Trump’s China-built vessel levies are set to hit the world’s major shippers significantly unless they take the expensive moves to diversify from China, Bloomberg reports. The impact won’t only affect Chinese shippers whose fleets are mostly China-built, but European majors like Maersk and the Mediterranean Shipping Company (MSC) are also looking at major cost surges, with roughly one quarter of their current fleets reportedly manufactured in Chinese shipyards.

REMEMBER- The levies were proposed by US President Donald Trump’s administration on China-built and China-flagged vessels late last month, with about USD 1 to USD 3 mn surcharge expected for shipments on certain transatlantic trips.

The fallout, in greenbacks: Chinese state-owned shipping giant Cosco Shipping could suffer fees of USD 3.1 mn every time it drops anchor at a US port, Xeneta’s Chief Analyst Peter Sand told Bloomberg. MSC and Maersk are likely to incur USD 1 mn per US port call, Sand estimates.

But it could be too late to reverse China’s dominance: Upwards of 90% of MSC’s orderbook is made up of requests to Chinese shipbuilders, while 70% of Maersk’s orderbook relies on Chinese firms, Bloomberg adds, citing data from Alphaliner. Furthermore, global shippers have continued ordering Chinese-made vessels, like Megamax-class ships — throughout February and March, an Alphaliner analyst told Bloomberg.

Some are adapting: Certain carriers have rerouted shipments so that China-made vessels follow pathways not bound to US stops, Sand said. Shipping lines might also reduce the number of US ports they stop at to sidestep levies, which could lead to greater congestion and drive up freight rates.

Gemini may be at advantage: Ships under Maersk and Hapag-Lloyd’s Gemini Cooperation that diversify routes have a leg up on MSC’s vessels in this scenario, Sand said.

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