Recent changes to port fees enacted by the U.S. Trade Representative during the Trump administration have imposed a considerable financial strain on a U.S.-based ocean carrier, which is now confronted with an estimated annual tariff obligation of $34 million as a result of its reclassification under the new Section 301 program terms. On October 14, the first day of the fee program, Atlantic Container Line faced a $1.4 million tariff due to the unique design of its container vessels. ACL’s vessels handle a significant portion of shipping containers, a notable share of roll-on/roll-off freight—which encompasses tractors, construction equipment, and passenger vehicles—and a portion dedicated to oversize cargo like aircraft wings and transformers used in power plants and data center machinery.

The additional changes include the fee structure for vehicle carriers, known as roll-on/roll-off vessels, which enable the transport of cars, agricultural machinery, and other large equipment. A fee will now be calculated based on the vessel’s net tonnage capacity instead of the number of vehicles transported. This contributes to the recent introduction of the new standard USTR port fees, effective Tuesday, leading to heightened uncertainty among ship owners about potential financial impacts. Under the USTR rule, Section 301 allows it to tackle unfair trade practices globally. This inquiry began under the Biden administration, focusing on Chinese port equipment, among other issues, and persisted into Trump’s new term, leading to an ocean carrier facing charges five times a year per vessel. ACL vessels operate along the transatlantic route, utilizing a fleet of five vessels that serve the U.S. trade lane, ensuring weekly service.

“That’s 25 vessels being charged $1.4 million a year,” remarked Andrew Abbott during an interview. “The anticipated yearly tariff amount is $34 million.” Abbott claims that his company has encountered considerable difficulties stemming from a bureaucratic error. Out of the 10% of roll-on/roll-off freight handled by ACL, only 1% is made up of passenger vehicles. “The vessel should be classified according to the main cargo we carry. This signifies containers. Traditionally, we have been categorized as a container ship. This time, Customs and Border Protection has updated it to Ro/Ro container. Unlike traditional Ro/Ro’s that look like floating parking garages, we are different,” he stated. Abbott warns that, in the long run, the continuous requirement to pay tariffs could threaten its capacity to operate profitably in the U.S., possibly leading to a move of operations, which would impact U.S.-based importers and exporters.

“A substantial amount of the freight we manage is aimed at American manufacturers and for export as well,” Abbott stated. “They are concerned about the possible loss of their main carrier responsible for bringing in that product.” Abbott highlighted that with his company handling cargo often overlooked by others, its exit from the market would force U.S. exporters and importers to turn to charter services, resulting in increased costs and a lack of weekly service. “For a clear example, a well-known American car maker a few years ago aimed to shift its assembly line from Germany to Kentucky, and we helped make that happen,” he added. “We moved their containers of parts and transported the large machinery.” They were not obligated to hire a ship. They could send out shipments weekly on our vessel, as the factory in Germany was facing a downturn while the one in Kentucky was thriving. That highlights a unique part of our operations; however, it would come to an end, and the company would no longer have that option,” he stated.

Abbott noted that after the new fees were put in place, ACL has been in talks with clients about the effects of tariff costs and the potential for passing these expenses onto them. “They can’t believe it,” he stated. “They never expected in a thousand years that we would be affected. We are currently informing individuals that the importance of the situation is causing a sense of disbelief among the public. At this point, importers are facing tariffs, and this situation introduces additional challenges that could hinder their operations,” Abbott stated. In what he described as a “challenging economic environment,” Abbott noted that the unforeseen charge is adding to rising uncertainty. “This signifies yet another challenge that will inevitably reach a breaking point,” he stated. “We are hopeful that we can connect with someone in the administration who is open to our concerns.”

A statement reveals that there are currently no intentions to change the application of the program rules and fees. “Vessels have long been required to provide their International Classification of Ships by Type code to CBP. A spokesperson from USTR stated, “USTR’s responsive action employs this existing reporting to CBP as a means to assess the applicability of service fees under the Section 301 action.” “To clarify, we note that the International Classification of Ships by Type is based on the construction characteristics of the marine structure, rather than its specific use or the cargo it carries at any given moment.” Abbott stated, “Our ships are a one-of-a-kind hybrid that cannot be found anywhere else globally.” Shipping companies that continue to order vessels from China will not incur any charges. Large Ro/Ro carriers can allocate the expenses throughout their whole fleet. Our fleet consists of only 1% of vehicles, yet we cover all the related expenses, and we exclusively operate our headquarters in the United States. I thought USTR’s goal was to create a welcoming atmosphere that draws people to the USA, not one that pushes them away. However, they are just indicating the exit to us. Abbott stated that if the current situation continues, “then we need to begin considering redeployment seriously next year.” He concluded, “I’m just hoping that my government doesn’t drive us out of business after we’ve managed to fend off everyone else.”