Cargo Volume Softness May Mute Effects of Chinese Vessel Fee, Expert Says
RANCHO MIRAGE, Calif. -- The downturn in cargo volumes may be muting any market impact of U.S. efforts to collect fees on Chinese-built and -operated ocean vessels, a panelist recently said at the Western Cargo Conference.
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"You're at a lull of cargo in the market, so volumes are down right now," said Rich Roche, president of Mohawk Global Logistics, during a panel on ocean shipping trends. Vessel carriers also didn't do any forward filing of surcharges in September and ahead of the Oct. 14 start date, which may have been due to hedging as other trade measures, such as the tariffs, have been pushed or delayed, he said. Carriers also seem to be adopting a wait-and-see approach, he continued.
Meanwhile, the recent announcement by China that it will retaliate with reciprocal fees "was very nebulous. It did not lock them down to any specifics and how they were going to implement it," Roche said. "I think it's a shot across the bow."
Carriers could redirect some of their fleets to ports in Canada and Mexico to avoid the U.S. port docking fees, but doing so would bring extra costs to the carrier, according to Andrew Hwang, director of West Coast and international for CargoSprint.
"I think everyone's anticipating the market to be softer, but maybe this is also an opportunity for them to maybe not call on the U.S. with some of the Chinese-built vessels as a wait-and-see [approach]," Hwang said.
Another challenge to potentially diverting cargo to ports in Canada or Mexico is whether the ports, particularly in Mexico, would be able to absorb the additional volumes, panelists said.
Vessel operators will self-declare whether they are eligible for the fees, and CBP will conduct a verification process based on the information it has, according to Roche. The remittance will be through pay.gov, which will then pass that information into ACE, he said. ACE will pass the same data into the vessel entrance clearance system, and that's where CBP will verify if the vessel must pay the fees or if it's exempt.