Key takeaways
New service fees target Chinese links
Charges apply to vessels with Chinese ties or build.
Fee structure varies by vessel type
Rates depend on tonnage, containers, and origin.
Charterparty terms need urgent review
Operators must clarify who pays and when
Following the announcement on 21 February 2025 by the US Trade Representative (USTR) of proposals to impose substantial ‘service fees’ on ships and operators with Chinese connections, the USTR issued a further announcement on 17 April 2025.
The proposals
The USTR’s proposal of 17 April 2025 differs significantly from the original proposal but still provides for substantial fees and there remain uncertainties as to the scope and implementation of the fees.
Broadly, in terms of the headline differences:
Service fees are set at USD 0 from 17 April until 14 October 2025;
From 14 October 2025 onwards:
Vessel owners and operators of China calling at US ports:
fees to be charged on net tonnage at USD 50 per net ton per voyage to a maximum of five times per year, per vessel.
the fee per net ton to increase by USD 30 per net ton per year for the following three years.
Annex I sets out entity parameters for the purposes of establishing whether the owner or operator is ‘of China’ which includes direct and indirect shareholding provisions and deeming provisions for ocean common carriers.
The Service Fee is payable by the operator on or before entry of the vessel at the first port or place from outside the Customs territory and appears to include the Service Fees for any subsequent US port calls on the same voyage.
Vessel operators of Chinese built vessels calling at US ports:
fees to be charged at USD 18 per net ton or USD 120 per discharged container, per voyage to a maximum of five times per year, per voyage;
the fee per net ton to increase by USD 5 per net ton per year, with container fees to increase to a maximum of USD 250 per discharged container by 2028.
Annex II defines a Chinese built vessel by reference to it having been built in the People’s Republic of China and identified as such in the Vessel’s Entrance or Clearance Statement (CBP Form 1300) or electronic equivalent.
The Service Fee is payable by the operator on or before entry of the vessel at the first port or place from outside the Customs territory and appears to include the Service Fees for any subsequent US port calls on the same voyage.
On non-US built vehicle carriers, USD 150 per car equivalent unit.
There are some exceptions/exemptions to the fees which include LNG carriers, vessels owned by US entities (being entities controlled by US persons or at least 75% beneficial ownership of US persons), vessels arriving at US ports empty or in ballast, smaller vessels, vessels performing ‘short voyages’ (being from a point less than 2,000 nm of the US arrival port).
Additional duties will be charged on ship-to-shore cranes and cargo handling equipment, including containers, that are manufactured or made up of Chinese origin components, or assembled in, transported through or stored in China or installed by a company ‘of China’ as defined in Annex V. The onus is on the vessel to demonstrate that Annex V does not apply, failing which the ship-to-shore crane or cargo handling equipment will be deemed to be ‘of China’ and the charge levied.
The USTR does appear to have dropped the proposal to set Service Fees based on fleet composition i.e. non-Chinese owners with Chinese built vessels in the fleet will not be charged based on fleet ownership, provided a Chinese built vessel is not used for US port calls.
Charterparties
A key issue from a charterparty and contract of affreightment perspective remains the allocation of risks and responsibility for the Service Fees, particularly given that these are payable before or on arrival at the first US port of call.
There is a lack of clarity as regards how ‘operator’ will be defined. The Annexes I and II proposal defines ‘Vessel owner’ and ‘Vessel operator’ by reference to the entity ‘identified as the operator of the vessel and whose name would appear on the Vessel Entrance or Clearance Statement (US Customs and Border Protection (CBP) Form 1300) or its electronic equivalent’. However, CBP Form 1300 does not contain a definition of ‘Owner’ or ‘Operator’ and it remains to be seen whether commercial managers, technical managers, document of compliance holders and others responsible for the vessel, such as bareboat charterers or time charterers, will be treated as being an ‘owner’ or an ‘operator’ for the purpose of compliance. This will have an impact on who, in the first instance, will be responsible for payment of the Service Fees and how those will be allocated under the shipping contracts.
As highlighted in our previous update, shipping contracts, including charterparties and contracts of affreightment will need to be reviewed in order to assess how the proposed Service Fees are to be allocated between the parties.
A further public hearing will take place on 19 May 2025 and no doubt further announcements will be made by the USTR following that hearing.
