Due to China’s “Special Port Fee for Vessels” and US sanctions significantly cutting effective capacity, the global VLCC market has once again fallen into a frenzy.
Latest data shows that on October 10, the daily time charter equivalent (TCE) earnings for major VLCC routes continued their strong upward trend. The daily earnings for the Middle East Gulf to China route (TD3C) surged by $24,007 in a single day to $80,807, an astonishing increase of 42.3%; the West Africa to China route (TD15) also rose, with daily earnings reaching $76,857, an increase of $12,637 from the previous day; the US Gulf to China route (TD22) saw a relatively moderate increase, rising by $2,706 in a single day to $65,666.
Amid the strong performance in the spot market, the A-share tanker sector also saw significant gains, with China Merchants Energy Shipping and COSCO Shipping Energy Transportation performing particularly well, becoming the leading gainers within the sector.
Specifically, China Merchants Energy Shipping’s stock price rose sharply, closing at 9.10 yuan, with a single-day increase of 4.96%. Trading in the stock was extremely active, with a turnover of 1.5 billion yuan, indicating strong inflows of market funds. COSCO Shipping Energy Transportation also showed strong upward momentum, closing at 12.77 yuan, an increase of 4.50%. China Merchants’ subsidiary, China Merchants Nanjing Tanker Corporation, performed relatively moderately, closing up 2.23% at 3.21 yuan.
Industry insiders believe this round of VLCC price increases is closely related to several factors. On one hand, the recovery in global oil transportation demand, particularly the growth in demand from the Asian market, has driven demand for VLCCs. On the other hand, the effective capacity shortage caused by the Sino-US port fee dispute and frequent US sanctions has further tightened supply in the VLCC market, pushing up freight rates.
On October 10, the Ministry of Transport issued an announcement regarding the collection of Special Port Fees for Vessels from the United States. The fees will be levied on a per-voyage basis and implemented in phases, targeting vessels owned by US enterprises, other organizations, and individuals; vessels operated by US enterprises, other organizations, and individuals; vessels owned or operated by enterprises or other organizations in which US enterprises, other organizations, or individuals directly or indirectly hold 25% or more equity (voting rights, board seats); vessels flying the US flag; and vessels built in the United States. Starting from October 14, 2025, April 17, 2026, April 17, 2027, and April 17, 2028, the fees will be charged at 400, 640, 880, and 1120 RMB per net ton, respectively.
According to Clarksons Research database statistics on ship particulars for “US-related” vessels, currently 7,000-9,000 ships in the fleet potentially fall within the scope of this Chinese levy. However, considering that most US vessels only serve the US domestic market or trades governed by the Jones Act, the number of affected vessels will be significantly reduced. Clarksons Research estimates that approximately 3,120 vessels in international transport, representing 3% of the global international fleet capacity, are potentially affected.
If US-listed companies are included in the calculation, but without considering the operating areas of international vessels, Clarksons Research statistics show that the potentially affected tanker fleet capacity accounts for 15% of the global total (15% for both crude and product tankers), 4% for bulk carriers, 7% for container ships, and 8% and 17% for LPG and LNG carriers in the gas carrier segment, respectively.
It is worth noting that further analysis by Clarksons found that only about one-third of these “US-related” vessels have actually called at Chinese ports. However, as the world’s largest importer of crude oil and raw materials, changes in port passage costs in China have a strong transmission effect on the international market. Especially in the bulk and tanker sectors, the special port fees levied by China are expected to exceed the standards set by the US USTR, creating an amplified impact on the global shipping cost structure.
Previously, Bloomberg reported that several bookings for tankers scheduled to deliver crude oil to Chinese ports were canceled due to China’s Special Port Fee for Vessels. Industry insiders believe this will cause disruptions to transportation flows.
Calculations by the Research Institute of Founder Securities further reveal the extreme level of freight pressure. Taking VLCCs as an example, starting from October 14, the first phase of the special port fee levied by China is estimated to reach approximately $5.9 million, accounting for 110% of the current single-voyage freight (TD3C route). This ratio means that without rerouting or capacity adjustments, shipowners can hardly bear the additional economic burden. Consequently, VLCC owners have a strong incentive to avoid the cost impact through global capacity replacement, adjusting the sequence of port calls, and re-routing.
Meanwhile, sanction factors have added fuel to the already tight market. The US Treasury Department’s Office of Foreign Assets Control (OFAC) recently added sanctions on 6 VLCCs and several companies related to Iranian crude oil trade, including Rizhao Shihua Crude Terminal Co. and the “teapot refinery” Shandong Jincheng Petrochemical. The extension of the sanction chain comprehensively covers the oil source, transportation, and discharge ends, further squeezing the activity space of “grey capacity.” This means that the market share of VLCCs in the formal market will be rapidly pushed higher in the short term, and market freight rates will also show stronger upward elasticity.
