Chinese shipbuilding industry

Neurosmith said:

A full order book for now doesn't mean that future sales won't decrease and the article sort of demonstrates that. What you are highlighting is just a lag time of 2-3 years.

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true.. that doesn't mean future orders won't decrease. but

its a very complicated situation. South Korea/Japan can fulfil the orders from Chinese side at a certain extent but cannot replace China for a major order. up until 2023 Korea was ahead in capital ships like LNG and oil tankers and in 2018 Korea received 44 percent orders that drove many Chinese shipbuilders into bankruptcy. 50 percent shipbuilding industry still hold by Korea/Japan with strong competition in capital ships.. this all happened even before Trump's presidency

in 2023, HD Hyundai Heavy Industries (HHI) received record order of LNG ships but due to lack of labor/skilled workers they turned to China for 400 tons heavy block. this is first time in 50 years HHI consider import from a foreign country.


Japan is facing more problems due to severe shortage of labor/workers in shipbuilding industry.
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also recently China shifted its gear towards high end shipbuilding where profit margin is extremely high like Cruiser ship , LNG , Large oil tankers , offshore oil/gas platforms and components manufacturing include Engines.. do you know ?? Korean LNG ships uses Chinese made large diesel engines.

Trump action will hurt Chinese shipbuilding industry and can cause orders cancellation. but China will continue to be the major player in this sector for a foreseeable future. there is no alternative solution for China as of now.

HardBall said:

Right; these things are usually done over long time horizons. Actually that is also why such type of industry wide economic wars are phased in over time.

I'm certain that if push comes shove, PRC can decide on just as devastating tariff regimes as USTR with some notion of extraterritoriality. Each structured in a way to impact the entire supply chain, or as much as it is convenient to enforce. Those could be phased in over several years, to lessen the impact on other nations, for them and the domestic players to make gradual switch over time.

Some large and significant sectors that can be targeted would obviously include commercial airspace. A major increase in airspace transit fees as well as airfield slot fees for American made commercial aircraft probably would be the long term death knell to the Boeing long haul fleet (787 + 777X), which could potentially lead to the collapse of the firm, prompting some type of government intervention.

Another area potentially are new costs imposed on financial transactions that go through the US, although it would also hurt the available liquidity in PRC markets as well. Those can be variably imposed on various types of asset classes, brokerage services, underwriting activities, structured finance, etc, to maximize the impact on US financial sector while minimizing domestic impact. Over time, this would actually be a significant force in shifting financial activities in the West toward London, Frankfurt, and other centers, leaving a big hole in the US economy.

There are many other examples, such as petrochemicals products, refined fossile fuels, fossile fuel exploration and drilling services, brand name pharmaceuticals, automobile components, medical equipment and components, industrial electronic instruments, agricultural products, etc.

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China have many cards to play in shipbuilding. In 2024, China's ports are projected to handle around 17.5 billion tonnes of cargo. US probably2-3 billion tonnes of cargo.. China is also the largest trading partner of 150 countries. China could slap the same duties on Korean/Japanese made ships include ships directly come from USA.

sunnymaxi said:

China have many cards to play in shipbuilding. In 2024, China's ports are projected to handle around 17.5 billion tonnes of cargo. US probably2-3 billion tonnes of cargo.. China is also the largest trading partner of 150 countries. China could slap the same duties on Korean/Japanese made ships include ships directly come from USA.

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They could.

But the main point would be usually to counter the specific actions, and the specific parties that precipitated those actions. You may not want to unnecessarily antagonize other players.

One thing in shipping itself that they can definitely do is to penalize US marine and shipping insurance, or any type of financial services on the ships. This would basically apply to all different types of ships, and would be especially devastating during times of conflicts around choke points (Gulf of Aden, Strait of Hormuz, etc).

sunnymaxi said:

true.. that doesn't mean future orders won't decrease. but

its a very complicated situation. South Korea/Japan can fulfil the orders from Chinese side at a certain extent but cannot replace China for a major order. up until 2023 Korea was ahead in capital ships like LNG and oil tankers and in 2018 Korea received 44 percent orders that drove many Chinese shipbuilders into bankruptcy. 50 percent shipbuilding industry still hold by Korea/Japan with strong competition in capital ships.. this all happened even before Trump's presidency

in 2023, HD Hyundai Heavy Industries (HHI) received record order of LNG ships but due to lack of labor/skilled workers they turned to China for 400 tons heavy block. this is first time in 50 years HHI consider import from a foreign country.

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Japan is facing more problems due to severe shortage of labor/workers in shipbuilding industry.
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also recently China shifted its gear towards high end shipbuilding where profit margin is extremely high like Cruiser ship , LNG , Large oil tankers , offshore oil/gas platforms and components manufacturing include Engines.. do you know ?? Korean LNG ships uses Chinese made large diesel engines.

Trump action will hurt Chinese shipbuilding industry and can cause orders cancellation. but China will continue to be the major player in this sector for a foreseeable future. there is no alternative solution for China as of now.



China have many cards to play in shipbuilding. In 2024, China's ports are projected to handle around 17.5 billion tonnes of cargo. US probably2-3 billion tonnes of cargo.. China is also the largest trading partner of 150 countries. China could slap the same duties on Korean/Japanese made ships include ships directly come from USA.

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Sure, countries may rely on Chinese shipbuilding but nobody is going to survive a $1.5M fee on every single port call in the US. Eventually they will have to bite the bullet and redirect their orders to other shipbuilding countries like the ROK and Japan. Heck, there might even be a resurgence of US shipbuilding to a smaller degree if Trump allows for rollbacks or fee refunds on US-built vessels.

China will likely respond by other means such as having an "airport fee" like others have proposed, assuming that the proposed USTR port fees are indeed passed into law.

Neurosmith said:

Sure, countries may rely on Chinese shipbuilding but nobody is going to survive a $1.5M fee on every single port call in the US. Eventually they will have to bite the bullet and redirect their orders to other shipbuilding countries like the ROK and Japan. Heck, there might even be a resurgence of US shipbuilding to a smaller degree if Trump allows for rollbacks or fee refunds on US-built vessels.

China will likely respond by other means such as having an "airport fee" like others have proposed, assuming that the proposed USTR port fees are indeed passed into law.

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Why even resort to an airport fee.
China can instigate port fee for any company that doesn't have a certain percentage of Chinese built ships. So companies will need to keep buying Chinese ships to skip the fee.

So either they pay the fee for Chinese ports or US ports. Since china is a larger trading nation, and only a percentage of ships need to be Chinese, most companies would just use Chinese ships to pick up cargo from China, drop it off at a Mexico or Peru port, then another will take it to the US, increasing prices for the US.

Neurosmith said:

Sure, countries may rely on Chinese shipbuilding but nobody is going to survive a $1.5M fee on every single port call in the US. Eventually they will have to bite the bullet and redirect their orders to other shipbuilding countries like the ROK and Japan. Heck, there might even be a resurgence of US shipbuilding to a smaller degree if Trump allows for rollbacks or fee refunds on US-built vessels.

China will likely respond by other means such as having an "airport fee" like others have proposed, assuming that the proposed USTR port fees are indeed passed into law.

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The $1.5 -3.5 mil should only really hit the smaller container vessels and bulk carriers hard, while the massive container vessels and VLCCs should be able to shrug it off if they limit port calls to the major ports only to pickup and offload everything in one go, tho not ideal.

I see this as only really an issue in short term. The likely scenario depending on actual implementation of the proposal, is that subsidiaries will be popping up to only serve the American routes. This will also have further implications.

Using SK and Japanese built ships is only a short term solution as well, with the backlog of ships to be built by the time your order is out of the yard, the second part of the proposal would have kicked in requiring a certain % of American made ships. If we assume the shipping companies and global logistics cave this time, then what would you expect to happen when the investments have been made and expansions have been done to the US yards and they are hungry for orders. I don’t think I need to spell it out.

Therefore, hypothetically, if a counter to this situation is to be implemented… rather than fees and penalties, there should be incentives instead, to favour any Chinese built ships while not penalising others apart from US built or flagged ships, tho not really going to matter with US built probably for the next decade. This shows that China is happy to do business with the rest of the world so long as you are not an enemy economically or otherwise. This should especially be implemented at any Chinese operated and owned ports around the world and with further incentives for ports close to the US for any ships not US flagged or built, set up a specific, proper and quick ship-to-port-to-ship / straight ship-to-ship transfer system, establish a standard for the future of, to/from US cargo, in anticipation for US built routes, isolate them and milk them in the future.

The whole airport and air route penalty thing shouldn’t even be thought about until COMAC has a large enough offering, market share and is internationally recognised as a viable competitor to Airbus and Boeing. As it is now, its not in anywhere near the position it needs to be

Neurosmith said:

Sure, countries may rely on Chinese shipbuilding but nobody is going to survive a $1.5M fee on every single port call in the US. Eventually they will have to bite the bullet and redirect their orders to other shipbuilding countries like the ROK and Japan. Heck, there might even be a resurgence of US shipbuilding to a smaller degree if Trump allows for rollbacks or fee refunds on US-built vessels.

China will likely respond by other means such as having an "airport fee" like others have proposed, assuming that the proposed USTR port fees are indeed passed into law.

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They can. For a let's say, 15,000 TEU ship, that amounts to $100 per container. The cost of shipping a container can be everywhere from $3000-$9000 per container.

That's literally nothing.

If the container has multiple shippers in it, the $100 fee can be divided among each shipper.

$1.5 million / 15,000. One TEU = One 20' container.

That's for one way.

For two way, meaning you are also exporting from the US to Asia, you can divide the costs by half, charge half to the exporters from China or importer in the US and half to the exporters from the US or importer in China. That's $50 per container assuming you have equal and balanced import and export, which unfortunately you often don't because the US doesn't have such finished goods to export to China. Before they used to fill returning containers with trash that you can recycle in China. Nowadays the main US export is, now was, to China that isn't oil and gas, is grain, which uses bulk freighters.

The US grain exporter to China, unfortunately for them, they have to pay the $1.5 million port charge, for that bulk freighter. They will likely do so since China has the corner for this type of ship.

Oil tanker and LNG carrier will also be one way US to China export. For this $1.5 million would also be a pittance but it's not a point anymore since China has either stopped oil or gas imports from the US or added their own 25 percent tariff which is going to cost far more. In case, China is going to be pipelining from Russia and the only gas and oil that's coming from North America would be Canada's.

If a tanker carries 2 million barrels of oil, and you charge it $1.5 million in docking fees, that's about $1.3 per barrel. Let's say the barrel of US oil is $72 per barrel. If China charges a 24 percent retaliation tariff on US oil and gas exports to China, the retaliatory tariff per barrel of oil is going to cost way more than the additional docking fees.

Oil Traders Shun China-Made Ships for US Flows on Trump Levies

Charterers booking ships to haul cargoes that will load from, or discharge at, US terminals are asking for vessels that weren’t constructed in Chinese yards

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Sales of second-hand Chinese bulk commodity ships, which carry raw materials from grains to metals and coal, have ground to a halt, while orders to build new vessels at Chinese yards have slowed.

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escobar said:

Oil Traders Shun China-Made Ships for US Flows on Trump Levies

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How many vessels r they talking abt in the subject of article?

escobar said:

Oil Traders Shun China-Made Ships for US Flows on Trump Levies

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how quietly you omitted the important information from this article.. but no worry i m posting this on your behalf.
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Under the – not yet finalized – the Office of the US Trade Representative (USTR) proposes a per-port-entry fee of up to $1.5 million on Chinese-built vessels

When there are alternatives, the traders now prefer non-Chinese tankers, with South Korean ships being the preferred option. South Korea-built vessels are already being chartered at higher rates than the China-built ships, according to Bloomberg’s anonymous sources.

South Korea has more oil tankers as a proportion of the global tanker fleet, but China accounts for over 70% of the number of vessels under construction, per estimates from Clarksons Research.

The proposal of the port fees could backfire with threatening the survival of the U.S. cargo carriers, executives last month in hearings on the plan.
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Note - this is just a minor hustle and bustle. USA yet to finalized the extra port fee on Chinese made vessels. and there is already way more Korean made oil tankers. so not a big issue for US ports. Bloomberg exaggerating it and they didn't even post any source.

and Chinese government is just waiting for the official announcement. after that they will announce their counter measures.. then i shall reply you with complete details.. i m too waiting for the official announcement from both sides.. so far nothing happened.

@ACuriousPLAFan ..

One way out for shipping companies is to appoint trustees to form new shipping companies exclusively for destinations to US ports. Appointment of trustees is to avoid any business ownership link to existing shipping companies that owned China made ships.

Thus we may see alot of existing shipping companies abandon their routes to US ports, and the newly set up companies that do not own China made ships will take over these sea routes.

Shipments from China to ASEAN, Middle East, Europe, Australia, Latin America and Africa can still be served by China built ships.

Business will be dented for Chinese shipyards, but it will not be fatal because China is a larger trading country than USA. The damages will be less than that suffered by Huawei.

The biggest losers unfortunately are the consumers in the USA because the importers and distributors will pass the extra expenses to end users. And inflations in US economy may render higher cost for US exports, thus make US made products un-competetive and reduce demand for US made goods.

And China has been contributing to low inflations in USA by providing low cost affordable consumer and industrial products for the last few decades, looks like low cost affordable products in USA will become rare in near future.