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Companies warn that Trump's plan to build ships could disrupt the ocean cargo industry

Executives warned that President Donald Trump's plan for revitalizing the U.S. maritime industry could impose massive costs on ocean transportation operators and create a new supply chain chaos in the rest of the world.

According to a draft of an executive order, Trump's administration wants to fund a comeback in American shipbuilding by charging hefty fees to ports for Chinese-made ships and those from fleets that include Chinese-made ships.

According to the World Shipping Council, which represents the liner ship industry, the levies would affect virtually all ships calling at U.S. port, impose up to $30 billion in annual costs to American consumers, and double the shipping cost for U.S. exported goods.

WSC CEO Joe Kramek stated that policymakers should reconsider damaging proposals and find alternative solutions to support American industry.

The gloomy outlook of industry executives illustrates how Trump's pro U.S. policies sometimes have unintended consequences which are contrary to his stated goals.

Jeremy Nixon (CEO of Ocean Network Express, owner of container ships) said that the plan could have a negative impact on ocean carriers and customers. He made this statement at S&P Global’s TPM Container Shipping Conference in Long Beach, California.

Ship owners may make fewer port calls in the U.S. to reduce fees. Executives said that a flood of additional cargo could cause congestion in these ports, making it difficult to ship exports and imports.

Trump's plan could also force companies to redeploy global ship fleets, so that vessels not built in China can be re-focused on the United States - which could cost money and time.

MSC's CEO, Soren Tofft, said that the world's biggest container carrier could avoid smaller ports, such as the Port of Oakland in California, which is an important gateway for the export of fresh beef, almonds, and dairy products.

Executives warned that such moves could flood the nation's largest ports and isolate the smaller ones. This would risk a repetition of the early pandemic backlogs which hampered global trade.

Beth Rooney said that it would be difficult for her and other partners to handle the volume increase.

Punishing past mistakes that are not known

MSC's Toft, speaking of fees associated with China-built vessels, said: "If a new regulation is introduced, we should at least be forward-looking, and not penalize ourselves for past mistakes that we didn't know were mistakes."

CMA CGM is also expanding its fleet of American President Lines, which are under the U.S. flag, and looking into having ships built here. The French carrier has a vessel sharing alliance with China's COSCO Shipping, and Walmart is one of their top customers.

In an interview published Friday, CEO Rodolphe Saade stated that "we are in discussions with several shipyards in order to determine how long and at what costs it would take".

Maersk, a Danish shipping company, said that it is premature to comment about new tariffs and fees because they are constantly changing.

(source: Reuters)