Latest News

The proposed US port fee on China-built vessels chokes coal and agriculture exports

Donald Trump's plan for a revival of U.S. shipbuilding by charging massive fees to China-linked ships visiting American ports has caused U.S. inventories to soar and is fueling uncertainty in an already troubled agricultural market as exporters struggle to locate ships to ship goods overseas.

Trump is working on an executive order which would use funding from the U.S. trade representative proposal to levy up to $1.5million in fines on ships from China or vessels that are part of fleets with ships from China.

These potential port fees have restricted the availability of ships required to move agricultural, energy, mining and construction goods to international customers, according to major U.S. transport providers and exporters in interviews, letters to U.S. government officials and comments made ahead of USTR's hearings next Monday.

Xcoal Energy & Resources' CEO Ernie Thrasher wrote to U.S. Department of Commerce secretary Howard Lutnick on March 12, stating that vessel owners had already refused to make offers for future U.S. Coal shipments because of the proposed USTR fee.

Thrasher stated that enacting and implementing these fees could stop exports of U.S. Coal within 60 days. This would put $130 billion in shipments at risk. Thrasher said that the fee structure would add up to 35 percent to the cost of U.S. Coal delivered, rendering it uncompetitive in the global market.

Thrasher said that the loss of jobs, both direct and indirect, would be devastating. He confirmed that he sent the letter but said he had not yet received a reply.

The letter from Pennsylvania coal marketer Xcoal, and the comments of agriculture representatives showing tangible effects from the proposed fee have not been previously reported.

Chris Hamilton, CEO, West Virginia Coal Association said that coal mines are preparing to layoff workers as their unsold inventory of coal continues to grow.

He didn't provide any specifics.

In comments submitted to USTR on March 23, the American Petroleum Institute (the powerful lobbying group for the oil industry) said that the proposed fees may also make it more difficult for the U.S.A. to export energy products such as oil, liquefied gas and refined fuels. 10.

Containership operators with a high profile and their retail and manufacture customers have spoken out about the possible harm that the fees could cause. Experts warn the bulk and container ships that transport basic goods such as food and fuel may be more vulnerable because they can't spread the costs among dozens of clients like container carriers.

The American Farm Bureau Federation stated that U.S. Farmers, who have already been hit by retaliatory duties from China, Mexico, and Canada, are also caught in the crossfire as the Chinese ship fees fight continues.

Three U.S. grain traders said that the inability to secure ocean cargo transportation beyond May has limited their ability to export bulk U.S. agricultural commodities like corn, soyabeans and wheat, because they are uncertain of what the final costs would be.

According to U.S. Census Bureau trade data, the United States will export more than $64 billion in bulk feed, vegetable oil, and bulk crops in 2024. Next week, the North American Export Grain Association (NAEGA), which represents exporters of crop commodities, will be present at the hearing.

The Farm Bureau reported that bulk agricultural exporters may face additional transportation costs of $372 to $930 millions per year. This would be a significant loss of margin in markets around the world where competition is often determined by pennies per bushel.

Alexa Combelic is the executive director for government affairs at the American Soybean Association. She said that U.S. agricultural producers have an advantage over their global competitors by using a cost-effective, efficient, and domestic transportation system to move products to market.

"When you add cost to a system that is efficient, it no longer works efficiently." Combelic stated that the company no longer had a competitive advantage. Reporting by Lisa Baertlein, Karl Plume, Tom Polansek, Timothy Gardner, and Richard Chang in Washington.

(source: Reuters)