Cover Story
Trump’ s plan to restore US shipbuilding would upend supply chains
By Michael Angell and Greg Knowler
The sheer ambition of US President Donald Trump’ s plan to restore domestic shipbuilding to its 1940s heyday is, to borrow a phrase from the president,“ huge.”
Whether policy changes enacted by the Trump administration will be enough to make his vision of“ bringing this industry home to America” a reality after the US intentionally ceded those capabilities during post-World War II reconstruction is an open question. But according to industry stakeholders, the short-term implications are clear.
Container lines, cargo owners, port authorities, railroads and industry analysts alike say a proposed set of port fees targeting vessels built in China of up to $ 1.5 million per call would force carriers to cut calls to smaller US ports— or exit certain US trades— and drastically increase the cost of moving goods in and out of the country.
“ A lot of the marginal ports— the peripheral ports— will be at risk.”
“ In California today, we typically call at Long Beach then proceed to Oakland, but we can’ t proceed to Oakland if that costs us another $ 1 million,” Soren Toft, CEO of Mediterranean Shipping Co.( MSC) and chair of the World Shipping Council( WSC) board, said during the Journal of Commerce’ s TPM25 conference in early March.“ A lot of the marginal ports— the peripheral ports— will be at risk, and we will have to adapt our services.”
At least one carrier said the fees, if enacted as proposed, would push it out of the US market entirely.
“ ACL would be forced to terminate its US service, close its American offices, lay off its American staff and redeploy its ships to non-US trades, because the proposed action would render us totally uncompetitive versus the other carriers in the US trades,” Andrew Abbott, president and CEO of Atlantic Container Line( ACL), a subsidiary of Italy’ s Grimaldi Group based in New Jersey, wrote in a public comment to the USTR.“ US manufacturers would lose their only USA-headquartered North Atlantic carrier.”
The resulting consolidation of calls would reduce service and raise costs for shippers, particularly exporters; pose an existential threat to smaller ports, thereby threatening hundreds of longshore jobs; and create bottlenecks at major load-centers and in inland rail networks.
In addition, carriers would divert some US-bound cargo to gateways in Mexico and Canada, resulting in“ increased truck and rail traffic,”“ less work for American longshoremen,”“ less capital available for infrastructure” and“ higher costs for consumers,” Cary Davis, president and CEO of the American Association of Port Authorities( AAPA), said in a written comment.“ If American ports are to compete well in the North American market and around the globe, we cannot make it more expensive to do business at American ports.”
Executives from US Class I railroads CSX Transportation and Union Pacific, speaking at the J. P. Morgan Industrials Conference on March 11, said intermodal rail networks could accommodate carriers consolidating US calls at larger load-center ports, but it would not come without“ significant” disruption.
“ This potential port fee that could come into play would have a significant disruptive impact,” CSX CFO Sean Pelkey told the event.“ If there’ s more consolidation at ports that we serve and there’ s more volume that wants to come into those ports, that’ s a good thing. We can be a part of the solution for that. But it could also result in more congestion as well, which could have significant disruptive effects.”
On the hook
The proposals, which stem from an investigation conducted by the USTR under President Joe Biden, include a $ 1 million port entrance fee for each US port call by a ship operated by a Chinese carrier. For all other carriers, the USTR proposed a sliding fee of up to $ 1.5 million per Chinese- built vessel based on the percentage of the carrier’ s fleet built in China. An additional fee of $ 1 million per vessel could also be assessed based on the amount of newbuild tonnage a carrier has on order at Chinese shipyards. Stakeholders across the board warned that carriers would pass those additional costs on to cargo owners in the form of additional surcharges, and shippers would likely pass them on to consumers via higher pricing.
“ The ships already built of Chinese origin will not disappear from the world fleet if the proposed port fees are introduced,” Lars Robert Pedersen, deputy secretary general and director of regulatory affairs at shipowner association BIMCO, wrote in a public comment on the USTR docket.“ Rather, the shipping industry will seek to avoid paying [ the ] fees.”
US anti-trust law prohibits ocean carriers from conferencing when setting rates and surcharges. Instead, container lines would publish fees individually and the market would eventually settle into a standard range, much like during the rollout of international low-sulfur fuel regulations in 2020.
“ If this moves forward in any way, shape or form, especially as it’ s currently proposed, it will be a cost that will not just be absorbed by the owner-operator,” Ashley Craig, chair of the international trade and logistics group at law firm Venable, told the TPM25 audience.“ It will be passed down. Believe me, ultimately, a consumer will be paying it.”
Maritime consultant Drewry estimates 80 % of container ships calling the US would be subject to the fees, but the cost impact— and, in theory, carrier surcharges— would vary by trade lane.
According to Toft, a typical Asia – US East Coast service with four US calls carries about 10,000 TEUs per voyage. If those ships incur $ 4 million in USTR port fees, that equates to an additional $ 400 per TEU in operating costs. www. joc. com April 7, 2025 | Journal of Commerce 11