On March 24, 2025, Joe Kramek, President & CEO of the World Shipping Council (WSC), will testify before the Section 301 Committee regarding proposed U.S. trade actions targeting China’s maritime, logistics, and shipbuilding sectors.
In his testimony, Kramek will argue that imposing port fees and mandating U.S.-built or U.S.-flagged vessels would increase costs for American consumers, hurt exporters, and disrupt supply chains. Below is a summary of his testimony:
How proposed fees and U.S.-built vessel mandates could disrupt the U.S. economy
Dear Chairs Grimball and Butler:
I am the President of the World Shipping Council (WSC), and I request to testify at the InterAgency Section 301 Committee’s hearing in this matter, scheduled for March 24, 2025. WSC is a non-profit trade association that represents the liner shipping industry, which is comprised of operators of containerships and roll-on/roll-off (ro-ro) vessels, including vehicle carriers. WSC’s members operate approximately 90 percent of the world’s liner vessel services. The global liner shipping industry includes over 6,000 ocean-going vessels. Each year, approximately 1,100 liner vessels sail into U.S. ports, representing over 18,000 U.S. port calls.1 Transporting $1.5 trillion in U.S. trade, the liner shipping industry directly or indirectly supports over 6.4 million U.S. jobs and contributes over $1.1 trillion to U.S. Gross Domestic Product.
WSC supports the goal of building a strong and vibrant U.S. shipbuilding and maritime sector. A strong U.S. maritime sector will have positive ripple effects across the entire maritime industry. However, WSC opposes the flawed remedial actions proposed by the Office of the United States Trade Representative in this proceeding, which will result in increased costs for U.S. consumers and exporters as well as supply chain inefficiencies while failing to provide China with effective incentives to alter its acts, policies, and practices.
Summary of Testimony
My testimony will address why the U.S. Trade Representative should not impose port fees or requirements to use U.S.-flagged or U.S.-built vessels. In particular, I intend to highlight the following:
• The proposed fees would adversely affect Americans. When incurred by liner carriers, these fees would raise the cost of imported items—both those destined for consumers and those used as inputs to produce goods in the United States. These fees would be passed along to U.S. consumers at a time when they already face the squeeze of inflation.
• The proposed fees would be detrimental to U.S. businesses and workers. When incurred by liner carriers, the fees would raise shipping costs for U.S. exporters, decreasing the competitiveness of American products in overseas markets and decreasing employment opportunities for Americans who make those products. Additionally, the fees would reduce competition for ocean cargo transportation to and from the United States and could shift port business to ports in Canada and Mexico. The fees would generate congestion at larger ports as operators of vessels subject to fees seek to minimize the number of U.S. port calls those vessels make on each route. Economic impacts of congestion and reduced U.S. port traffic would reverberate throughout the economy, adversely impacting businesses, consumers, and especially farmers.
• Requiring set percentages of U.S. exports to be shipped on U.S.-flagged or U.S.-built vessels would further undermine the competitiveness of U.S. exports by driving up shipping costs. Moreover, given the small number of existing U.S.-built vessels and the lack of existing U.S. shipyard capacity, the proposed requirements for exportation on U.S.-built vessels would not be realistic for many years into the future.
• Finally, the proposed fees and the proposed requirements for use of U.S.-built or flagged vessels are disconnected from the goal of section 301 actions: inducing elimination of the foreign acts, policies, and practices at issue. It is inconceivable how levying a port fee on, or based on ownership of, vessels already constructed would impact China’s incentives going forward. The same point applies with respect to vessel orders already placed at Chinese shipyards. Further, because vessel routes can be reshuffled and corporate structures can be re-aligned, even fees on, or based on operation of, Chinese vessels built or ordered in the future will not serve as an effective limitation on the market for Chinese vessels and thus as an incentive to China to alter any practices. Likewise, while fee remissions for use of U.S. built or flagged vessels, and requirements to export on these vessels, may serve to create a market for these vessels, they do not serve to meaningfully shrink the market for Chinese built vessels. These actions, too, are disconnected from the statutory goal of eliminating the foreign act, policy, or practice at issue, and therefore should not be imposed.
Thank you in advance for the opportunity to testify.
Sincerely,
Joe Kramek
President
World Shipping Council