurt U.S. businesses, which rely on affordable and efficient shipping to remain competitive in the global marketplace.

S&P activity:

Dry:

On the dry S&P activity, vintage Panamax vessels remain in demand, with five transactions involving ships aged 16 years or more. Greek buyers acquired the Conventional M/E Kamsarmax “Dream Star” - 82K/2014 Tadotsu for USD 21 mills. On the Panamax sector, the “Maria D” - 79K/2009 Sanoyas was sold for USD 11.5 mills, while the “Graecia Universalis” - 74K/2005 Namura was sold for USD 8.2 mills to Middle Eastern buyers. Moreover, the Panamax “Antigoni” - 75K/2000 Hitachi Zosen and the “Aegea”- 75K/2000 Hitachi Zosen were sold for low USD 5 mills each. On the Ultramax sector, the “Western Fuji” - 64K/2020 Xiangyu changed hands for USD 28 mills, and the “Nord Magellan” - 64K/2020 Iwagi was sold for USD 29.8 mills to Chinese buyers. Finally, on the Handysize sector, the “Seastar Explorer” - 35K/2012 Shanhaiguan found new owners for high USD 9 mills, while the one year older “Vega Dablam”- 35K/2011 Zhejiang Yueqing changed hands for USD 9.3 mills.

Tanker:

On the tanker S&P activity, the Suezmax “Onisilos” - 159K/2004 HHI and the “Zeno I” - 152K/2003 HHI were sold for USD 45 mills enbloc. Chinese buyers acquired the LR2 “Raffles Harmony” - 105K/2013 HHI for USD 41.9 mills. Last but not least, the MR2 “NH Siri”- 50K/2010 HMD and the “NH Erle” - 50K/2010 HMD were sold for USD 22.5 mills each with surveys due.

Xclusiv Shipbrokers Inc.