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Concerns Rise Over Proposed U.S. Fines on Chinese-Built Freight Vessels
Atlantic Container Line (ACL), a niche ocean carrier, has expressed alarm over potential fines that the U.S. government is considering for Chinese-manufactured freight vessels. The company’s CEO, Andrew Abbott, warned that such measures could drive ACL out of the U.S. market, destabilizing the global supply chain and causing freight rates to rise to levels not witnessed since the COVID-19 pandemic.
“This hits American exporters and importers worse than anybody else,” Abbott stated, emphasizing the detrimental impact these penalties would have on his business. “If this happens, we’re out of business, and we’re going to have to shut down.”
The ongoing hearings held by the Office of the United States Trade Representative (USTR) feature discussions on imposing fines under Section 301 of U.S. trade law. Over 300 trade organizations and stakeholders have voiced their concerns, highlighting that the country is not positioned to win an economic battle while placing carriers that utilize Chinese-built ships at a disadvantage. Currently, vessels built in China account for a substantial 98% of global shipping.
The policy initiative, which began under the Biden administration, culminated in a January report identifying unfair advantages in China’s shipbuilding sector. The proposed plan would enable the government to impose significant fees on Chinese-made vessels docking at U.S. ports. For Chinese-owned lines like Cosco, the fee could reach $1 million per vessel, while non-Chinese-owned carriers with Chinese-made ships could face charges of up to $1.5 million.
In ACL’s commentary submitted to the USTR, Abbott elaborated on the severe economic challenges his company would encounter if these penalties proceed, asserting that enforcement would make ACL “totally uncompetitive” in the U.S. market.
As the oldest continuously operating container line globally and part of Italy’s Grimaldi Group, ACL uniquely provides combination container-roll-on, roll-off services between North America and Northern Europe, crucial for transporting oversized cargo including vehicles and construction equipment. If ACL exited the U.S. market, it would leave domestic manufacturers without a dedicated North Atlantic carrier, significantly affecting the transfer of essential goods.
Abbott illustrated the specificity of ACL’s operations, mentioning that the company transports Airbus wings manufactured in the U.S. to the UK. “If we disappear, you’d have to find another breakbulk ship,” he cautioned.
Emphasizing the disparity between his company and larger competitors, Abbott remarked that the fines would place a heavier burden on his smaller operation. A potential charge of $2,000 to $2,500 per container for ACL could be significantly higher than that faced by larger companies, making it untenable for ACL to remain competitive.
While the proposed fines aim to revive U.S. shipbuilding, critics argue that they are misaligned with the goal. Abbott pointed out that those likely to be targeted, such as Chinese operators, might not feel the brunt of these new fees, whereas U.S.-based companies would bear the consequences. “The guys you want to target are getting off scot-free, and the guys who are in your own country get nailed,” he noted.
The repercussions of shutting down ACL’s U.S. operations would extend beyond the company itself, affecting approximately 300 employees and the supply chain infrastructure that relies on them, including truck drivers and warehouse workers.
Compounding the challenges, the threat of imposing these fines coincides with a notable increase in trade along U.S. routes. Following what Abbott described as the smallest volume year for the company since 1967, ACL has seen U.S. exports surge by 50% since January due to concerns over future tariffs and logistics disruptions.
Major ocean carriers are already strategizing to navigate around the proposed fines, which could have significant implications for U.S. ports. Soren Toft, the CEO of MSC, the world’s largest ocean carrier, indicated that ports like Oakland may be sidelined, with containers redirected to larger hubs like Los Angeles and Long Beach.
Abbott expressed skepticism about rerouting shipments through Canadian or Mexican ports, citing prohibitive inland transportation costs. Furthermore, he warned that diverting freight would lead to congestion, artificially inflating container shortages and ultimately driving freight rates higher.
“There are going to be COVID-era rate increases,” Abbott cautioned. “All that’s going to do is put a lot of American exporters out of business. They won’t be able to compete with the rest of the world.”
Watch the full video interview with Abbott below.
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