The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian and Caribbean companies that rely on US imports will likely suffer a 50-60 percent increase in shipping costs if proposals to levy an up to $1.5m per port call fee on Chinese-made ships are implemented.

Dion Bethell, president and chief financial officer at Arawak Port Development Company (APD), in an update issued yesterday to Tribune Business said the Caribbean Shipowners Association (CSA) and region’s wider private sector are planning to lobby for a “carve out” from the US Trade Representative Office’s using the existing trade agreement with the US as “a precedent”.

The Nassau Container Port chief, detailing the shipping industry and private sector advocacy plans, said their arguments will likely focus on the potential damage to US businesses and exporters from the resulting loss of competitiveness and Bahamian/Caribbean firms shifting their product sourcing and supply chains away from traditional routes.

And Mr Bethell, in response to this newspaper’s inquiries, confirmed that there had been discussions among the Association as to whether the fees proposed by the US Trade Representative’s Office will apply to all Chinese-made vessels or be based only on “prospective” orders for new-builds that have been placed with Chinese shipyards and boat builders.

If it is the latter, the impact for the shipping industry, port operators and importers in The Bahamas and Caribbean, as well as consumers, will likely be much less. However, it appears that the CSA and its members, who include APD as operator of the commercial port which processes 90 percent of New Providence’s freight cargo, are leaving nothing to chance given how serious the potential economic consequences are.

Mr Bethell said the CSA had also focused on differentiating between small and large vessels since the proposed one size-fits-all US fee would disproportionately impact the former, which carries a lesser amount of freight to spread the charge over and has a smaller deadweight tonnage (DWT).

“During our deliberations it was uncertain as to whether this fee would apply to new builds or existing vessels,” Mr Bethell confirmed. “It was also discussed whether the same fee should apply to large and small vessels given that such a large fee would be disadvantageous to small size vessels with a lower DWT.” Most of the vessels servicing the Caribbean from a freight cargo perspective are Chinese-made.

Detailing the potentially catastrophic economic consequences that will result throughout the supply chain, from US exporters to Bahamian consumers, if the US fee is implemented as is, Mr Bethell wrote: “The proposed US tariff of up to $1.5m per port call on Chinese-built vessels is expected to cause a 50 to 60 percent increase in shipping costs for Caribbean businesses that rely on US trade.

“Many shipping lines serving the Caribbean operate Chinese-built vessels, which means higher freight costs that will ultimately raise the cost of imported goods. The Caribbean faces a high dependence on trade with the US, meaning these measures could significantly disrupt supply chains

“Reduced vessel calls and competition could further reduce market efficiency, increasing uncertainty for importers and exporters in the region.” Rupert Roberts, Super Value’s owner, earlier this week estimated to Tribune Business that imposing the fees could produce a skyrocketing 25 percent inflation rate in The Bahamas with freight costs exceeding the price of the actual goods being shipped. 

Mr Bethell, confirming that the CSA has “formally convened to strategise a response to mitigate the impact of the proposed tariffs”, said the Caribbean’s existing one-way trade preferences agreement with the US provides “a precedent” to exempt the region from the Chinese vessel fee.

The Bahamas is also a member of that trade deal, the Caribbean Basin Initiative (CBI), which enjoys a waiver from World Trade Organisation (WTO) rules that require trade preferences to be two-way and benefit both sides of the agreement. “A collective lobbying effort is underway to advocate for a carve-out or exemption for the Caribbean due to its unique economic dependency on US imports,” Mr Bethell said.

“The Caribbean Basin Initiative (CBI), which provides duty-free access to US goods, is being referenced as a precedent to support an exemption for shipping costs.” He said a “key argument” that will be made by the region’s shipping industry and private sector is that the proposed fee “would hurt American businesses by making Caribbean trade more expensive, possibly shifting trade relationships to other global markets”.

Besides lobbying US officials, policymakers and the US Trade Representative’s Office, the APD chief wrote that the region plans to “highlight the unintended consequences [for] Caribbean-US trade and “seek an exemption for Caribbean routes, arguing that the small scale of operations in the region makes the impact disproportionately high”. It also “contradicts” existing US-Caribbean trade agreements.

“The CSA and Caribbean business leaders are actively pushing for an exemption, but the risk of higher costs remains real if this proposal is implemented. Given the March 24, 2025, deadline for public comments, we strongly encourage regional businesses and importers to submit their concerns to the US Trade Representative’s Office to demonstrate the potential economic damage to Caribbean economies,” the CSA said.

Dr Duane Sands, the Free National Movement (FNM) chairman, yesterday told Tribune Business that the “game changing” impact threatened by the proposed up to $1.5m per port call fee on Chinese-made vessels requires The Bahamas to adopt an “all hands on deck” approach to combat it.

“If they [the US] actually follow through with this it has the potential to be a significant game changer but not for the better,” he said. “This is not something that anyone could have planned for. This will have, if they go through with the planned implementation of these fees, a tremendous impact on food security, on access to goods, costs and, as predicted by Rupert Roberts, it could significantly cause the cost of living crisis to increase.

“The unintended consequences of these actions may not be of concern to the person or powers making the determination, but it would certainly have a huge impact on fragile economies such as ours,” Dr Sands continued. “I think we are going to need to move very quickly to seek clarification, and more than seek clarification. This is not something that’s manageable in the immediate term.

“It can mean the viability of business. A $1m fee may not seem like much to a multi-trillion dollar economy, but to ours it’s a big deal once you are talking per ship and it’s not a one-time charge per company or ship. It’s a very concerning issue.

“This is something that needs to be dealt with with a sense of urgency and determination,” he added. “This is a very big deal. I hope there’s, for want of a better word, a ‘war room’ to manage the fall-out or head-off the potential fall-out.”