The widespread presence of Chinese-built vessels in the global shipping fleet makes implementing the proposed US port fee in its current form highly challenging, according to prominent Greek shipping executive George Karageorgiou
Onassis Foundation-controlled Olympic Shipping and Management’s president and chief executive told Riviera thefigures outlined in the proposal are difficult to be implemented, as they would cause major disruptions to the US economy.
Focusing on the tanker sector, where Olympic Shipping specialises, he highlighted many US-based businesses depend on Chinese-built vessels for trade with nearby destinations. If the proposal is implemented as drafted, these businesses could face severe financial difficulties.
Mr Karageorgiou highlighted approximately 25% of the global VLCC fleet, 21% of the Suezmax fleet, and 11% of the Aframax fleet, along with around 40% of LR2 tankers, are built in China, with a significant portion actively engaged in the US import-export supply chain.
The impact of the proposed fee becomes even more pronounced when examining the orderbook. Roughly 75% of VLCCs currently under construction are being built in China, with the proportion across other tanker sizes ranging from 55% to 100%, as in the case of Panamax tankers.
“It is impossible to exclude the Chinese-built fleet from trade with a single decision. The impact would be enormous,” Mr Karageorgiou emphasised, adding such a measure could drive freight rates to unsustainable levels, ultimately harming US shippers and the domestic economy.
Mr Karageorgiou suggested the US is likely to take a more measured approach in targeting the world’s largest shipbuilding nation, rather than enforcing the proposed policy outright.
The tariff debate
Recent moves by the US administration to impose tariffs on a range of goods have heightened trade tensions, with China, Canada and Mexico among the primary targets of Donald Trump’s agenda.
Examining the potential effects on the tanker market, Mr Karageorgiou noted the disruption of US-Canada oil trade could have unintended consequences. If Canada is forced to redirect its exports to Europe or Asia, the US will need to secure alternative suppliers from further afield, significantly increasing import costs. This scenario, he argued, could ultimately balance the trade with Canada but at great cost to the US consumer and the economy.
Given these complexities, Mr Karageorgiou remains sceptical about how the tariff policy will be implemented, predicting any final measures will likely be adjusted to ensure that shippers can manage the increased costs.
Positive outlook for the VLCC market
Despite trade uncertainties and potential policy shifts, the outlook for the tanker sector – particularly the VLCC segment, where Olympic Shipping specialises – remains positive.
Mr Karageorgiou pointed to healthy supply fundamentals in the VLCC market, noting the orderbook currently accounts for approximately 9-10% of the existing fleet. Although higher than in the past two years, this ratio remains manageable, especially if one considers that around 18% of the fleet is over 20 years old.
Additionally, sanctions targeting the so-called ’ghost fleet’ engaged in trade with Iran and Venezuela are expected to reshape supply dynamics. Mr Karageorgiou noted around 100 VLCCs have been sanctioned. Once these trades cease, most of these vessels will likely head to scrapyards, as their age and poor maintenance will prevent them from re-entering conventional markets, ultimately exerting a negative impact on the supply landscape.
