Economist warns US port fees on Chinese ships could negatively impact freight markets

Bob Costello, the chief economist at the American Trucking Associations (ATA), recently expressed his concerns about the impact of tariffs on freight markets and specifically highlighted the upcoming fees on Chinese ships calling at U.S. ports which could have significant repercussions.

Initially, labor unions lodged a trade complaint against Chinese shipping companies accusing them of unfair labor practices in shipbuilding and oceangoing freight movements during the Biden administration. However, the decision on this matter was deferred by the Biden administration and left for the next administration to address.

Costello firmly opposed the implementation of fees proposed in response to the complaint. These fees, which could range from $1.5 million to $3 million, would be incurred by Chinese ships for every port call made in the U.S. This policy could potentially alter existing freight patterns as he highlighted how these fees would incentivize Chinese ships to offload all cargo at one port rather than making multiple stops, such as in Los Angeles, Long Beach, Oakland, and Seattle.

The consequences of this policy could significantly impact smaller ports on the East Coast and the Gulf of Mexico which are crucial for exporters, as Costello outlined. He cited a possibility that ships may avoid smaller ports like Mobile, Alabama due to the financial burden of these fees. This, in turn, could create challenges for exporters in securing capacity to transport their products.

Costello emphasized the potentially disruptive nature of these policies, stating that they could fundamentally change established freight patterns. Encouraging vigilance in monitoring these developments, Costello affirmed that the ATA is actively engaged in addressing these concerns.

Amidst the broader challenges facing the freight market, Costello identified other significant issues that could further shape the supply and demand dynamics within the trucking industry. Notably, he anticipated increased scrutiny on Mexican B-1 drivers engaged in cabotage, where they unlawfully extend their stay in the U.S. to operate domestic routes after transporting freight from Mexico. Strict enforcement of regulations governing this practice could lead to a reduction in capacity.

In reflection, Costello’s insights underscore the importance of monitoring regulatory changes and their potential implications on the freight industry. As the industry navigates through various challenges, maintaining awareness of emerging trends and policy developments will be crucial for stakeholders to adapt to the evolving landscape effectively.