By Leo Ryan, Editor
Ahead of the public hearings being staged in Washington March 24 and March 26, the Canadian government, along with Canadian Great Lakes carriers, have filed statements to the U.S. Trade Representative (USTR) strongly critical of the Trump administration’s proposed fees of up to $1.5 million per port call of Chinese-built ships. Among the biggest issues raised: the potential devastating impact on shipping costs, supply chains and Canada-U.S. trade.
The USTR invited written comments from industry stakeholders globally concerning what was described as a Proposed Action Pursuant to the Section 301 Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance. This procedure was launched in response to a petition by five US labour unions.
“Canada strongly supports fair competition in the global shipping sector, and recognizes that maritime transport is the backbone of global trade,” says a statement transmitted by the Canadian Embassy in Washington. “However, as a member of the global trading community, Canada is also concerned about the potential impact of the proposed remedies on international and North American supply chains that are key to the economic security of the United States and Canada.
“Canada and the United States share deeply interconnected supply chains that support critical industries that underpin the economic security of North America, including defence, aerospace, energy, manufacturing and agriculture. With over 80% of the world’s goods carried by sea, shipping plays a critical role in ensuring the smooth operation of supply chains and global commerce. Policies affecting the shipping industry should strive to ensure predictability and stability and avoid costly and inefficient disruptions.”
The statement stresses: “Canada notes that the proposed remedies would penalize shipowners and their customers, including those in the U.S., and harm the supply chains they service by artificially increasing shipping costs. These costs would ultimately be passed down to, and borne by consumers. In 2023, $34.6 billion (USD) in goods were traded with between Canada and the U.S. by ship. Much of this trade is focused on high volume, and generally lower value bulk commodities that form the basis for many industries such as construction, manufacturing, power generation and many defense applications, including U.S. ship production. This includes iron ore, coal and coke, aggregates, steel, cement and salt. Because many of these bulk commodities are generally lower value on a per tonnage basis, the increased shipping costs for these goods across the Great Lakes and along the East and West Coasts will make them prohibitively expensive in some instances, and result in increased costs for the construction of new homes, commercial buildings and infrastructure, like roads.”
Far-reaching unintended consequences
The Canadian government statement continues: “The proposed fees would also have far-reaching unintended consequences. The imposition of the proposed port fees on lower value bulk commodities will reshape supply chains and push the transport of these commodities to other modes, namely rail and road transport. This is expected to significantly impact infrastructure needs, as well as capacity on those networks, thereby increasing the cost of all goods that must now compete for limited capacity. Shipping must be underpinned by a healthy, competitive global shipbuilding market. The shipping industry is diverse, encompassing bulk carriers, container ships, tankers, and specialized vessels. Policy considerations should take into account these distinctions to avoid unintended disruptions in specific sectors.”
Concerns of Great Lakes carriers
Captain Scott Bravener, CEO of McKeil Marine Limited, commented on behalf of a Canadian enterprise that delivers marine transportation and project cargo services across the Great Lakes, St. Lawrence Seaway, East Coast, and the Canadian Arctic.
“While we acknowledge the necessity of countering China’s dominance in global shipbuilding and logistics, the proposed measures pose significant challenges to North American trade and manufacturing,” he said. “Notably, the U.S. and other nations currently lack the requisite shipbuilding infrastructure to replace all Chinese-built vessels serving the Great Lakes-St. Lawrence Region .The US fleet only does not currently have the capacity to replace all of the potentially displaced capacity. Consequently, the proposed port call fees may inadvertently curtail services and revenues at U.S. ports.”
In 2022, maritime shipping through the Great Lakes-St. Lawrence Region moved 252.1 million metric tons of cargo valued at $120.9 billion USD generating $50.9 billion USD in economic activity and supporting 356,858 jobs across the U.S. and Canada. The St. Lawrence Seaway alone handled 36.3 million metric tons of cargo, contributing $9.5 billion USD in economic output and sustaining 66,594 jobs.
Among ramifications raised by Capt. Bravener was the failure to distinguish between trans-oceanic and shortsea shipping.
“The proposal appears to overlook the distinct role of short-sea industrial barge traffic, focusing instead on transoceanic containerized shipping,” he remarked. “Bulk carriers and project cargo barges, vital to Great Lakes and regional trade, lack the pricing flexibility of deep-sea container shipping and cannot simply absorb substantial cost increases. The proposed fees seem designed for large ocean-going vessels carrying cargo worth hundreds of millions or even billions of dollars.”
In conclusion, Capt. Bravener stated: “While we support efforts to address China’s influence in global shipbuilding, the proposed measures lack a comprehensive strategy that accounts for the complexity of North American trade. A one-size-fits-all approach targeting containerized shipping does not reflect the realities of bulk and industrial freight operations. Without exemptions, reinvestment mechanisms, or phased implementation, these financial penalties will disproportionately burden cross-border maritime operators and disrupt U.S.-Canada trade.”
Dramatic impact on shortsea shipping
Henrik Friis is Vice-President of CSL Americas, which is engaged in marine transportation and cargo handling across North, Central and South America. He expressed serious concern that as they stand the proposed measures “severely and disproportionately impact shortsea shipping.”
In his view, these measures “could increase shortsea shipping costs for dry bulk cargo by 300 % to 1000%, significantly harming these markets by inadvertently targeting vital coastal trade routes that grow and sustain regional economies.”
Mr. Friis also emphasized the need to differentiate between long-haul (trans-oceanic) shipping and shortsea shipping.
And in the conclusion of his statement to USTR, he recommended that “the USTR refine its proposal by limiting remedies to vessels that transport cargo over 2,000 nautical miles before reaching the U.S., with a special provision for Hawaii. This approach would ensure that fees are directed at the intended targets – Chinese-owned and operated long-haul vessels, while preserving critical, efficient regional and domestic trade.”
Substantial Canadian participation at public hearings
Meanwhile, key stakeholders and executives in the Canadian marine industry will be represented in the public hearings Monday and Wednesday staged at the U.S. International Trade Commission.
On Monday, scheduled to appear on one panel session are Hannah Bowlby on behalf of the Ontario Marine Council, Bruce Burrows, President and CEO of the Chamber of Marine Commerce, and Jonathan White from Canada Steamship Lines.
Wednesday will see Gregg Ruhl (Algoma Central Corporation), Scott Bravener (McKeil Marine) and Guillaum Dubreuil, Chairman of St. Lawrence Shipoperators, offering their insights.
(Dreamstime photo of Canadian Embassy in Washington and photo of Mckeil Marine vessel)