Jonathan Todd, Vice Chair of Benesch’s Transportation & Logistics Practice Group, was recently quoted in the Logistics Management article “USTR targets Chinese maritime dominance with tiered vessel fees, prompting supply chain strategy shifts.”
The article discusses the USTR's ongoing investigation into China's influence in the maritime, logistics, and shipbuilding sectors. It outlines proposed policy changes, including a fee structure for Chinese vessels and adjustments to LNG export regulations, aimed at countering China's market dominance.
Jonathan emphasized that the USTR’s actions will likely lead to increased rates for container shipping in the near term, noting that “it is kind of an unfair expectation to think that this will not find its way into increased rates.” He explained that some sophisticated procurement teams understand how Chinese steamship lines operate and the percentage of Chinese vessels within a fleet, “This is the driver of the lines that will have the increased burden.” As a result, some shippers are considering diversifying their supplier base, evaluating where they might face the biggest challenges, and assessing whether additional service contracts or volume shifts to less-affected carriers are necessary. “I have heard some shippers may plan for a little more diversity in their supplier base. That leads them to ask about where they expect the hits to be and if additional service contracts are needed, or if volumes should be moved to other lines that will be less impacted by this going forward,” Todd said. He also highlighted the importance of avoiding concentration risk across service contracts to maintain flexibility in response to market shifts. “Understand that things may cost more, and understand that maybe we need to avoid concentration risk across our portfolio of service contracts, because we may need to pivot volumes.” Given the complexity of the situation, he framed this as just another factor in an already turbulent landscape, citing past disruptions such as the pandemic, wars, and ongoing trade conflicts.
Read the full article here.