CNBC Highlights “Bureaucratic Bind Spot” in USTR Port Fee Program

The American news channel CNBC is highlighting what is being called a “bureaucratic blind spot” in the new USTR port fee program. During an interview with the Atlantic Container Line CEO, Andrew Abbott, it reports that the carrier could be facing fees of $34 million per year, which the CEO calls “unsustainable.”

The carrier, which is a division of Grimaldi Group, was set up 60 years ago by five major European steamship companies. Today, it is a unique niche provider operating five ConRo vessels built in China and registered in Malta. It operates transporting mostly containers and oversized equipment with service connecting Halifax, New York, Norfolk, and Baltimore, in the United States, with Liverpool, Antwerp, Hamburg, and Gothenburg.

Earlier this month, just before the USTR rolled out its program, it announced a proposed final change to the fees for the Ro-Ro segment. They had wavered between basing the fees on the number of units aboard the vessels or net tonnage. The USTR said it would proceed with the fees based on net tonnage because it was less susceptible to manipulation. They also dramatically increased the fee to $46 per net ton.

Abbott tells CNBC that ACL’s vessels, although they carry 80 percent containers, are being treated as Ro-Ro under the port fee program. He calls this a “bureaucratic blind spot,” saying that only 10 percent of their cargo is Ro-Ro and only 1 percent is cars. The remaining 10 percent is oversized cargo.

The five vessels as 49,600 dwt / 100,000 gross ton ships that have a capacity of 3,800 TEU and 6,400 linear meters of Ro-Ro capacity access with a stern ramp. They were built in China in 2015 and 2016. Abbott says much of their business is for American manufacturers and materials that ultimately are in U.S. exports. The line maintains weekly service with its five vessels.

He tells CNBC that on the first day of the program, one of their ships faced a $1.4 million fee. Since the program permits ships to be charged five times per year and they have five ships, he says they would be required to pay 25 fees per year. That is approximately $34 million per year.

Abbott contends their ConRo design ships have always been recognized as containerships and should be treated as such under the U.S. program. However, the codes the USTR is using list the ships as Ro-Ros.

During the interview with CNBC, Abbott asserts that “it may not be able to viably operate a business in the U.S., and could be forced to relocate operations,” based on the fees. He says, if the situation remains the same, “then we have to start seriously looking next year about redeployment.”

He asserts that the nature of ACL’s business is unique, transporting tractors, equipment, aircraft wings, data center machinery, and transformers for power plants, for example. He says their customers would be forced into the charter market, which would provide less frequent and more costly service to move the critical equipment.

USTR responded to CNBC, saying that the program is using the International Classification of Ships by Type. It asserts this is based on construction characteristics and not the cargo being carried.