1 week Ago By hellenicshippingnews...
According to Gibson, “critically, the current plan differentiates between Chinese built and Chinese owned or operated vessels. For Chinese owned or operated tankers, the tariff will be initially set at $50 per net tonne (NT) per port call or rotation of US port calls, increasing over the next three years. Yet, there is still uncertainty as how “vessel owner” or “vessel operator” will be defined.
According to the USTR, these terms mean the entity which is identified as the owner or operator of the vessel and whose name would appear on the Vessel Entrance or Clearance Statement (US Customs and Border Protection Form 1300) or its electronic equivalent. However, there appears to be little consistency in how these forms are completed, creating further uncertainty. Further, it is uncertain how far up the ownership chain the USTR will go to “trace” Chinese ultimate ownership, particularly in cases where Chinese lease finance is present.
According to law firm Watson Farley & Williams, under Chinese lease financing the lessee is considered the beneficial owner of the vessel, although other opinions have put the lessor as the ultimate owner. If this proves to be the case, widescale refinancing may be required. There are no exemptions for Chinese owned/operated vessels, versus those built in China, but not owned/operated by Chinese companies.
Given the fees for Chinese owned/operated vessels are prohibitively high, Chinese operated or owned tankers are unlikely to trade to the US once the measures come into effect. The average NT of a VLCC is 105,000 tonnes, which would put this fee at $5.25m for a port call by a Chinese owned or operated vessel, which could be charged up to five times per year, per vessel”.
Source: Gibson Shipbrokers Gibson added that “for Chinese built but critically not owned or operated vessels, the measures are more complex as various exemptions may apply. Regardless of vessel size, if the tanker arrives in ballast, the voyage is less than 2000nm, or it is US beneficially owned, no fees will apply. Further, if the vessel is less than 55,000 dwt, or has a bulk capacity less than 80,000 dwt, no fees will apply.
Under 55,000 dwt covers Handies and MRs, including chemical tankers, which are thus exempt from paying fees. The 80,000 dwt tonnes bulk capacity threshold should mean that Panamaxes/LR1s are also exempt. It is unclear how this would apply to Aframaxes, which typically carry 70-100,000 tonnes.
Provided none of these exemptions apply, US port calls on a Chinese built vessel would be impacted, and a fee of $18/NT is set which will also increase over the next three years. This translates to a fee of around $1.9m for an average VLCC, $900k for a Suezmax, and $600k for an LR2/Aframax above 80,000 dwt bulk capacity.
Discharging crude via STS may be a way to avoid fees, although this has not been specifically mentioned”. “Due to the exemptions around vessel size, the fees will apply primarily to dirty tankers, with the vast bulk of clean trade into the US under 55,000 dwt requirement. Imports from Mexico and Colombia will be unaffected, as both these countries are within 2000nm of most major US Gulf refineries.
Imports from Canada, which mainly go into the USWC, should also be unaffected. No Brazilian or Argentinian ports are within 2000nm of US ports, and around 200kbd of crude exports from South America into Los Angeles are affected”, the shipbroker said. According to Gibson, “15% of tankers are Chinese owned or operated, though this varies strongly between vessel sizes, applying to only 6% of Handies and 24% of VLCCs.
22% of tankers are Chinese built, and this number is set to increase as 67% of newbuilds are on order at Chinese yards. It so far seems unlikely that we will see cancellations of newbuilding contracts at Chinese yards. Many owners will have enough diversity in the origin of their fleets to direct Chinese vessels away from US trade.
Further, Chinese built vessels may be subject to a larger discount compared to Korean and Japanese built vessels. US owners are exempt from fees, though only 4% of the tanker fleet is US owned. One aspect of these plans is for US shipbuilding to be encouraged and ordering a ship of greater or equivalent tonnage can lead to the suspension of fees on another vessel.
However, the current lack of capacity and cost competitiveness of US shipbuilding is unlikely to change any time soon”, the shipbroker noted. Gibson concluded that “if the measures are implemented in their current form, we are likely to see some repositioning of tanker fleets. Chinese owned and operated vessels will no longer trade to the US, and non-Chinese owners of Chinese built vessels will likely position their fleet to avoid incurring any extra costs, if none of the exemptions apply.
There remains a lack of clarity around certain definitions and loopholes, which may be cleared up at the next hearing on the 19th of May”. Nikos Roussanoglou, Hellenic Shipping News Worldwide.
