Letter from the Editor
Breakbulk & Project Cargo
These penalties would be on top of the previously announced USTR port fees.
Potential bombshells
By Carly Fields
Tariff battles and port call penalty fees could be the least of the breakbulk and project cargo sector’ s worries if two more impactful pieces of proposed legislation work their way through the legislative process.
Amid the scramble to make sense of now partially-relaxed US import tariffs and the US Trade Representative’ s( USTR’ s) planned fees on Chinese ships calling US ports, industry stakeholders have overlooked a key detail of the recently reintroduced Shipbuilding and Harbor Infrastructure for Prosperity and Security( SHIPS) for America Act, according to an engineering, procurement and construction( EPC) source who asked not to be identified.
The SHIPS Act, reintroduced to Congress April 30 by Sens. Mark Kelly( D-Ariz.), Todd Young( R-Ind.), John Garamendi( D-Calif.) and Trent Kelly( R-Miss.), aims to expand the US-flag international fleet by 250 ships in 10 years, enhance US competitiveness and make investments in the maritime workforce.
But according to the EPC source, the proposed legislation threatens to restore a provision in the USTR port fees that would punish operators with vessels on order at Chinese shipyards, a provision from which multipurpose vessels( MPVs) were thought to be exempt.
The SHIPS Act would create a penalty tax for ships operated by Chinese carriers or built in China, as well as non-Chinese operators that order ships from Chinese yards. The tax is set at $ 5 per ton for ships owned or operated by a“ foreign country of concern,” vessels registered there, or vessels registered there three years prior to“ the date of the determination of the application.” An owner or operator not based in China would be subject to the tax if 50 % or more of its vessel orders were placed with a shipyard of concern at the time the law goes into effect, or if 50 % of its newbuild deliveries in the 24 months after enactment come from a designated yard.
For a non-Chinese owner or operator with between 25 % and 49 % of its ships on order at or delivered by a shipyard of concern within 24 months of the effective date, the penalty would be $ 3.50 per ton. In addition, any owner or operator that had 50 % or more of its ships constructed or undergoing repairs at a shipyard of concern“ at any time” during the three years preceding the imposition of the law would be subject to a $ 1.25-per-ton fee.
Given that these penalties would be on top of the previously announced USTR port fees, they would“ have huge ramifications,” the EPC source said, noting that it is generally much more difficult to reverse a law than an executive order on tariffs or a USTR measure.“ After it has passed into law, the chance of it being repealed is pretty remote. I can’ t remember the last time an act was repealed in the US.”
The 2025 reintroduction of the SHIPS Act has been referred to 12 committees, including the Committee on Armed Services, the Committees on Transportation and Infrastructure, and the Committee on Energy and Commerce. The previous version of the proposed act did not progress beyond the committee review stage.
Also flying under the radar as it maneuvers through the legislative process is the American Cargo for American Ships Act. If enacted, that bill would require all work contracted by the Department of Transportation to be carried out by US-flag vessels, up from a current requirement of 50 %, effectively shutting out non-US-flag MPVs from all government-funded energy and defense projects.
email: carly. fields @ spglobal. com
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