How small do Chinese-built tankers have to be to avoid port fees when discharging in US ports?
Yesterday pointed out that China-built tankers under 80,000 DWT would be exempt from USTR fees, assuming they were not Chinese-owned or operated. While there is no ambiguity that this exemption applies to vessels under 55,000 DWT, we should have mentioned that some ambiguity remains for vessels between 55,000 and 80,000 DWT.
Efforts by the USTR to clarify this last Friday did not help. In a document that modified Section 301, the USTR stated that ‘bulk vessels’ included ‘liquid bulk vessels’, but then went on to list some examples of bulk cargoes which notably did not include crude oil of product tankers. The closest it got to an oil tanker was an OBO.
Was the list of examples of liquid bulk vessels not exhaustive, or are tankers not liquid bulk carriers in the eyes of the USTR, in which case the exemption only applies to tankers under 55,000dwt?
Before this update, we might have thought 55,000 dwt was the cut off point for Chinese built tanker. This seemed to be implied by an internal US Customs and Border Protection (CBP) guidance document from Oct 1st that stated that ‘80,0000 DWT bulk capacity applies only to bulk vessels; 55,000 DWT capacity applies to all other vessels.” In the ‘code of US Federal Regulations’ – a web page that provides a sort of official glossary of federal regulatory terms - that ‘bulk cargo’ is defined as ‘homogeneous cargo that is stowed loose in the hold and is not enclosed in any container such as a box, bale, bag, cask, or the like. Specifically, bulk cargo is composed of either: Free flowing articles such as oil, grain, coal, ore, and the like, which can be pumped or run through a chute or handled by dumping…’. So basically, the sort of cargo carried by an oil tanker.
Moving away from the (somewhat limited) documentation that accompanies the rules, the actual experience of calling at a US port from today is perhaps more telling. When vessels file for entry into the US with the CBP using the Vessel Entrance and Clearance System (Form 1300), tankers are declaring that they are ‘bulk vessels’. So 80,000dwt would be the cut off.
In sum, the efforts by USTR on Friday to provide ‘greater certainty’ may have heightened the ambiguity, but we still believe Chines built vessels will be exempt from port fees when discharging in US ports from today. We would love to hear from anyone who sees it differently.
Crib sheet for port fees in China and US
We have compiled the following table below as a quick guide to the US and Chinese port fees. Please note that this is our interpretation of the rules and could be subject to change as more clarity emerges.
1USTR fee exemptions for Chinese-built vessels:
- At least 75% US owned
- Vessels arriving empty or ballast
- Laden voyages under 2000 nautical miles
- Voyages on vessels equal or less than 55,000 DWT* BUT NOT IF CHINESE OWNED/OPERATED/LEASED
*Possibility this may be 80,000 DWT due to the ambiguity in USTR wording (bulk vs tankers), needs to be tested, see research note
2Chinese port fee exemptions:
- Exemption for vessels built in China
- If a company has a vessel on order in a Chinese shipyard, they can apply a fees exemption
1,2Applicable to both US and Chinese fees:
- Fees will face incremental increases from 17 April 2026
- First port call in a voyage faces the fees, no fees after multiple port calls
- Maximum of five voyages per year will face fees
So where do I trade my ship?
Global triangular trading has become significantly more complicated in recent days. If you are Chinese owned/controlled, or anyone with a Chinese built and larger than 55,000 dwt (or possibly 80,000 dwt as we argue above), you want to steer clear of US discharge. If you are non-Chinese built and either owned or operated by a US entity (as per China’s rather vague definitions) you will probably want to steer clear of China discharge. Will US charterers miraculously extricate themselves from time charter contracts with non-Chinese built tankers owned by third parties to trade to China. Anyone for a Taco?