COULD USTR SHIFT GRAIN SHIPPING STRATEGIES?


In April 2025, the Office of the U.S. Trade Representatives finalised a set of measures under Section 301 of the Trade Act aimed at countering China’s dominance in maritime shipping and shipbuilding. The new policy, set to take effect in October 2025, introduces escalating fees on vessels entering U.S. ports if they are built, owned, or operated by Chinese entities. However, the details have so far been somewhat vague.


The regulation creates two main fee categories. Annex I targets vessels owned or operated by Chinese companies with no exemptions. Annex II targets Chinese-built vessels, but offers exemptions for those arriving empty, under 80,000 deadweight tonnes, or on short voyages if vessels are operated by non-Chinese companies. These fees will begin at low levels but increase annually through 2028. The intended effect is to gradually price Chinese-linked vessels out of U.S. port calls, encouraging the use of alternative tonnage and indirectly boosting demand for U.S.- built or allied-built ships.


THIS REGULATORY SHIFT INTERSECTS DIRECTLY WITH DRY BULK SHIPPING IN GRAIN BECAUSE MOST OF THE GLOBAL DRY BULK FLEET IS EITHER CHINESE-BUILT OR AT LEAST PARTIALLY OPERATED BY CHINESE INTERESTS.


Panamax and Supramax vessels, the mainstay of grain trade, are especially exposed. Although many grain carriers arrive empty to U.S. ports and might qualify for exemptions under Annex II, Annex I applies universally to Chinese operators, regardless of whether the vessel is in ballast. The result is an added layer of compliance complexity and commercial risk for any shipment that begins in the United States.


For grain exporters selling on Free on Board (FOB) terms, these developments introduce new operational considerations. Under FOB, the seller loads the grain at the U.S. port while the buyer arranges and pays for freight. In principle, the seller should be shielded from transport issues. In practice, that assumption no longer holds. If a buyer nominates a vessel that is subject to Section 301 fees, the ship may be delayed at berth or incur costs that affect the port operation as the USA might insist of these costs to be paid before the ship leaves US waters. Sellers will need to be more proactive in vessel acceptance, possibly including new clauses in contracts that specify the buyer must nominate a vessel that does not fall under the fee regime. Even if the legal burden of the fee rests with the shipowner, the seller has a clear interest in ensuring the loading operation proceeds without regulatory delays or disputes.


10 | ADMISI - The Ghost In The Machine | Q2 Edition 2025


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