As the United States moves to levy millions of dollars in port fees on Chinese-built vessels and Chinese shipping companies operating at U.S. ports, some firms are already walking away from shipbuilding contracts in China. Analysts say the downturn in demand for Chinese ships could provide a boost to South Korea’s shipbuilding sector.
Industry sources said on Mar. 31 that ExxonMobil had canceled an order for two liquefied natural gas bunkering vessels (LNGBVs) originally slated for construction at a Chinese shipyard. Although the U.S. energy giant had secured production slots, it ultimately chose not to finalize the contract, voiding the order. This marks the first known cancellation of a Chinese shipbuilding order following a Mar. 24 public hearing hosted by the Office of the United States Trade Representative (USTR).
The U.S. is currently weighing a proposal that would impose port fees of between $1 million and $3 million (1.5 billion to 4.4 billion won) on Chinese vessels and shipping firms entering American ports. The proposed framework includes a $1 million fee for ships operated by Chinese shipping companies and a $1.5 million fee for Chinese-built vessels.
During the USTR hearing, industry representatives offered mixed views on the potential impact of the proposed fees. Some warned the added costs could drive up logistics expenses and undercut U.S. exports of energy and agricultural goods. Others voiced support, arguing the move would help revitalize the domestic maritime sector.
Industry insiders expect demand for Chinese-built ships to decline further. While ExxonMobil has not publicly stated its reasons for scrapping the order, many believe the looming tariffs were a key factor. With total fees running into the millions, companies may see limited incentives to opt for Chinese-built vessels.
Shipping companies currently operating fleets dominated by Chinese-built ships are now reassessing their sourcing strategies. According to U.K.-based Clarkson Research, nearly 70 percent of global ship orders in 2023 went to Chinese yards.
A potential drop in Chinese orders could create new opportunities for shipbuilders in South Korea and Japan. Data from the Congressional Research Service show that China accounted for 51 percent of global ship deliveries in 2023, followed by South Korea at 28.3 percent and Japan at 15.4 percent. As the prospect of U.S. tariffs on Chinese ships and shippers grows, interest in non-Chinese vessels is rising.
“The large LNGBVs that ExxonMobil canceled can only be built in China and South Korea, so the orders may shift to Korean shipyards,” an industry official said. “But Korean yards are already facing a backlog that stretches several years, so securing a production slot won’t be easy.”
The USTR is accepting public comments on the proposed port fee policy through Apr. 2. In a report published on Mar. 29, the Korea Trade-Investment Promotion Agency (KOTRA) noted that the U.S. shipbuilding industry remains significantly less competitive than China’s. The agency said the current situation may open doors for South Korean exporters in the U.S. market, particularly in areas such as maintenance, repair, and overhaul (MRO) services for military vessels, as well as new shipbuilding contracts for the U.S. Navy and Coast Guard.
