With two business days until the deadline for comment submissions, the docket for public comments on the US Trade Representative’s proposals regarding port calls for vessels built in China, or operated by companies with links to China is now approaching 200 comments. Unlike many comments boards which are heavy on political posturing, this issue is drawing a wealth of practical observations- including detailed discussions of freight economics.

Pangaea Logistics Solutions Ltd. (NASDAQ: PANL), headquartered in Rhode Island, with offices in Denmark, Greece and Singapore, is active in the dry bulk space- with an owned fleet of 41 vessels as well as a network of terminals predominantly in the Southeastern US Its submission, makes the case that the restrictions, as proposed, would be detrimental to the commercial interests of US companies.

With a focus on the dry trades, the submission provides hard numbers making the case that the proposed fees would themselves be a significant portion of the cargo’s values, and would “significantly disrupt dry bulk trading patterns to and from the US, endangering the supply of critical raw material imports and exports, and may actually be multiples of the calculated amount, “with the latter due to shortfall of vessels making calls at US ports”.

The submission makes the point that: “A real question for Pangaea and its US customers is whether its customers can survive the impact of the fees, even in the short term, as the supply chain adjusts.”

Dry bulk trades are price sensitive with small margins predominating on sales. For coal carrying vessels in the Handy trades, PANL’s analysis suggests that tariffs at $1,000,000 per port call would equate to around 34% of the FOB value of a thermal coal cargo (valued at around $85 per ton). For agricultural products, with a greater commodity value than coal, the tariffs would still come in between 10% - 15% of the commodity value.

With increased cargo value, the impacts are less; for alumina inbound from Brazil (with an underlying value of nearly $500 per ton), the impacts are in the single digits, around 6%. For larger cargo sizes, in Supra and Ultramaxes, the percentages are lower. The calculations include CIF values- building in current spot freight rates; but PANL points out that “There is likely to be a much larger impact on the freight charged against US trade by the lack of ships willing or able to call on US ports.”- part of the supply adjustments mentioned earlier.

A submission by a Connecticut-based dry bulk shipbroker provided calculations illustrating the deleterious voyage economics, in the face of the proposed measures, for shipowners and charterers, with a focus on cargo of salt and scrap metal.

But rather than limiting the submission to hypothetical cases, reality sets in with the broker writing: “In the past two weeks alone, I have witnessed Owners/ Operators already taking drastic measures to account for the possibility of USTR provisions coming into effect. Some Owners/ Operators have stopped evaluating business into and out of the US Other Owners/ Operators have already started including specific clauses that state if the USTR provisions apply and there are extra fees/ penalties to be paid for connections to Chinese built/ owned/ flagged/ operated vessels, then ALL of these fees will be passed directly to the charterer and eventually the end user.”

Resource: USTR comments board

https://comments.ustr.gov/s/docket?docketNumber=USTR-2025-0002