US reduces fees on foreign-built LNG carriers

The US is reducing maritime fees on foreign-built LNG tankers it announced on October 10.

In a press release, the United States Trade Representative’s (USTR) office revealed that it will reduce fees on operators of foreign-built ships to $46 per net ton beginning on October 14.

The announcement marks a major concession from a fee of $150 per net ton, which was proposed in April, as US President Donald Trump sought to force the sector to utilise US transport vessels by the levying of high tariffs on Chinese-built ships using US ports.

The move was met with widespread criticism and lobbying letters were sent by industry groups including by the American Petroleum Institute (API) warning that the new fees could wreak havoc on an industry that is vital to Trump’s attempts to reshape the energy sector.

Intended to give a boost to domestic shipbuilding, US LNG exporters have expressed concerns that the policy would significantly raise the cost of hiring vessels and affect US LNG exports. With almost no US-built tankers capable of shipping LNG currently the increased maritime fees on foreign-built LNG tankers would dig into the profitability of US LNG exporters.

Following the pushback, the USTR amended the proposed fee to $14 per net ton in June but has now raised the fee settling on $46 per net ton.

However, the USTR also announced that it will no longer suspend LNG export licenses if certain restrictions on usage of foreign constructed tankers were not met.

Despite the US LNG export industry’s phenomenal growth since its first exports from the lower 48 states in 2016 to become the world's biggest exporter of the super-chilled fuel today, the country has not developed a shipbuilding industry for its LNG carriers.

Lacking sufficient infrastructure, plans by Trump to boost the US shipbuilding sector in the immediate future appear unlikely to be successful with a longer runway needed for infrastructure development before the sector can begin to takeoff.