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For Korean shipyards, U.S. port fees could be sea of opportunity, or stormy waters

Published: 18 Apr. 2025, 18:06

A cargo ship carrying containers approaches the Yantian port in Shenzhen, China, on April 17. [REUTERS/YONHAP]

Korea’s shipbuilders could see a windfall as the Donald Trump administration moves to penalize Chinese-built vessels — but the policy shift may also raise costs for Korean exporters and test their ability to adapt to stricter sourcing rules.

The Office of the United States Trade Representative (USTR) on Thursday announced measures to impose port fees on Chinese-flagged and Chinese-built vessels entering U.S. ports as part of efforts to counter what it describes as unfair Chinese practices in the maritime, logistics and shipbuilding sectors.

The new fees will be introduced in two stages, with the first set to take effect on Oct. 14, 180 days after the announcement. Starting then, ships operated by Chinese shipping companies will be subject to a $50 per-net-ton fee, which will rise to $140 by 2028.

Moreover, ships built in China — even if operated by non-Chinese firms — will also face charges. These will be assessed at the higher of two rates: per net ton or per container.

Fees will begin at $18 per net ton and increase by $5 annually until reaching $33 in 2028. Container fees will start at $120 and reach $250 by 2028.

The United States will also impose a $150 fee-per-car equivalent unit on foreign-built car carriers, effectively targeting nearly all vessels used to export cars from Korea, Japan and Europe to the United States. There are virtually no U.S.-built car carriers in operation.

The USTR cited China's rapid rise in shipbuilding as justification for the move. In 1999, China accounted for less than 5 percent of global shipbuilding. That figure surpassed 50 percent in 2023. As of January 2024, Chinese firms owned over 19 percent of the world’s commercial fleet, according to USTR data.

Global shipping and energy companies are already adjusting. ExxonMobil recently delayed a liquefied natural gas (LNG) bunkering vessel order initially planned for a Chinese yard. Greek shipping company Capital Maritime is now in talks with Korea’s HD Hyundai affiliates to build 20 ships, moving away from its Chinese suppliers.

“Shipowners don’t want the added risk,” said a shipbuilding industry insider in Korea. “There’s now a stronger incentive to work with Korean shipyards, and we may see some benefit from that.”

The Korean container ship HMM Stockholm is loaded at a terminal at a harbour in Hamburg, Germany, on April 3. [REUTERS/YONHAP]

Port fees could shrink market

Korean flag carrier HMM is expected to be less directly affected. Only five of its 83 container vessels were built in China, and those operate mainly on Southeast Asian routes.

Still, industry insiders worry about broader effects — specifically, that higher freight rates could lead to a drop in cargo volume.

"If port fees raise freight rates, it won’t be a win for shipowners or carriers, it’ll just shrink the market,” said one executive at a Korean shipping company.

A spokesperson for Hyundai Glovis, which handles logistics for Hyundai Motor and Kia exports, noted that U.S.-built car carriers are nearly nonexistent.

“All our vessels carrying cars to the United States will be subject to the fee,” said a Glovis official. “We’ll work with our clients to minimize the impact.”

HD Hyundai Heavy Industries' Ulsan shipyard [HD HYUNDAI]

To encourage domestic shipbuilding, the USTR has built in a grace period. Shipowners who place an order for a U.S.-built vessel of equal or greater size than an existing Chinese-built ship can receive a fee waiver for up to three years. The same applies to car carriers. The fee is deferred when the order is placed, but if the ship is not delivered within three years, the fee must be paid.

The second phase of the policy, beginning April 17, 2028, mandates the use of U.S.-built LNG carriers for at least 1 percent of all U.S. LNG exports. That figure is set to rise to 15 percent by 2047. The United States aims to wrestle some market share from Chinese builders, who accounted for 38 percent of global LNG carrier orders in 2024.

To qualify as “U.S.-built,” a ship must be registered in the United States, retrofitted for LNG exports at a U.S. shipyard and use key components made domestically by 2029 at the latest. After that, even more of the ship’s structure and propulsion systems must originate in the United States.

Challenges for Korean shipbuilders

Korean shipbuilders grew optimistic about a surge in LNG carrier demand after U.S. President Trump pushed to expand U.S. LNG exports. According to Clarkson Securities, global orders for new LNG carriers could reach as many as 126 vessels by 2029. With each ship costing around $260 million, the total market is valued at more than 46 trillion won ($32.3 billion).

But while the U.S. policy could redirect some orders to Korea in the short term, Korean shipbuilders remain wary of the long-term implications.

The U.S. push for local production may eventually undercut Korean exports. Moreover, U.S. yards may struggle to scale up. For example, Philadelphia Shipyard — acquired by Hanwha Ocean last year — is too small to build the 174,000- to 180,000-cubic-meter (235,000-cubic-yard) capacity LNG carriers commonly used in export operations. HD Hyundai Heavy Industries does not currently have a U.S. shipyard. All of this would require massive investments, but it’s difficult to gauge the return.

“Building LNG carriers requires highly specialized materials, especially for cargo containment systems, yet no U.S. suppliers exist,” said an executive at a major Korean shipbuilder who asked for anonymity. “Starting with smaller 30,000- to 40,000-cubic-meter LNG vessels may be a more practical way to comply with U.S. rules.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.

BY LEE SU-JEONG [[email protected]]