SHIPS for America Act another unexpected headache for shippers: Xeneta

With yet more fees to consider when importing goods into the United States, taking decisive action on supply chain cost and resilience becomes increasingly difficult, it noted. 

In February, the office of the US trade representative (USTR) announced proposals for fees on Chinese carriers and ships entering US ports. This included a fee based on the percentage of a carrier’s order book being built in Chinese yards.

However, when revised proposals were announced on April 18, this element was not included. That relief, however, may be short-lived as the SHIPS for America Act—a completely separate scheme to the USTR port fees—was reintroduced last week and now includes a fee to be levied against carriers (of any nationality) based on the percentage of order book being built in certain Chinese yards, Xeneta observed.

This fee was not included when the Act was first tabled in December last year.

There are huge questions now over how carriers will pass on the cost of the USTR fees, and therefore, shippers should be ready to push back against these surcharges, Xeneta said in a note.

The fact they must now also factor in surcharges relating to the SHIPS for America Act means the potential additional costs are even higher.

While the financial implication of the SHIPS for America Act is lower than the USTR fees, it is yet another cost to be absorbed, Xeneta said.

The complexities in the way different carriers and alliances will be exposed to the fees should be factored by shippers when procuring their next freight contract. Striking a low rate may not look quite so appealing if your chosen carrier is heavily exposed to these additional fees or surcharges, it noted.

Section 415 of the SHIPS for America Act states 1 per cent of goods from China (measured by tonnage) must be transported on US-built ships, starting five years after the data of enactment. This requirement increases 1 per cent each year to 10 per cent. Any shipper failing to comply would be fined an amount that is greater than the difference of the cost for shipping on a US-built ship versus cost for shipping on a flag of convenience ship.

It is unclear how this would work in practice, but, if it does come to pass, it would be a financial as well as administrative headache for the shipper, Xeneta added.

Fibre2Fashion News Desk (DS)