PORT FEES WILL NOT REVIVE US SHIPBUILDING
Global freight rates shot up again last spring and summer, but shipping industry experts say that appears to have been related to companies globally building inventories to insure against future shocks rather than any fresh news out of the Red Sea.
They have since fallen back again, and as Kramek points out, around 80 per cent of global shipping takes place under long-term freight contracts, so dramatic shortlived spikes in container rates have a muted impact on costs.
World shipping and ports also managed to cope with a surge of trade earlier this year to get deliveries done before any Trump tariffs were imposed.
Kramek’s more immediate concern, as he testified at a hearing this week, is the administration’s plan for a fee of up to US$1 million on calls at US ports for Chinese shipping lines and shipping companies that have commissioned vessels from Chinese shipyards and up to US$1.5 million for ships built in China.
For a visit to the US with six port calls, the WSC reckons this could add US$6,350 to the cost of a container, more than twice the combined current spot rates for the Rotterdam-New York route.
However, the time lag involved in constructing vessels and the possibility of shuffling Chinese vessels on to different routes surely mean the likelihood that port fees will make a material difference to the relative returns of shipbuilding in the US and China is minimal.
It will take time and money to revive US shipbuilding, and burdening shipping with extra costs, even if the WSC’s calculations are discounted as coming from a vested interest, will increase upward pressure on US input and consumer prices without contributing much to the cause. It’s a counter-productive quick fix from an administration that reaches for protectionist tools without any thought to their wider consequences.
The auto industry is bracing for a much faster and more catastrophic imposition of barriers, and no one needs accidentally to be added to a “trade & tariffs” Signal messaging group to work that out.
