October 17, 2025 • 37 mins
Headlines scream trade war, but our radar shows choreography. We unpack how the U.S. Section 301 vessel fees and China’s mirrored port charges operate like a controlled conversation—clear signals with tight guardrails—while cargo keeps moving and markets recalibrate. From exemptions and caps to first-port-only assessments, we trace why this design aims at leverage, not revenue, and how carriers are already adapting without triggering a supply chain shock.
We walk through the mechanics that matter: which vessels are actually exposed, why build origin and operating control change the calculus, and how alliances quietly repositioned tonnage to avoid the sharpest edges. You’ll hear why analysts see limited immediate impact on U.S. port calls, what COSCO’s steady rotations suggest about state-managed restraint, and how selective carve-outs reveal space for diplomacy. Then we zoom out to the long game—shipyard order books tilting toward South Korea, India, and allied builders—as incentives nudge capital away from fee-heavy risk and toward diversified capacity.
If you manage logistics or compliance, this conversation is a field manual. We share a simple exposure map to build now, invoice checks to catch pass-throughs, and practical diversification moves that add flexibility without blowing up your network. We also look ahead: leadership shifts at the FMC and MARAD, data transparency pushes, and the coming leader-to-leader meeting that could turn reversible fees into negotiating chips on shipbuilding, port technology, and reciprocal access. The theme is precision over panic—policy as a scalpel, not a hammer—backed by steps you can take today.
If this lens helps you see the signal in the noise, follow and subscribe, share with your team, and leave a review. Your feedback guides what we dive into next—and keeps this community a step ahead of the next policy move.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker (00:00):
Ready to go.
You're listening to By Land andBy Sea, powered by the Maritime
Professor.
Lauren Beagen (00:18):
The trade war is officially seaborne within days
of the USTR's new Section 301vessel fees going into effect on
ships built or operated byChinese company.
Beijing is firing back,announcing mirror image port
charges, and even targetingAmerican-linked shipbuilders
(00:38):
with sanctions and restrictions.
But look, I'm here to say Idon't see this all as chaos
entirely.
I see it as perhapschoreography.
And frankly, I see the wholething as strategically perhaps
clever by President Trump'sadministration.
To me, it reassures and itreasserts U.S.
leverage in the maritime domainwhile signaling to allies and
(01:00):
competitors that the U.S.
is backed at the helm of itsown shipping policy.
We're going to talk a lot moreabout it today.
What I think about the wholething.
Hi, welcome back to Byland andby Sea, an attorney breaking
down the weakened supply chainpresented by the Maritime
Professor.
Me, I'm Lauren Beegan, formerFMC International Affairs
Attorney and founder of theMaritime Professor in Squall
Strategies.
(01:20):
By Land and By Sea is yourgo-to resource for navigating
the regulatory side of globalocean shipping.
And me, well, I'm your favoritemaritime attorney.
As always, this podcast is foreducational purposes only and is
not legal advice.
This is Plain LanguageMaritime, so anyone, not just
lawyers or industry insiders,can follow along and see what's
happening in the world ofshipping.
(01:41):
So let's dive in because as youknow, ocean shipping moves the
world.
All right.
Well, before we jump into it, Iwant to stop for a minute
before we get too deep into theheadlines and let you know that
look, today we're going to beunpacking the nuances and
frankly some of my reactions tothe latest tip-for-tap political
posturing between the UnitedStates and China in the maritime
(02:02):
sphere.
It's going to be technical.
It might be a little lessbaseline 101 than we usually
talk.
But as we get into today'sdiscussion, if you find yourself
thinking, wait, what exactlyare these USTR Section 301 port
fees?
She keeps talking about, don'tworry, you're not alone.
That's why I built a minicourse on this.
It's part of my just in timelearning mini course.
(02:25):
It breaks it all down.
What are these Section 301vessel fees?
Why were they created?
Who they actually hit?
Look, we go over it all in 30minutes or less.
Plain language, so you get theinformation you need when you
need it.
Because when you understand therules, you make better
decisions.
You can take the short coursebefore or after this episode.
I mean, you're alreadylistening, so keep with us.
(02:46):
Either way, it'll give you theplain language foundation of how
this all started and set you upfor the deeper dive that we're
about to take today.
So find it at theMaritimeProfessor.com.
Just look for just in timelearning, USTR section 301 port
fees.
All right, now let's get intothe nuance.
And why this latest tip for tapmay actually be a sign that the
US strategy is working exactlyas intended.
(03:07):
I don't know.
Let's see.
I have some thoughts on this.
So look, of course, headlineslove the word retaliation.
It sounds dramatic, it drivesclicks, it makes for great
talking points.
But in the world of trade andmaritime policy, what's
happening right now, to me,isn't a free-for-all.
It's a pattern.
(03:27):
I see it as a pattern.
And I always try to find thethemes of the pattern.
One that we've seen perhapsplay out before.
And it's actually a pre afairly predictable structured
exchange between the two majoreconomies in its simplest form.
I don't want to minimize thatthis is a very complicated
thing, but I'm seeing trends.
(03:48):
So when the United States takesa policy action like this, in
this case, the US, the USTR siteand 301 vessel fees, it's
sending a calculated signal,right?
We're willing to use maritimepolicy as leverage because it
was never only about the portfees.
This wasn't meant to be amoneymaker.
This was meant to be a behaviorchanger, right?
(04:10):
It it's a show of seriousness,not necessarily hostility, is
how I took it.
And so, of course, China wasgoing to respond, right?
Of course they were going torespond.
This was probably one of themost predictable things that
could have happened that Chinaresponded.
It wasn't when, it was how theywere going to respond.
And so when China responded, Ididn't see it out of anger.
(04:32):
I kind of saw it out ofnecessity.
Of course, Beijing had todemonstrate strength to its own
domestic audience.
That's part of the playbook,right?
That's how geopolitics works.
Matching tone and posture toshow that it won't be
intimidated.
But what I will note is that itseemed like they didn't totally
cross the line into escalation.
(04:52):
So rather than a trade spiralspiral, excuse me, what we're
seeing is a calibrated, measuredresponse.
That's what it seems like tome.
A series of carefully balancedmoves designed to communicate
power while keeping trade lanesopen.
In other words, this isn't abreakdown to me.
It seems like two superpowersare talking through the language
(05:14):
of tariffs this time around.
Now, according to Reutersreporting posted by G Captain,
China's Newport fees largelymirror the US Section 301
structure, right?
We saw similar framework,similar tone.
That's not accidental.
That's diplomacy throughmimicry, mimicking.
(05:34):
We talked about what theseChina response fees look like
last week.
So you can go back and checkout what they actually are.
But essentially it's amirroring.
When one side mirrors theother's actions so precisely, to
me, it didn't feel likeescalation.
It felt like communication.
It felt like China was actuallysaying, We see what you do in
(05:55):
the US, we we can match you, butwe're not shutting that door.
And to me, it feels like that'show the trade politics are
working here.
Both sides moving the samechest pieces, and then it feels
like maybe we're in that pause.
Who blinks first?
And this is where the nuancereally matters.
Despite all this talk ofmaritime retaliation, right?
Retaliation is the word.
(06:16):
Nothing operationallydestabilizing has really
happened.
And I don't want to minimizethat there has been a little
bit, there has been, and theremight be some trouble, but I
wouldn't say that any sort oftrouble or additional fees are
destabilizing.
This hasn't destabilized thesupply chain.
(06:36):
The world's largeststate-backed ocean carrier,
Costco Shipping, told the JOCthat it had no plans to change
its U.S.
service rotations.
And maybe they didn't tell JOCdirectly, but they they they
made it known that Costco saidthey have no chance, no plans to
change its U.S.
service rotation, which isinteresting because Costco has
the largest exposure.
(06:57):
They are Chinese operated.
And Chinese operated means theycan't just maneuver their
Chinese built vessels out ofrotation and try to cover it.
Chinese operated is a categoryin the US Section 301 that has a
higher fee rate.
And they said they have noplans to change out of U.S.
service rotations.
(07:18):
To me, that was a very publicway of saying we're not going to
pull our ships, we're not goingto be cutting our ports, we're
actually just staying thecourse.
And it also tells me that theChinese government and its
state-run carriers are managingthis extremely carefully.
Of course they are, but they'remaking sure the political
optics stay tough while thecommercial operations stay
stable.
(07:38):
And China quietly went a stepfurther and exempted U.S.
flag vessels built in Chinafrom its retaliatory port fees.
It's part of that mirroring,right?
They said, we've said that evenif it's a Chinese built vessel,
as long as it's owned by a U.S.
company, they're exempted.
China created that same carveout in their responsal fees.
(08:02):
They said US flag vessels builtin China are exempted.
And it's a big deal, and it'skind of easy to miss because
there's a lot going on here.
But if they could have justturned away all U.S.
everything, right?
And they that would have beenin the escalation.
That exemption kind of means tome that China deliberately
carved out space for diplomacy.
(08:23):
They didn't escalate.
They could have applied theirfees more broadly, but they
didn't.
They're signaling some of thatrestraint, but also perhaps
signaling that they're trying toimpact behavior the same way
that the US is.
They're saying we'reresponding, but we're leaving
this open.
We're not going to beescalating.
(08:43):
So when you look at all thistogether, right?
The mirrored policy, the fairlycalm messaging from Costco on
this and the selectiveexemptions, like I said, it's
not chaos to me.
It seems like this is allcontrol.
It seems like this is aplaybook move on both sides, a
short-term show strengthdesigned to create bargaining
leverage, not damage globaltrade.
(09:06):
And from the US side, it'sevidence that the new USTR
Section 301 vessel fees arebeing implemented with exactly
the kind of restraint andpredictability that reassure
markets, right?
And now I am not an economist,and so perhaps I'm batting
outside of my realm by talkingabout the economy of it all.
But I do understand the supplychain side, and I certainly
(09:27):
understand the maritime side.
And this all still sends a firmmessage that the US is serious
about maritime fairness, butit's also impacting decisions,
market decisions.
Now, if you really want areality check on how targeted
these USTR fees are, MichaelAngel over at the JOC analyzed
new data from SP Global MarketIntelligence.
(09:48):
He posted this on LinkedIn thisweek.
As of the October 14th startdate, only 16 of the 85
container ships calling U.S.
ports were Chinese built, hesaid.
But 16 calling U.S.
ports, 12 fell below the 4,000TEU threshold.
So we had 85 containershipscalling U.S.
(10:09):
ports on the 14th.
16 of them were Chinese built.
But of those 16, 12 fell belowthe 4,000 TEU threshold, meaning
they were exempted.
They were too small to beassessed.
And most of them were operatedby U.S.
companies in the Caribbean orshort-term trades that are
already exempt.
(10:29):
So Costco and OCL each have acouple of post-PanMAC ships in
the mix, but both carriers havesaid they don't plan to pass the
fees through to customers.
Now, this is a I want to kindof pause because the way that I
read it is mostly that way whereCostco and OCL have said they
don't plan to pass the feesthrough as a surcharge.
Now, I don't know if that meansexactly that they're not going
(10:51):
to be passing it through as adirect pass-through charge, or
if they're just saying we're notgoing to be doing a blanket
surcharge, as many of the otherocean carriers have said, they
don't plan to do a blanketsurcharge to cover these fees.
I'm expecting that they'llprobably come through as direct
pass-through fees, but arguablythat's what Cascona OCL is
(11:12):
saying here is that they don'tplan to pass through the fees
through surcharges.
I don't know.
We're going to see.
We we're two days, three dayspast the start date of these
fees.
So here we are.
We're going to see what theystart looking like if they show
up on invoices.
But look, that's hopefully themessage really is that they
don't plan to pass through thefees to the customers at all.
(11:33):
So while the headlines arestill screaming new tariff, the
actual operational impact isminimal, is what we're seeing,
right?
This is a high precision, itfeels like high precision, low
volume policy aimed at strategicsignaling, perhaps not
disruption.
And now I know that I don'tusually go into the
judgment-based side of things,and I really don't think that
I'm going too far into thejudgment-based side of things.
(11:55):
I'm just trying to illuminatesome of these patterns that I'm
seeing, right?
And it feels like it wasprobably a calculated thing, and
it seems to be proving to bepretty effective.
It's demonstrating resolvewithout risking volatility at US
ports, right?
They're both kind of signaling,right?
US and China are bothsignaling, but trade keeps
(12:15):
flowing and it feels measured.
So if you caught last week'sepisode, you'll remember we
walked through the details ofthis China retaliatory port
fees, these mirror port fees, asa direct response to U.S.
Section 301.
What we talked about is thatBeijing was rolling out its
special port fees on U.S.
linked ships, is what it was,the U.S.
(12:36):
linked ships, starting October14th.
It's a one-for-one, ten-for-tonresponse, meant to show parity,
not escalation, is what I saw.
China now charges 401 per netton, or about 56 bucks per
voyage, applied only at thefirst Chinese port of call,
similar to the US application.
And each vessel is capped atfive assessed voyages per year,
(12:57):
just like the USTR Section 301s.
And just like the US system,the rates escalate annually to
roughly $90 in 2026, $120 in2027, and $157 in 2028.
If that sounds familiar, itshould.
It's mirror image policy of theUS Section 301 vessel fees,
down to the cap, the timing, theescalation schedule.
(13:19):
Like I said, this I see this asChina's message of clear of we
can match your maritime economicpressure ton for ton, but we're
not going to escalate.
Right?
They didn't escalate.
They're symbolic leveragetools, a diplomatic echo of U.S.
policy meant to show strengthwhile preserving stability.
And the markets noticed, sure,but there was also some
(13:41):
market-driven decisions thathappened from these
announcements.
One of the first was that weheard from Gemini Cooperation,
the new strategic partnershipbetween Marisk and Hopag Lloyd.
Remember, this is the Hobb andSpoke model.
This is the one where theytalked about very high
reliability.
According to JOC, Geminirepositioned certain vessels
away from Chinese ports almostimmediately after the fees took
(14:03):
effect.
Now, with the USDR Section 301,they had six months to plan.
With these special port fees,the China announced they had
about a week.
So it was, it had to be faster,right?
And the faster you go, perhapsthe more disruptive it can be to
the markets.
But the markets were alreadymaking adjustments and
repositioning fleets.
And we're seeing that withmany, many, many of the ocean
(14:27):
carriers repositioning theirfleets over the summer, right?
Across the container sector,carriers were mapping vessel
ownership, build origin, andoperational control with a level
of precision that we reallyhaven't seen before.
So now, what does that mean foryou?
What does that mean for you asjust somebody that's part of the
ocean shipping world?
You also have to do a littlebit of assessment on what
(14:49):
container, what vessel yourcontainers are moving on.
So ask, and this is not legaladvice, but this is general
education on what I see going onhere.
Who owns this vessel?
Right?
You probably know, but is it avessel operating comma carrier?
Is it a non-vessel operatingcomma carrier?
Who actually owns and isoperating the vessel that your
(15:09):
container is on?
And where was that vesselbuilt?
If it was built in China, thenmaybe expect to be watching your
invoices a little closer to seeif you get a surcharge that
comes through or a pass-throughcharge that comes through of
these USTR Section 301 fees ornot.
But at least you'll know wasyour container on a Chinese
(15:30):
built or non-Chinese builtvessel and who's operating it.
Those are the those are thequestions that I think you
should be asking.
And for a little bit, you'regonna have to get that's pretty
detail-oriented.
That's pretty in the weeds.
Your shipping documentsprobably have that information
somewhere in it.
But look, we might also beseeing freight quietly shifting
towards some of these oceancarriers that aren't Chinese
(15:53):
operated, right?
Perhaps moving away fromCostco's and moving toward the
Maersks and the MSCs and theCMAs and the Hopigloids and the
OEs and everybody else.
Carriers that offer perhapsmore US friendly, or should I
say, non-Chinese built ornon-Chinese operated vessels
without triggering either side'sfee structure.
(16:15):
Now it kind of almost feels alittle, and this is stay with me
here, the incentive principle,right?
The FMC worked on thisincentive principle in the 2020
demerge and detentioninterpretive rule.
And basically what they weretrying to say is you don't need
punishment to change behavior,you just need incentives, and
the market corrects itself.
And that's kind of what we'reseeing here, right?
(16:36):
The US Tariff Section 301 feescreated a cost incentive that
rewarded transparency.
And I say incentive becauseyou're trying to avoid the fee.
So arguably it could maybe evenbe still a penalty, but it's
incentivizing movement towardone way by avoidance of a fee
elsewhere.
And we're seeing that happen innot just the who people are
(17:00):
shipping their goods with, butwe're also seeing it in some of
these order books.
We've talked about this before.
These ocean carriers are nowlooking at the contracts that
they have for new builds, andthe the proof is in the pudding.
The reports are coming out thatSouth Korea is seeing an
increase in orders.
I was even seeing this weekincreases in Indian shipyards,
(17:20):
and I'm sure European shipyardsare out there too, where now
non-Chinese shipyards are seeingincreases in order books of
vessels.
Because if these fees are hereto stay, now it's a long game,
right?
Because you would have to kindof bet that these fees are here
to stay, or at least thisincentivization of away from
(17:42):
Chinese bill is here to stay.
But it's it's rebalancing themarket for shipbuilding
generally, right?
So what looks like a trade spatfrom all these headlines feels
like market discipline takingshape and decisions being made
based on avoidance of fees andlonger-term decision making, and
(18:05):
perhaps a bolstering of, Imean, we're seeing injections of
cash like we've never seenbefore coming from Hanwa into
the Philly shipyard and justgenerally order books of
investment infrastructure intoshipbuilding, into maritime,
generally, in either the US orour friends out there.
So I'm seeing all of this asmarket discipline taking shape
(18:31):
toward this strategicrecalibration that is benefiting
the US position here.
It's not a one-off tariff, it'sa chapter in this deliberate
U.S.
industrial policy reboot.
For decades, maritime issueswere really treated as
peripheral in Washington andelsewhere, right?
We all know that.
We all know that.
As members of the maritimecommunity here, we all know we
(18:55):
were always overshadowed by air,rail, and trucking when it came
to infrastructure priorities.
But I feel like, look, underthis administration, maritime
leverage is recognized as astrategic power.
As soon as this administrationcame in and they pulled Mike
Waltz for national securityadvisor, he had just been
working on the SHIPS Act, whichwas previously called the Kelly
(19:15):
Waltz bill.
Mike Waltz was working veryhard on maritime issues.
And so when he went into thenational security advisor
position, I said, maritimesecurity is national security
now.
This is the best so sign ofthat.
And shortly after, we had allof these executive orders and
kind of movement toward usingmaritime leverage as a strategic
(19:36):
power.
So we're watching it unfold.
The US-China trade dispute nowspans multiple fronts.
We're seeing it onshipbuilding, certainly, but
also poor infrastructure andtechnology.
These aren't random and thesearen't new.
These are things that we'vekind of watched unfold over the
past few months.
And remember, this USTR Section301 started under the Biden
administration.
So it's not entirely Trump thatwas seeing this need to
(20:01):
rebalance maritime shipbuilding,but just the maritime industry
in general.
But it is the Trumpadministration that's been using
it as leverage in tradenegotiations.
We're seeing this intentspecifically for rebuilding U.S.
and Allied shipyards capacity,right?
Building ships.
We're seeing it in themodernizing of ports through
Merit programs and privateinvestments.
(20:21):
And we will probably continueto see that because as the trade
money comes in, I expect to behelping to bolster the maritime
modernization.
And we're also seeing a use oftrade policy to balance maritime
influence that's been one-sidedfor quite a long time.
This is the United Statesasserting leadership through
(20:42):
competence.
And the administration, itseems like, is using these
targeted measures rather thanblunt force bans to restore that
balance or attempt to restorethat balance in the maritime
system.
It feels like strategicmodernization.
And look, this didn't happenovernight, and it still won't
happen overnight.
It's been a slow build.
And that was something that wekind of talked about over the
(21:04):
summer, too, that it felt likethis was taking a little bit too
long.
It felt like things werestalling out over the summer.
We didn't hear much.
There was some reshuffling ofstaff, drafts of ideas of
implementation for perhapsdifferent categories of the
executive order on maritimedominance were being floated.
But now looking back, you canalmost see the methodology
(21:24):
behind the pacing, right?
We had to give time to majorocean carriers to reposition
their fleets for the USTRSection 301 port fees proposals
so that they could repositionthose vessels, limit their fee
exposure to prepare for what wascoming.
And during that time, I'll noteChina didn't introduce those
mirror fees.
So there wasn't a reason not toreposition their vessels.
(21:46):
Had China perhaps acted faster,it would have been more
chaotic, but it didn't.
And it was showing that thechange behavior through the
market decisions approach kindof worked here.
If this policy decision hadbeen rushed, we probably would
have seen a market shock andconfusion.
But instead, we're seeing ameasured rollout, is what it
feels like.
Here we are.
(22:06):
It's about six months past theannouncement, uh, almost six
months, because that was anApril 9th order.
And we have November 5th iswhen we're expecting the app the
maritime action plan.
We needed this maritime, thismeasured rollout to allow the
global system to adapt so thatwhen the fees took effect this
week in October, the responsewas calm, orderly, and
(22:28):
meaningful.
I mean, you have to admit thatkind of seems like it was all by
design.
And perhaps that stall was apurposeful stall.
And maybe I'm giving you toomuch credit to the whole thing.
But maybe it was a purposefulstall.
I've said it from kind of whenwe restarted the season this
fall.
Look, by dropping the proposal,getting everybody engaged,
(22:48):
revising the proposal, right?
The first time USTR evenmentioned these things, it was a
million dollars per Voyage, andthat was it.
And it felt like, whoa, that'sgoing to cause chaos.
And then they revised it.
And then they let the privatesector breeze.
And they gave a six-monthwindow to adapt.
It felt like maximum marketimpact with minimal disruption.
Right?
It felt like it was allowingthe market decisions and the
(23:12):
data to catch up with thediplomacy.
And now months later, we'reseeing that vessel orders are
shifting toward Allied yards.
We're seeing fleetdiversification, we're seeing
repositioning of vessels,carriers rebalancing service
networks.
So that when people are askingwhether these vessel fees are
working, like they've only beenin effect for three days.
But the answer was before evenOctober 14th, yes.
(23:33):
Because everybody was makingdecisions around them.
It was impacting the behavioras they were really designed to
do.
It was a long game, right?
And that's a game that Chinaplays too.
So this was a long game overwhat, six months?
But this was a game that wascarefully sequenced with
market-informed maritimestrategy, seeming to be
restoring that balance andAmerican presence, one measured
(23:56):
move at a time.
So President Trump has alreadyannounced that he's going to be
probably meeting with PresidentXi in the next few weeks, or
that he will be meeting withPresident Xi in the next few
weeks.
This is something that I saidlast week.
And again, not legal advicedirectly related to your matter,
but I think this is gonna get alittle chaotic for the next few
weeks until this meetinghappens.
But I also am very hopeful thatperhaps this chaos, this tit
(24:20):
for tat, this retaliatorymeasures is heating things up
and moving us toward a tradedeal between the US and China.
The Section 301s only went livea few days ago.
Like I said, I think that we'regonna be heating up perhaps
before the meeting of the twoleaders.
But I also see this as the USwalking into that dialogue with
(24:40):
leverage.
They were able to impact marketdecisions.
They were able to impact thebehavior of categories within
the maritime sector.
And both sides can claimstrength here, right?
The U.S.
acted decisively to correctmarket distortion in
shipbuilding and maritimeservices, and China responded
proportionally, the mirror,while keeping trade open.
(25:04):
And that's the definition ofcontrolled escalation with an
exit ramp.
If I'll durable agreements seemto start because Section 301
tools are reversible, theydouble as negotiating chips.
If China offers concession onmaritime-related issues, the
U.S.
could reduce the fees whileclaiming still a policy win.
And the vessels have beenmaneuvered, and they probably
(25:27):
won't be maneuvered out becausewhy would they?
It seems to work just fine.
It reasserts maritimeinfluence, strengthens maritime
bargaining position.
It feels like this was allplanned.
So for industry, what is themessage here?
To me, it's gonna feel a littlechaotic, but to me, the system
(25:48):
is working.
I think the plan is unfoldinghow it was designed to unfold.
Trade lanes are opening orcontinue to stay open.
Carriers are sailing, cargo ismoving.
There's not a lot of messagingof big surcharges coming in.
It feels like the U.S.
is demonstrating the maritimepolicy can be used as a
(26:08):
precision instrument becausethere's no sign of chaos or or
not a large sign of chaos in theports.
There doesn't seem to besurging or dropping out of
rates.
There doesn't seem to be a lotof panic in the markets.
Instead, it feels kind of calmand choreographed, right?
I said it wasn't chaotic, itwas choreographed.
(26:29):
So what do you do if you're inlogistics and compliance?
Run the numbers, audit yourexposure, figure out what
vessels your goods are shippingon, take a look at surcharge
clause in all invoices that youreceive.
See if you are getting anypass-through charges.
Make sure that things are stilloperating the way that they
(26:49):
should.
And maybe ask questions.
Where are your vessels built ifyou're working with carriers?
Or if you are a carrier, makesure that you know, and I'm sure
this has been happening, whereyour vessels are built.
What's the vessel structure ofyour fleet?
Do you have non-Chinese vesselsthat can still be moved around?
(27:10):
And then if you are a shipper,find out who's actually
operating these vessels.
That's just knowing what'sgoing on.
That's that's strategicliteracy that's that's
successfully planning for what'snext.
And by understanding some ofthese nuances in the maritime
industry and the ocean shippingworld, you will be better
situated on making decisionsstrategically on how to ship
(27:34):
your goods and limit yourexposure to potentially
surcharges.
It's also an opportunity todiversify routing options while
conditions are perhaps calm,we'll say for the most part.
Maybe I said this during someof the labor negotiations.
I said that maybe diversifyingports of entry or diversifying
(27:55):
routes was a good idea then.
It continues to probably be agood idea, not specific to your
matter.
This isn't legal advice, thisisn't business advice that you
should be taking specifically,but something for you to
consider.
Diversifying your suppliers,diversify your routing options.
Maybe there's something thatyou could also add so that if
(28:15):
something, if you do haveexposure on one trade route,
because remember, ocean carriersmove on dedicated trade lanes.
So if you know what vessel ison that dedicated trade lane,
perhaps you can help youeliminate or certainly reduce
your available exposure to someof these fees, right?
I think maritime infrastructureis going to continue to be a
(28:38):
field of national priority.
I think that what we are goingto see next week, the FMC
nominees, Laura DeBella and BobHarvey, are up for maritime, up
for their hearing over at theSenate.
We also see the MaritimeAdministrator, the Department of
Transportation nominee, SteveCarmel.
He is also up for his hearing.
It's moving forward, right?
I think that we're seeingmaritime leverage on the large
(29:02):
global stage.
We're seeing the pieces startto fall into place within the
federal agencies.
I think that we have a reallygood start here.
And to be honest, it isrefreshing to see any
administration put maritimeaffairs front and center.
Because as we all know, youcan't get your goods.
(29:23):
90% of everything moves byocean shipping.
And you can't get your goodsinto the country if you don't
have the ports and you don'thave the people and you don't
have the ships.
And you have to have thatcargo, right?
It's not just an infrastructureissue, it's a tool.
Because at the end of the day,this isn't about the tariffs or
the tonnage.
It's about confidence, theconfidence that hopefully
(29:43):
America can set a tone in globalshipping.
I think that we're gettingthere.
My advice, non legal, is tostay calm, is to make sure that
you understand where your goodsare moving, make sure that you
understand how it all works.
Because I think that we'regoing to continue to see this.
So, what am I watching next?
(30:04):
The story is not done, that'sfor sure.
What happens over the next fewweeks, I think, could define the
tone of US-China maritimerelations and certainly maybe
US-China maritime, US-Chinarelations generally.
We're watching for this TrumpXi meeting.
President Trump and PresidentXi have said that they're going
to be meeting in the next fewweeks.
Uh, this is gonna be the firsttest of where we are.
Is this going to be an actualwe had a chat, it was great, or
(30:28):
is this going to be a here'ssome things that we're working
on reciprocity, transparency,industrial capacity?
I'm gonna be listening forthings like that.
I'm also gonna be listening forpotentially shipbuilding
investment and different ways ofmaneuvering that I think will
get us closer to a broader traintrade framework.
(30:50):
Will those special port feesstart to fall off by China?
And also I'm gonna see China'senforcement of those special
port fees.
They don't have to, and wehaven't seen them, right?
We're still waiting on bothsides.
How are they going to beapplied?
Who's paying for themspecifically?
But that's a big question onthe China special port fees.
(31:10):
They could quietly pauseenforcement to cool tensions if
they wanted, or they couldselectively tighten it as
negotiations unfold.
That's kind of the benefit ofhaving these special port fees,
is that they can maneuver themfor leverage.
So if the enforcement staysrestrained, it suggests Beijing,
it's still seeing value andkeeping the shipping lanes calm
(31:33):
and the conversation open.
We're gonna continue to see thecarrier behavior responding to
it.
I think we're also gonna beseeing, like I said, the
shippers responding to it.
Are you going to be makingdecisions on whether whether
you're gonna ship with Costco orwhether you're gonna ship with
somebody else, knowing thatCostco is an ocean carrier, a
(31:53):
Chinese-operated ocean carrier.
But on the other hand, if youhave a lot of exposure to
Chinese ports, maybe you'll makedecisions based on that.
I also think I'm gonna keepcontinue to keep an eye on
shipyard order books,specifically out of South Korea.
We'll continue to watch that,but it was really interesting to
(32:13):
see an uh increase in reportingof India and order books coming
out of India.
Let's see if this momentumcontinues, right?
Our new order is gonna beshifting away from these Chinese
yards into Allied facilities,one day into perhaps the US
facilities.
I'm also gonna continue to seewhat's happening with domestic
(32:35):
follow-through, right?
We're gonna have our people intheir positions, right?
So Department of Transportationthrough MARAD and the Federal
Maritime Commission hopefullywill be up to full power.
Both have opportunities totranslate this momentum into
policy infrastructure.
Mayrad could expandorganization and training
initiatives, and the FMC coulduse this moment to refine
competitive fairness frameworksor data transparency programs,
(32:58):
right?
So perhaps it won't just alwaysbe reacting to China, but they
might be institutionalizing someof this maritime strength for
the long term, and hopefully ina as they are meant to, or at
least the FMC, in a fairnessway.
Perhaps MARED will becontinuing to pursue and promote
(33:18):
the US flag side of things, theU.S.
maritime infrastructure.
But on the FMC side, we'regonna be seeing their move
toward fairness and reliabilityand the throughput and the
efficient movement of goods andcargo for the benefit of the
U.S.
importer, exporter, andconsumer.
Because that's their missiontoo.
I'm gonna keep looking at allof this, right?
(33:41):
I want to see how it allconnects trade, national
security, industrial innovation.
This is all unfolding veryquickly.
I didn't want to go too farinto any of the specifics
because it could change at amoment's notice.
I think that we will continueto see things change over the
next few days, the next fewweeks.
It feels like the US might havedone a few things well here.
(34:03):
And I said that kind ofthroughout this monologue, I
guess, but we'll see.
We'll see where it all goes.
I think that it's still, thereare a lot of things at play.
But to me, looking back at someof the things that I've been
reporting on and reacting toover the past few months and
certainly into the spring,doesn't it feel like things are
(34:24):
kind of falling together?
They're kind of it it kind ofmade sense.
Now, I don't want to, I don'twant to give too much credence
here because who knows, right?
We're we're still kind ofseeing all of this play out.
And I'm certainly not eventalking about the tariff side of
things.
I'm only talking about themaritime side, I'm talking about
(34:46):
the portface here.
But it worked.
It certainly worked to changebehaviors.
So I'm encouraged.
I'm staying positive.
I'm I'm really encouraged byseeing the behavior shift.
And now we're getting intoperhaps the the apex of our
relationship with China formaritime issues, and maybe we'll
(35:07):
have a trade deal in the nextfew weeks.
I'm hopeful.
I'm hopeful.
Look, keep it here, keepwatching, keep listening, and uh
we'll get back to the theCaptain's Lock news next week.
But I wanted to kind of have areactionary episode.
So if you like this episode, besure to follow, subscribe, and
leave a review.
Want to go deeper on thesetopics or bring this kind of
insight to your team, visit themaritimeprofessor.com to explore
(35:29):
corporate trainings, tailoredbriefings, and on-demand
webinars, all designed to makecomplex maritime regulations
practical and easy tounderstand.
If your organization needs helpnavigating the legal or
strategic side of ocean shippingregulations, head over to
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That's where I provideconsulting services, regulatory
guidance, and policy support.
Also, this year we are so proudto say that we are an official
(35:51):
partner of Manifest, the futureof supply chain and logistics.
So Manifest Vegas, it'sFebruary 9th through 11th, is
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(36:13):
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Listeners of my show actuallyget to save an additional $200
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Now look, as always, thispodcast is for educational
purposes only and should not beconsidered legal advice.
You need an attorney, contactan attorney.
(36:34):
Today, like I said, was alittle bit different.
We walked through some of the,I guess, the spider web of how I
see things playing out.
But this is just a snapshotperception.
This is just non-judgmentbased, but me trying to tie it
all together.
I hope that you enjoyed it.
But like I said, we're gonnaget back to issue-based reaction
(36:55):
and perhaps some more educationon how things are rolling out.
But I thought that it wasimportant to spend a little bit
of time trying to show you wheremy brain was going on how
things are maneuvering and how Ithink that they might continue
to play out.
Because this is just my read ofwhat's going on.
Continue to read those tradepresses out there, continue to
(37:16):
stay informed, continue to stayengaged and educated on all
things ocean shipping, becausethe better that you know the
industry, the better that youknow the rules, the better
decisions you make.
So look, until next time, I'mLauren Began, the Maritime
Professor, and you've justlistened to my land and by
seeing.
See you next time.
Ready to go.
You're listening to By Land andBy Sea, powered by the Maritime
Professor.
Lauren Beagen (00:18):
The trade war is officially seaborne within days
of the USTR's new Section 301vessel fees going into effect on
ships built or operated byChinese company.
Beijing is firing back,announcing mirror image port
charges, and even targetingAmerican-linked shipbuilders
(00:38):
with sanctions and restrictions.
But look, I'm here to say Idon't see this all as chaos
entirely.
I see it as perhapschoreography.
And frankly, I see the wholething as strategically perhaps
clever by President Trump'sadministration.
To me, it reassures and itreasserts U.S.
leverage in the maritime domainwhile signaling to allies and
(01:00):
competitors that the U.S.
is backed at the helm of itsown shipping policy.
We're going to talk a lot moreabout it today.
What I think about the wholething.
Hi, welcome back to Byland andby Sea, an attorney breaking
down the weakened supply chainpresented by the Maritime
Professor.
Me, I'm Lauren Beegan, formerFMC International Affairs
Attorney and founder of theMaritime Professor in Squall
Strategies.
(01:20):
By Land and By Sea is yourgo-to resource for navigating
the regulatory side of globalocean shipping.
And me, well, I'm your favoritemaritime attorney.
As always, this podcast is foreducational purposes only and is
not legal advice.
This is Plain LanguageMaritime, so anyone, not just
lawyers or industry insiders,can follow along and see what's
happening in the world ofshipping.
(01:41):
So let's dive in because as youknow, ocean shipping moves the
world.
All right.
Well, before we jump into it, Iwant to stop for a minute
before we get too deep into theheadlines and let you know that
look, today we're going to beunpacking the nuances and
frankly some of my reactions tothe latest tip-for-tap political
posturing between the UnitedStates and China in the maritime
(02:02):
sphere.
It's going to be technical.
It might be a little lessbaseline 101 than we usually
talk.
But as we get into today'sdiscussion, if you find yourself
thinking, wait, what exactlyare these USTR Section 301 port
fees?
She keeps talking about, don'tworry, you're not alone.
That's why I built a minicourse on this.
It's part of my just in timelearning mini course.
(02:25):
It breaks it all down.
What are these Section 301vessel fees?
Why were they created?
Who they actually hit?
Look, we go over it all in 30minutes or less.
Plain language, so you get theinformation you need when you
need it.
Because when you understand therules, you make better
decisions.
You can take the short coursebefore or after this episode.
I mean, you're alreadylistening, so keep with us.
(02:46):
Either way, it'll give you theplain language foundation of how
this all started and set you upfor the deeper dive that we're
about to take today.
So find it at theMaritimeProfessor.com.
Just look for just in timelearning, USTR section 301 port
fees.
All right, now let's get intothe nuance.
And why this latest tip for tapmay actually be a sign that the
US strategy is working exactlyas intended.
(03:07):
I don't know.
Let's see.
I have some thoughts on this.
So look, of course, headlineslove the word retaliation.
It sounds dramatic, it drivesclicks, it makes for great
talking points.
But in the world of trade andmaritime policy, what's
happening right now, to me,isn't a free-for-all.
It's a pattern.
(03:27):
I see it as a pattern.
And I always try to find thethemes of the pattern.
One that we've seen perhapsplay out before.
And it's actually a pre afairly predictable structured
exchange between the two majoreconomies in its simplest form.
I don't want to minimize thatthis is a very complicated
thing, but I'm seeing trends.
(03:48):
So when the United States takesa policy action like this, in
this case, the US, the USTR siteand 301 vessel fees, it's
sending a calculated signal,right?
We're willing to use maritimepolicy as leverage because it
was never only about the portfees.
This wasn't meant to be amoneymaker.
This was meant to be a behaviorchanger, right?
(04:10):
It it's a show of seriousness,not necessarily hostility, is
how I took it.
And so, of course, China wasgoing to respond, right?
Of course they were going torespond.
This was probably one of themost predictable things that
could have happened that Chinaresponded.
It wasn't when, it was how theywere going to respond.
And so when China responded, Ididn't see it out of anger.
(04:32):
I kind of saw it out ofnecessity.
Of course, Beijing had todemonstrate strength to its own
domestic audience.
That's part of the playbook,right?
That's how geopolitics works.
Matching tone and posture toshow that it won't be
intimidated.
But what I will note is that itseemed like they didn't totally
cross the line into escalation.
(04:52):
So rather than a trade spiralspiral, excuse me, what we're
seeing is a calibrated, measuredresponse.
That's what it seems like tome.
A series of carefully balancedmoves designed to communicate
power while keeping trade lanesopen.
In other words, this isn't abreakdown to me.
It seems like two superpowersare talking through the language
(05:14):
of tariffs this time around.
Now, according to Reutersreporting posted by G Captain,
China's Newport fees largelymirror the US Section 301
structure, right?
We saw similar framework,similar tone.
That's not accidental.
That's diplomacy throughmimicry, mimicking.
(05:34):
We talked about what theseChina response fees look like
last week.
So you can go back and checkout what they actually are.
But essentially it's amirroring.
When one side mirrors theother's actions so precisely, to
me, it didn't feel likeescalation.
It felt like communication.
It felt like China was actuallysaying, We see what you do in
(05:55):
the US, we we can match you, butwe're not shutting that door.
And to me, it feels like that'show the trade politics are
working here.
Both sides moving the samechest pieces, and then it feels
like maybe we're in that pause.
Who blinks first?
And this is where the nuancereally matters.
Despite all this talk ofmaritime retaliation, right?
Retaliation is the word.
(06:16):
Nothing operationallydestabilizing has really
happened.
And I don't want to minimizethat there has been a little
bit, there has been, and theremight be some trouble, but I
wouldn't say that any sort oftrouble or additional fees are
destabilizing.
This hasn't destabilized thesupply chain.
(06:36):
The world's largeststate-backed ocean carrier,
Costco Shipping, told the JOCthat it had no plans to change
its U.S.
service rotations.
And maybe they didn't tell JOCdirectly, but they they they
made it known that Costco saidthey have no chance, no plans to
change its U.S.
service rotation, which isinteresting because Costco has
the largest exposure.
(06:57):
They are Chinese operated.
And Chinese operated means theycan't just maneuver their
Chinese built vessels out ofrotation and try to cover it.
Chinese operated is a categoryin the US Section 301 that has a
higher fee rate.
And they said they have noplans to change out of U.S.
service rotations.
(07:18):
To me, that was a very publicway of saying we're not going to
pull our ships, we're not goingto be cutting our ports, we're
actually just staying thecourse.
And it also tells me that theChinese government and its
state-run carriers are managingthis extremely carefully.
Of course they are, but they'remaking sure the political
optics stay tough while thecommercial operations stay
stable.
(07:38):
And China quietly went a stepfurther and exempted U.S.
flag vessels built in Chinafrom its retaliatory port fees.
It's part of that mirroring,right?
They said, we've said that evenif it's a Chinese built vessel,
as long as it's owned by a U.S.
company, they're exempted.
China created that same carveout in their responsal fees.
(08:02):
They said US flag vessels builtin China are exempted.
And it's a big deal, and it'skind of easy to miss because
there's a lot going on here.
But if they could have justturned away all U.S.
everything, right?
And they that would have beenin the escalation.
That exemption kind of means tome that China deliberately
carved out space for diplomacy.
(08:23):
They didn't escalate.
They could have applied theirfees more broadly, but they
didn't.
They're signaling some of thatrestraint, but also perhaps
signaling that they're trying toimpact behavior the same way
that the US is.
They're saying we'reresponding, but we're leaving
this open.
We're not going to beescalating.
(08:43):
So when you look at all thistogether, right?
The mirrored policy, the fairlycalm messaging from Costco on
this and the selectiveexemptions, like I said, it's
not chaos to me.
It seems like this is allcontrol.
It seems like this is aplaybook move on both sides, a
short-term show strengthdesigned to create bargaining
leverage, not damage globaltrade.
(09:06):
And from the US side, it'sevidence that the new USTR
Section 301 vessel fees arebeing implemented with exactly
the kind of restraint andpredictability that reassure
markets, right?
And now I am not an economist,and so perhaps I'm batting
outside of my realm by talkingabout the economy of it all.
But I do understand the supplychain side, and I certainly
(09:27):
understand the maritime side.
And this all still sends a firmmessage that the US is serious
about maritime fairness, butit's also impacting decisions,
market decisions.
Now, if you really want areality check on how targeted
these USTR fees are, MichaelAngel over at the JOC analyzed
new data from SP Global MarketIntelligence.
(09:48):
He posted this on LinkedIn thisweek.
As of the October 14th startdate, only 16 of the 85
container ships calling U.S.
ports were Chinese built, hesaid.
But 16 calling U.S.
ports, 12 fell below the 4,000TEU threshold.
So we had 85 containershipscalling U.S.
(10:09):
ports on the 14th.
16 of them were Chinese built.
But of those 16, 12 fell belowthe 4,000 TEU threshold, meaning
they were exempted.
They were too small to beassessed.
And most of them were operatedby U.S.
companies in the Caribbean orshort-term trades that are
already exempt.
(10:29):
So Costco and OCL each have acouple of post-PanMAC ships in
the mix, but both carriers havesaid they don't plan to pass the
fees through to customers.
Now, this is a I want to kindof pause because the way that I
read it is mostly that way whereCostco and OCL have said they
don't plan to pass the feesthrough as a surcharge.
Now, I don't know if that meansexactly that they're not going
(10:51):
to be passing it through as adirect pass-through charge, or
if they're just saying we're notgoing to be doing a blanket
surcharge, as many of the otherocean carriers have said, they
don't plan to do a blanketsurcharge to cover these fees.
I'm expecting that they'llprobably come through as direct
pass-through fees, but arguablythat's what Cascona OCL is
(11:12):
saying here is that they don'tplan to pass through the fees
through surcharges.
I don't know.
We're going to see.
We we're two days, three dayspast the start date of these
fees.
So here we are.
We're going to see what theystart looking like if they show
up on invoices.
But look, that's hopefully themessage really is that they
don't plan to pass through thefees to the customers at all.
(11:33):
So while the headlines arestill screaming new tariff, the
actual operational impact isminimal, is what we're seeing,
right?
This is a high precision, itfeels like high precision, low
volume policy aimed at strategicsignaling, perhaps not
disruption.
And now I know that I don'tusually go into the
judgment-based side of things,and I really don't think that
I'm going too far into thejudgment-based side of things.
(11:55):
I'm just trying to illuminatesome of these patterns that I'm
seeing, right?
And it feels like it wasprobably a calculated thing, and
it seems to be proving to bepretty effective.
It's demonstrating resolvewithout risking volatility at US
ports, right?
They're both kind of signaling,right?
US and China are bothsignaling, but trade keeps
(12:15):
flowing and it feels measured.
So if you caught last week'sepisode, you'll remember we
walked through the details ofthis China retaliatory port
fees, these mirror port fees, asa direct response to U.S.
Section 301.
What we talked about is thatBeijing was rolling out its
special port fees on U.S.
linked ships, is what it was,the U.S.
(12:36):
linked ships, starting October14th.
It's a one-for-one, ten-for-tonresponse, meant to show parity,
not escalation, is what I saw.
China now charges 401 per netton, or about 56 bucks per
voyage, applied only at thefirst Chinese port of call,
similar to the US application.
And each vessel is capped atfive assessed voyages per year,
(12:57):
just like the USTR Section 301s.
And just like the US system,the rates escalate annually to
roughly $90 in 2026, $120 in2027, and $157 in 2028.
If that sounds familiar, itshould.
It's mirror image policy of theUS Section 301 vessel fees,
down to the cap, the timing, theescalation schedule.
(13:19):
Like I said, this I see this asChina's message of clear of we
can match your maritime economicpressure ton for ton, but we're
not going to escalate.
Right?
They didn't escalate.
They're symbolic leveragetools, a diplomatic echo of U.S.
policy meant to show strengthwhile preserving stability.
And the markets noticed, sure,but there was also some
(13:41):
market-driven decisions thathappened from these
announcements.
One of the first was that weheard from Gemini Cooperation,
the new strategic partnershipbetween Marisk and Hopag Lloyd.
Remember, this is the Hobb andSpoke model.
This is the one where theytalked about very high
reliability.
According to JOC, Geminirepositioned certain vessels
away from Chinese ports almostimmediately after the fees took
(14:03):
effect.
Now, with the USDR Section 301,they had six months to plan.
With these special port fees,the China announced they had
about a week.
So it was, it had to be faster,right?
And the faster you go, perhapsthe more disruptive it can be to
the markets.
But the markets were alreadymaking adjustments and
repositioning fleets.
And we're seeing that withmany, many, many of the ocean
(14:27):
carriers repositioning theirfleets over the summer, right?
Across the container sector,carriers were mapping vessel
ownership, build origin, andoperational control with a level
of precision that we reallyhaven't seen before.
So now, what does that mean foryou?
What does that mean for you asjust somebody that's part of the
ocean shipping world?
You also have to do a littlebit of assessment on what
(14:49):
container, what vessel yourcontainers are moving on.
So ask, and this is not legaladvice, but this is general
education on what I see going onhere.
Who owns this vessel?
Right?
You probably know, but is it avessel operating comma carrier?
Is it a non-vessel operatingcomma carrier?
Who actually owns and isoperating the vessel that your
(15:09):
container is on?
And where was that vesselbuilt?
If it was built in China, thenmaybe expect to be watching your
invoices a little closer to seeif you get a surcharge that
comes through or a pass-throughcharge that comes through of
these USTR Section 301 fees ornot.
But at least you'll know wasyour container on a Chinese
(15:30):
built or non-Chinese builtvessel and who's operating it.
Those are the those are thequestions that I think you
should be asking.
And for a little bit, you'regonna have to get that's pretty
detail-oriented.
That's pretty in the weeds.
Your shipping documentsprobably have that information
somewhere in it.
But look, we might also beseeing freight quietly shifting
towards some of these oceancarriers that aren't Chinese
(15:53):
operated, right?
Perhaps moving away fromCostco's and moving toward the
Maersks and the MSCs and theCMAs and the Hopigloids and the
OEs and everybody else.
Carriers that offer perhapsmore US friendly, or should I
say, non-Chinese built ornon-Chinese operated vessels
without triggering either side'sfee structure.
(16:15):
Now it kind of almost feels alittle, and this is stay with me
here, the incentive principle,right?
The FMC worked on thisincentive principle in the 2020
demerge and detentioninterpretive rule.
And basically what they weretrying to say is you don't need
punishment to change behavior,you just need incentives, and
the market corrects itself.
And that's kind of what we'reseeing here, right?
(16:36):
The US Tariff Section 301 feescreated a cost incentive that
rewarded transparency.
And I say incentive becauseyou're trying to avoid the fee.
So arguably it could maybe evenbe still a penalty, but it's
incentivizing movement towardone way by avoidance of a fee
elsewhere.
And we're seeing that happen innot just the who people are
(17:00):
shipping their goods with, butwe're also seeing it in some of
these order books.
We've talked about this before.
These ocean carriers are nowlooking at the contracts that
they have for new builds, andthe the proof is in the pudding.
The reports are coming out thatSouth Korea is seeing an
increase in orders.
I was even seeing this weekincreases in Indian shipyards,
(17:20):
and I'm sure European shipyardsare out there too, where now
non-Chinese shipyards are seeingincreases in order books of
vessels.
Because if these fees are hereto stay, now it's a long game,
right?
Because you would have to kindof bet that these fees are here
to stay, or at least thisincentivization of away from
(17:42):
Chinese bill is here to stay.
But it's it's rebalancing themarket for shipbuilding
generally, right?
So what looks like a trade spatfrom all these headlines feels
like market discipline takingshape and decisions being made
based on avoidance of fees andlonger-term decision making, and
(18:05):
perhaps a bolstering of, Imean, we're seeing injections of
cash like we've never seenbefore coming from Hanwa into
the Philly shipyard and justgenerally order books of
investment infrastructure intoshipbuilding, into maritime,
generally, in either the US orour friends out there.
So I'm seeing all of this asmarket discipline taking shape
(18:31):
toward this strategicrecalibration that is benefiting
the US position here.
It's not a one-off tariff, it'sa chapter in this deliberate
U.S.
industrial policy reboot.
For decades, maritime issueswere really treated as
peripheral in Washington andelsewhere, right?
We all know that.
We all know that.
As members of the maritimecommunity here, we all know we
(18:55):
were always overshadowed by air,rail, and trucking when it came
to infrastructure priorities.
But I feel like, look, underthis administration, maritime
leverage is recognized as astrategic power.
As soon as this administrationcame in and they pulled Mike
Waltz for national securityadvisor, he had just been
working on the SHIPS Act, whichwas previously called the Kelly
(19:15):
Waltz bill.
Mike Waltz was working veryhard on maritime issues.
And so when he went into thenational security advisor
position, I said, maritimesecurity is national security
now.
This is the best so sign ofthat.
And shortly after, we had allof these executive orders and
kind of movement toward usingmaritime leverage as a strategic
(19:36):
power.
So we're watching it unfold.
The US-China trade dispute nowspans multiple fronts.
We're seeing it onshipbuilding, certainly, but
also poor infrastructure andtechnology.
These aren't random and thesearen't new.
These are things that we'vekind of watched unfold over the
past few months.
And remember, this USTR Section301 started under the Biden
administration.
So it's not entirely Trump thatwas seeing this need to
(20:01):
rebalance maritime shipbuilding,but just the maritime industry
in general.
But it is the Trumpadministration that's been using
it as leverage in tradenegotiations.
We're seeing this intentspecifically for rebuilding U.S.
and Allied shipyards capacity,right?
Building ships.
We're seeing it in themodernizing of ports through
Merit programs and privateinvestments.
(20:21):
And we will probably continueto see that because as the trade
money comes in, I expect to behelping to bolster the maritime
modernization.
And we're also seeing a use oftrade policy to balance maritime
influence that's been one-sidedfor quite a long time.
This is the United Statesasserting leadership through
(20:42):
competence.
And the administration, itseems like, is using these
targeted measures rather thanblunt force bans to restore that
balance or attempt to restorethat balance in the maritime
system.
It feels like strategicmodernization.
And look, this didn't happenovernight, and it still won't
happen overnight.
It's been a slow build.
And that was something that wekind of talked about over the
(21:04):
summer, too, that it felt likethis was taking a little bit too
long.
It felt like things werestalling out over the summer.
We didn't hear much.
There was some reshuffling ofstaff, drafts of ideas of
implementation for perhapsdifferent categories of the
executive order on maritimedominance were being floated.
But now looking back, you canalmost see the methodology
(21:24):
behind the pacing, right?
We had to give time to majorocean carriers to reposition
their fleets for the USTRSection 301 port fees proposals
so that they could repositionthose vessels, limit their fee
exposure to prepare for what wascoming.
And during that time, I'll noteChina didn't introduce those
mirror fees.
So there wasn't a reason not toreposition their vessels.
(21:46):
Had China perhaps acted faster,it would have been more
chaotic, but it didn't.
And it was showing that thechange behavior through the
market decisions approach kindof worked here.
If this policy decision hadbeen rushed, we probably would
have seen a market shock andconfusion.
But instead, we're seeing ameasured rollout, is what it
feels like.
Here we are.
(22:06):
It's about six months past theannouncement, uh, almost six
months, because that was anApril 9th order.
And we have November 5th iswhen we're expecting the app the
maritime action plan.
We needed this maritime, thismeasured rollout to allow the
global system to adapt so thatwhen the fees took effect this
week in October, the responsewas calm, orderly, and
(22:28):
meaningful.
I mean, you have to admit thatkind of seems like it was all by
design.
And perhaps that stall was apurposeful stall.
And maybe I'm giving you toomuch credit to the whole thing.
But maybe it was a purposefulstall.
I've said it from kind of whenwe restarted the season this
fall.
Look, by dropping the proposal,getting everybody engaged,
(22:48):
revising the proposal, right?
The first time USTR evenmentioned these things, it was a
million dollars per Voyage, andthat was it.
And it felt like, whoa, that'sgoing to cause chaos.
And then they revised it.
And then they let the privatesector breeze.
And they gave a six-monthwindow to adapt.
It felt like maximum marketimpact with minimal disruption.
Right?
It felt like it was allowingthe market decisions and the
(23:12):
data to catch up with thediplomacy.
And now months later, we'reseeing that vessel orders are
shifting toward Allied yards.
We're seeing fleetdiversification, we're seeing
repositioning of vessels,carriers rebalancing service
networks.
So that when people are askingwhether these vessel fees are
working, like they've only beenin effect for three days.
But the answer was before evenOctober 14th, yes.
(23:33):
Because everybody was makingdecisions around them.
It was impacting the behavioras they were really designed to
do.
It was a long game, right?
And that's a game that Chinaplays too.
So this was a long game overwhat, six months?
But this was a game that wascarefully sequenced with
market-informed maritimestrategy, seeming to be
restoring that balance andAmerican presence, one measured
(23:56):
move at a time.
So President Trump has alreadyannounced that he's going to be
probably meeting with PresidentXi in the next few weeks, or
that he will be meeting withPresident Xi in the next few
weeks.
This is something that I saidlast week.
And again, not legal advicedirectly related to your matter,
but I think this is gonna get alittle chaotic for the next few
weeks until this meetinghappens.
But I also am very hopeful thatperhaps this chaos, this tit
(24:20):
for tat, this retaliatorymeasures is heating things up
and moving us toward a tradedeal between the US and China.
The Section 301s only went livea few days ago.
Like I said, I think that we'regonna be heating up perhaps
before the meeting of the twoleaders.
But I also see this as the USwalking into that dialogue with
(24:40):
leverage.
They were able to impact marketdecisions.
They were able to impact thebehavior of categories within
the maritime sector.
And both sides can claimstrength here, right?
The U.S.
acted decisively to correctmarket distortion in
shipbuilding and maritimeservices, and China responded
proportionally, the mirror,while keeping trade open.
(25:04):
And that's the definition ofcontrolled escalation with an
exit ramp.
If I'll durable agreements seemto start because Section 301
tools are reversible, theydouble as negotiating chips.
If China offers concession onmaritime-related issues, the
U.S.
could reduce the fees whileclaiming still a policy win.
And the vessels have beenmaneuvered, and they probably
(25:27):
won't be maneuvered out becausewhy would they?
It seems to work just fine.
It reasserts maritimeinfluence, strengthens maritime
bargaining position.
It feels like this was allplanned.
So for industry, what is themessage here?
To me, it's gonna feel a littlechaotic, but to me, the system
(25:48):
is working.
I think the plan is unfoldinghow it was designed to unfold.
Trade lanes are opening orcontinue to stay open.
Carriers are sailing, cargo ismoving.
There's not a lot of messagingof big surcharges coming in.
It feels like the U.S.
is demonstrating the maritimepolicy can be used as a
(26:08):
precision instrument becausethere's no sign of chaos or or
not a large sign of chaos in theports.
There doesn't seem to besurging or dropping out of
rates.
There doesn't seem to be a lotof panic in the markets.
Instead, it feels kind of calmand choreographed, right?
I said it wasn't chaotic, itwas choreographed.
(26:29):
So what do you do if you're inlogistics and compliance?
Run the numbers, audit yourexposure, figure out what
vessels your goods are shippingon, take a look at surcharge
clause in all invoices that youreceive.
See if you are getting anypass-through charges.
Make sure that things are stilloperating the way that they
(26:49):
should.
And maybe ask questions.
Where are your vessels built ifyou're working with carriers?
Or if you are a carrier, makesure that you know, and I'm sure
this has been happening, whereyour vessels are built.
What's the vessel structure ofyour fleet?
Do you have non-Chinese vesselsthat can still be moved around?
(27:10):
And then if you are a shipper,find out who's actually
operating these vessels.
That's just knowing what'sgoing on.
That's that's strategicliteracy that's that's
successfully planning for what'snext.
And by understanding some ofthese nuances in the maritime
industry and the ocean shippingworld, you will be better
situated on making decisionsstrategically on how to ship
(27:34):
your goods and limit yourexposure to potentially
surcharges.
It's also an opportunity todiversify routing options while
conditions are perhaps calm,we'll say for the most part.
Maybe I said this during someof the labor negotiations.
I said that maybe diversifyingports of entry or diversifying
(27:55):
routes was a good idea then.
It continues to probably be agood idea, not specific to your
matter.
This isn't legal advice, thisisn't business advice that you
should be taking specifically,but something for you to
consider.
Diversifying your suppliers,diversify your routing options.
Maybe there's something thatyou could also add so that if
(28:15):
something, if you do haveexposure on one trade route,
because remember, ocean carriersmove on dedicated trade lanes.
So if you know what vessel ison that dedicated trade lane,
perhaps you can help youeliminate or certainly reduce
your available exposure to someof these fees, right?
I think maritime infrastructureis going to continue to be a
(28:38):
field of national priority.
I think that what we are goingto see next week, the FMC
nominees, Laura DeBella and BobHarvey, are up for maritime, up
for their hearing over at theSenate.
We also see the MaritimeAdministrator, the Department of
Transportation nominee, SteveCarmel.
He is also up for his hearing.
It's moving forward, right?
I think that we're seeingmaritime leverage on the large
(29:02):
global stage.
We're seeing the pieces startto fall into place within the
federal agencies.
I think that we have a reallygood start here.
And to be honest, it isrefreshing to see any
administration put maritimeaffairs front and center.
Because as we all know, youcan't get your goods.
(29:23):
90% of everything moves byocean shipping.
And you can't get your goodsinto the country if you don't
have the ports and you don'thave the people and you don't
have the ships.
And you have to have thatcargo, right?
It's not just an infrastructureissue, it's a tool.
Because at the end of the day,this isn't about the tariffs or
the tonnage.
It's about confidence, theconfidence that hopefully
(29:43):
America can set a tone in globalshipping.
I think that we're gettingthere.
My advice, non legal, is tostay calm, is to make sure that
you understand where your goodsare moving, make sure that you
understand how it all works.
Because I think that we'regoing to continue to see this.
So, what am I watching next?
(30:04):
The story is not done, that'sfor sure.
What happens over the next fewweeks, I think, could define the
tone of US-China maritimerelations and certainly maybe
US-China maritime, US-Chinarelations generally.
We're watching for this TrumpXi meeting.
President Trump and PresidentXi have said that they're going
to be meeting in the next fewweeks.
Uh, this is gonna be the firsttest of where we are.
Is this going to be an actualwe had a chat, it was great, or
(30:28):
is this going to be a here'ssome things that we're working
on reciprocity, transparency,industrial capacity?
I'm gonna be listening forthings like that.
I'm also gonna be listening forpotentially shipbuilding
investment and different ways ofmaneuvering that I think will
get us closer to a broader traintrade framework.
(30:50):
Will those special port feesstart to fall off by China?
And also I'm gonna see China'senforcement of those special
port fees.
They don't have to, and wehaven't seen them, right?
We're still waiting on bothsides.
How are they going to beapplied?
Who's paying for themspecifically?
But that's a big question onthe China special port fees.
(31:10):
They could quietly pauseenforcement to cool tensions if
they wanted, or they couldselectively tighten it as
negotiations unfold.
That's kind of the benefit ofhaving these special port fees,
is that they can maneuver themfor leverage.
So if the enforcement staysrestrained, it suggests Beijing,
it's still seeing value andkeeping the shipping lanes calm
(31:33):
and the conversation open.
We're gonna continue to see thecarrier behavior responding to
it.
I think we're also gonna beseeing, like I said, the
shippers responding to it.
Are you going to be makingdecisions on whether whether
you're gonna ship with Costco orwhether you're gonna ship with
somebody else, knowing thatCostco is an ocean carrier, a
(31:53):
Chinese-operated ocean carrier.
But on the other hand, if youhave a lot of exposure to
Chinese ports, maybe you'll makedecisions based on that.
I also think I'm gonna keepcontinue to keep an eye on
shipyard order books,specifically out of South Korea.
We'll continue to watch that,but it was really interesting to
(32:13):
see an uh increase in reportingof India and order books coming
out of India.
Let's see if this momentumcontinues, right?
Our new order is gonna beshifting away from these Chinese
yards into Allied facilities,one day into perhaps the US
facilities.
I'm also gonna continue to seewhat's happening with domestic
(32:35):
follow-through, right?
We're gonna have our people intheir positions, right?
So Department of Transportationthrough MARAD and the Federal
Maritime Commission hopefullywill be up to full power.
Both have opportunities totranslate this momentum into
policy infrastructure.
Mayrad could expandorganization and training
initiatives, and the FMC coulduse this moment to refine
competitive fairness frameworksor data transparency programs,
(32:58):
right?
So perhaps it won't just alwaysbe reacting to China, but they
might be institutionalizing someof this maritime strength for
the long term, and hopefully ina as they are meant to, or at
least the FMC, in a fairnessway.
Perhaps MARED will becontinuing to pursue and promote
(33:18):
the US flag side of things, theU.S.
maritime infrastructure.
But on the FMC side, we'regonna be seeing their move
toward fairness and reliabilityand the throughput and the
efficient movement of goods andcargo for the benefit of the
U.S.
importer, exporter, andconsumer.
Because that's their missiontoo.
I'm gonna keep looking at allof this, right?
(33:41):
I want to see how it allconnects trade, national
security, industrial innovation.
This is all unfolding veryquickly.
I didn't want to go too farinto any of the specifics
because it could change at amoment's notice.
I think that we will continueto see things change over the
next few days, the next fewweeks.
It feels like the US might havedone a few things well here.
(34:03):
And I said that kind ofthroughout this monologue, I
guess, but we'll see.
We'll see where it all goes.
I think that it's still, thereare a lot of things at play.
But to me, looking back at someof the things that I've been
reporting on and reacting toover the past few months and
certainly into the spring,doesn't it feel like things are
(34:24):
kind of falling together?
They're kind of it it kind ofmade sense.
Now, I don't want to, I don'twant to give too much credence
here because who knows, right?
We're we're still kind ofseeing all of this play out.
And I'm certainly not eventalking about the tariff side of
things.
I'm only talking about themaritime side, I'm talking about
(34:46):
the portface here.
But it worked.
It certainly worked to changebehaviors.
So I'm encouraged.
I'm staying positive.
I'm I'm really encouraged byseeing the behavior shift.
And now we're getting intoperhaps the the apex of our
relationship with China formaritime issues, and maybe we'll
(35:07):
have a trade deal in the nextfew weeks.
I'm hopeful.
I'm hopeful.
Look, keep it here, keepwatching, keep listening, and uh
we'll get back to the theCaptain's Lock news next week.
But I wanted to kind of have areactionary episode.
So if you like this episode, besure to follow, subscribe, and
leave a review.
Want to go deeper on thesetopics or bring this kind of
insight to your team, visit themaritimeprofessor.com to explore
(35:29):
corporate trainings, tailoredbriefings, and on-demand
webinars, all designed to makecomplex maritime regulations
practical and easy tounderstand.
If your organization needs helpnavigating the legal or
strategic side of ocean shippingregulations, head over to
Squall Strategies.
That's where I provideconsulting services, regulatory
guidance, and policy support.
Also, this year we are so proudto say that we are an official
(35:51):
partner of Manifest, the futureof supply chain and logistics.
So Manifest Vegas, it'sFebruary 9th through 11th, is
the largest global supply chainand logistics tech event in the
world, bringing together globalsupply chain executives,
logistics service providers,cutting-edge startups, venture
investors, and technologyleaders.
You can join 6,000 of yourclosest friends and other supply
(36:13):
chain innovators to foster newstrategies and relationships.
Listeners of my show actuallyget to save an additional $200
off whatever the current priceis.
So go to manifestvegas.comslash maritimeprofessor.
Now look, as always, thispodcast is for educational
purposes only and should not beconsidered legal advice.
You need an attorney, contactan attorney.
(36:34):
Today, like I said, was alittle bit different.
We walked through some of the,I guess, the spider web of how I
see things playing out.
But this is just a snapshotperception.
This is just non-judgmentbased, but me trying to tie it
all together.
I hope that you enjoyed it.
But like I said, we're gonnaget back to issue-based reaction
(36:55):
and perhaps some more educationon how things are rolling out.
But I thought that it wasimportant to spend a little bit
of time trying to show you wheremy brain was going on how
things are maneuvering and how Ithink that they might continue
to play out.
Because this is just my read ofwhat's going on.
Continue to read those tradepresses out there, continue to
(37:16):
stay informed, continue to stayengaged and educated on all
things ocean shipping, becausethe better that you know the
industry, the better that youknow the rules, the better
decisions you make.
So look, until next time, I'mLauren Began, the Maritime
Professor, and you've justlistened to my land and by
seeing.
See you next time.
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