Proposals from the Office of the United States Trade Representative (USTR) to penalize owners of Chinese-built tankers calling at US ports could lead to higher oil prices both in the US and worldwide.
Shipbroker Poten & Partners analyzed the global tanker fleet, revealing that out of more than 10,000 tankers over 10,000 deadweight tons (dwt), 47% were built in South Korea, 22% in China, and 19% in Japan. In contrast, the US fleet consists of just 59 tankers, making up less than 1% of the global total.
Chinese shipyards dominate tanker construction across all sizes. They have secured the majority of contracts for very large crude carriers (VLCCs), Aframax, and Panamax tankers, as well as about half of Suezmax orders. Chinese builders have also won over two-thirds of orders for smaller tankers. No tankers are currently being built by US shipyards.
Although the USTR’s proposals have not yet been approved, Poten warns that, if enacted, they could prevent a large portion of the global tanker fleet from operating economically in the US market. This would raise the cost of both US exports and imports, especially for US-based charterers.
If the proposals are approved, charterers would likely seek tankers not built in China. However, these vessels would likely come at a higher cost. Tanker owners would charge a premium in a two-tier market, driving up freight costs for US-based energy companies. Most US-built tankers, which are used for Jones Act trades, cost at least three times more than comparable vessels from South Korea, China, or Japan.
While President Trump has expressed interest in rebuilding the US shipbuilding industry, Poten concludes that it would take significant time for US shipyards to produce large tankers at competitive prices.
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