The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The survival of a major ocean freight carrier serving The Bahamas would be in jeopardy if the US proceeds with a Chinese-made ship fee that “would almost double” 40-foot container cargo rates.

Tropical Shipping, which together with Mediterranean Shipping Company (MSC) has the dominant share of New Providence’s ocean freight market, revealed that the US Trade Representative’s proposal to impose an up to $1m fee per American port call by Chinese-made vessels would have a “catastrophic” impact on The Bahamas’ import dependent economy by raising its 40-foot container rates to a projected $2,352.

The cargo operator, in a March 24, 2025, letter said the proposal if implemented as is would “unquestionably threaten the ability of Tropical to continue operations” and drive importers of goods in The Bahamas and throughout the region to source goods from outside the region. And, besides undermining the multi-billion dollar annual trade the US enjoys with the Caribbean, it would also give foreign ships a competitive advantage.

Tropical Shipping added that companies such as MSC and even those in China, which operate much larger vessels, would gain a price advantage by being able to spread the Chinese-made ship fee over a greater volume of cargo and containers. This, it warned, would undercut a key policy objective of Donald Trump by turning The Bahamas and Caribbean into “China’s new Red River” where it - not the US - dominates trade.

Pointing out that US exports to The Bahamas and the Caribbean combined hit almost $101bn in 2024, and that the region is the US’ “fourth largest export market” which generates a goods trade surplus, Tropical Shipping spelled out in detail the consequences for this nation’s economy, companies and consumers if the proposed fee takes effect in its current form. A second day of hearings on the plan will be held today

“The average size vessel serving the Caribbean carries 1,100 nominal TEUs (twenty-foot equivalent units). The average size of Tropical’s fleet is smaller than that, with only six vessels as large as 1,100 TEUs, three vessels topping out at 300 TEUs, and one vessel that has only a 145 TEU nominal capacity,” Tropical Shipping told the US Trade Representative’s Office.

“In comparison, the average steamship line’s vessels calling on major US ports and operating in global trade routes are approximately 16,000 nominal TEUs. Tropical vessels enter the Port of Palm Beach 15 times per week on average. Under the proposed action, and based on our current fleet of vessels, Tropical would be charged port fees of $11.25m per week ($750,000 x 15) or $585m per year.

“Fees of this magnitude unquestionably threaten the ability of Tropical to continue operations,” the cargo operator continued. “The added port entry fees for Tropical would necessarily have to be spread by Tropical across all operating costs for freight inbound to, and outbound from, the United States on its arriving vessels subject to the proposed fees.

“Moreover, the typical loaded TEUs on the vessels serving the Caribbean basin are approximately 850 TEUs per vessel. The fees per entrance of a vessel to a US port as set out in the proposed action, if applied to vessels of this size, would almost double current freight rates in the region with an average freight increase of $2,352 per 40-foot container.

“As a comparison, if you applied the proposed $1m fee to a vessel that calls on a single US port directly from China carrying 16,000 nominal TEUs, it would increase the cost per 40-foot container by only $125,” Tropical Shipping reiterated. 

“The disproportionate impact of the proposed action on companies like Tropical and its US exporter customers is obvious and substantial, and would significantly disadvantage US carriers and US exporters in favour of Chinese and other foreign-owned vessels carrying foreign goods on much larger ships.

“A rate increase of this magnitude would be cost prohibitive, and it would be catastrophic for US exporters to the Caribbean Basin because the increased freight costs would cause customers in the region to buy goods from outside the United States.”

Continuing its argument that the proposed would have the opposite impact to what the US intends, namely countering Beijing’s economic expansion, Tropical Shipping said it presently has nine Chinese-made vessels in its fleet. The freight operator said these were sourced because there was “no practical option” to purchase or build them in the US at the relevant time due to “extremely limited supply”.

“Tropical’s fleet consists of vessels designed to serve shallow-draft ports in the Caribbean. This capacity to serve a broad range of ports in the region enables Tropical to directly serve markets that the ultra large container vessels, on which the larger global carriers rely, cannot directly serve,” Tropical Shipping explained.

“By offering frequent, superior service throughout its broad network of ports, Tropical and other American-owned carriers have been able to compete effectively in the Caribbean Basin against the large, foreign-owned carriers that otherwise dominate global shipping outside the Caribbean Basin....

“If US vessel operators like Tropical are forced to exit the Caribbean Basin due to the proposed action, non-US interests, including Chinese interests, will benefit. China is already seeking to exert influence in the Caribbean through its Belt and Road initiative,” Tropical Shipping added.

“The exit of operators like Tropical will allow for an expanded Chinese presence in the Caribbean Basin, negatively impacting the value of this important US ‘third border’. Indeed, there is a significant risk that China would turn the Caribbean Basin into the new China Red River.

“The proposed action would have a direct and prohibitive impact on the cost of shipping between the US and the Caribbean Basin. It is, therefore, a serious threat to Tropical and the thousands of US exporters that sell American products in the Caribbean Basin.

“It is not in the US interest to implement any remedy in this case that would surrender this valuable export market to other countries and cede international maritime transport services to non-US owned carriers.”Bahamian businesses, too, have warned that the US plan to levy up to $1m fees per port call on Chinese-made ships “will kill us” and “make no sense” for either this nation or American firms.

Peter Goudie, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) labour division head, in feedback submitted to the US Trade Representative’s Office echoed some of Tropical Shipping’s concerns by warning it will have a devastating inflationary impact for all this country’s residents in addition to inflicting immense damage on America exporters serving the Caribbean.

“The $1m service fee will increase costs substantially for goods delivered to the US which, in turn, will drive up costs for importers of goods from the US,” Mr Goudie told the US trade watchdog. “This will greatly impact most countries in the Caribbean, especially The Bahamas, which imports the vast majority of its imports from Florida.

“This will also force The Bahamas to find alternate suppliers in Canada, Mexico and Latin America, which will reduce business done by US suppliers. This will most certainly affect most Americans by driving up inflation, which makes no sense.”

Tropical Shipping, meanwhile, proposed that US-owned and based vessel operators such as itself be exempt from the Chinese-made ship fee. And it urged that any such fee be based on future additions, not existing vessels and fleets, as it has not purchased ships from China for eight years.

The carrier also suggested that vessels under 55,000 dead weight tons (DWT), which equals 3,750 TEUs, also be exempted from the fee and that any such charge be based on the weight of cargo offloaded at US ports. It even urged that an exemption be made for voyages between the US mainland and the US Virgin Islands and Puerto Rico.