Cosco Shipping Holdings Co.’s profit jumped, along with improved revenue from its transpacific routes, as customers front-loaded shipments ahead of new fees from the US Trade Representative set to target Chinese shippers.
First-quarter profit for China’s largest shipping line rose 73% to 11.7 billion yuan ($1.6 billion). Revenue from the transpacific route increased to 15.8 billion yuan from 12.5 billion yuan.
Under aplanput forward by the USTRearlierthis month, all ships built or owned by Chinese companies docking in the US would be subject to a fee based on the volume of goods carried, on a per-voyage basis. It’s expected to kick off from Oct. 14. The latest proposal has been toned down from an earlier version, though keeps the pressure on Chinese operators and shipbuilders.
Cosco Shipping is expected to be more affected by the levies than global peers like A.P. Moller-Maersk A/S and Hapag-Lloyd AG, as fees could top $35 million per Chinese container vessel for transpacific voyages annually by 2028, according to Bloomberg Intelligence analyst Kenneth Loh. The cost disadvantage can erode earnings amid this year’s projected industry slowdown, he added.
Earlier this month, Cosco Shipping Corporation Ltd.saidthe Trump administration’s plan would hurt stability in global trade and supply chains, marking the first response by China’s maritime sector.
Beyond Chinese operators, the revised proposal is expected to have minimal impact on global trade and shipping costs for bulk, liquid and container cargo, HSBC analysts including Parash Jain wrote in a note.
Only 9% of overall US port visits will be impacted when calculated based on 2024 voyages, compared with the initial proposal which would have affected 43% of port visits, the analysts added, citing data from maritime research service Clarksons.
Cosco Shipping and Orient Overseas International Ltd. will likely work closely with their partners in the Ocean Alliance to mitigate the impact from levies, they added.
Liners could also have more incentive to swap Chinese-built vessels to other routes and optimize capacity among alliance members, Citi analysts including Kaseedit Choonnawat said in a note.
Nearshoring and reshoring could pick up pace, while Chinese exporters now have the incentive to look more aggressively at export destinations outside of the US, said BI’s Loh.
“Transpacific trade could plateau while the growth outlook for intra-Asia regional trade is likely to be a rare bright spot in these turbulent times,” he said.
