Auto logistics has been hit hard by the combination of tariffs and regulatory fees levied on port calls made by auto carriers — Roll-on/Roll-off vessels. The dual hits are just beginning to have an impact leaving many wondering about the long-term effects of the new policies.
Back on June 25th the AJOT published a two-part story outlining the potential impacts of the Trump Administration’s tariffs and the United States Trade Representative (USTR) 301 “fee” proposals on auto imports and the Ro/Ro (Roll-on/Roll-off) transportation of vehicles.
On April 17th the Office of the United States Trade Representative (USTR) issued a final notice on its Section 301 investigation on “China’s Targeting the Maritime, Logistics and Shipbuilding for Dominance.” The notice finalized the USTR’s original February announcement with a few revisions.
The USTR Section 301 final notice came on the heels of President Trump’s April 9th Executive Order on “Restoring America’s Maritime Dominance” which established a “Maritime Action Plan” (MAP) endorsing the USTR’s restrictions on Chinese built and/or flagged vessels as well as other actions that would affect foreign built and/or flagged vessels calling US ports. MAP also instructed the Department of Homeland Security (DHS) to “take all necessary steps including proposing new legislation” to ensure many of the features were incorporated into legislation. In turn, the SHIPS Act was reintroduced with bipartisan support — ironically the legislative concept for SHIPS was initially introduced by the Biden Administration — in the House and Senate.
Wacked: Annex III and Ro/Ro
Following the June 6th USTR proposal to implement a $14 per net ton instead of a $150 per Car Equivalent Unit (CEU), the status of the fees remained in a regulatory fog. However, on October 10th a revision was proposed to the Annex III USTR section 301 on port fees and was released. The USTR’s new regulations establishes a fee of $46 per net ton on non-US built Ro/Ro carriers and other vehicle carrying vessels, such as Ro/Ro passenger and Ro/Ro container. Under the new proposal the fee must be paid by the vessel operator (which includes charterers) on or before entry of the vessel at the first port of call or place from outside the US when on a string of port calls in the US. Like Annex I and Annex II fees, the Annex III fees will be charged up to five times per calendar year. The new fees will become effective October 14th (today as this article is being written).
There are two exemptions proposed to the new fees, but they will offer little solace to a majority of the Ro/Ro ship calls annually making calls to the US from foreign ports.
The two proposed exemptions to the Annex III fees are for US-owned or US flagged vessels enrolled in the Maritime Security Program (MSP) and US Government vessels. The USTR has also proposed to add a third exemption for US-flag vessels of up to 10,000 dwt with a comment period.
Unsurprisingly the Ro/Ro sector feels it is being unfairly wacked. And it seems it is.
Why the Ro/Ro sector was treated differently than other sectors is a legislative mystery. However, in Benedict’s Maritime Bulletin for the 3rd Quarter, Bryant E. Gardner, a partner at Winston Strawn LLP, speculated in an article on the targeting of the Ro/Ro sector, “In contrast, Ro/Ro operators, who had no opportunity to comment on fees to be imposed upon vessels built in allied nations, received no such exceptions. The origin of the Ro/Ro-specific fees applicable to non-Chinese vessels is unclear. Some in industry speculate that the push came from US auto manufacturers, to be used in conjunction with section 232 tariffs on imported foreign cars, with the intention of making US auto manufacturers more competitive in the US consumer market.”
Impacts on US Ro/Ro Business
While the reasoning behind the legislation might be unclear, the impacts on the Ro/Ro operations in the US could be far reaching and with near certainty will not underwrite an instantaneous revival of commercial US shipbuilding.
Wallenius Wilhelmsen, the world’s largest Ro/Ro operator, in their Stock exchange notices section of their web page wrote a short notice entitled “Wallenius Wilhelmsen: US port fees impact 2025 outlook” which outlined the current situation not only for WW but nearly all non-US flag Ro/Ro operators calling US ports. “On October 10, 2025, a proposed modification of Annex III in the USTR section 301 on port fee regulations was released. In the proposal, fees concerning most Ro/Ro carriers was increased from USD 14 per net ton to USD 46 per net ton. Fees will be payable as of October 14, 2025. Based on the substantial increase in fees compared to the previous update of Annex III, we are working diligently to evaluate the impact for Wallenius Wilhelmsen, our customers, and our trading pattern. We see the risk of higher costs linked to port fees in the near-term. Because of the above, and that the proposed fees being substantially above our expectations, we find it prudent to suspend our financial outlook for 2025 as communicated in the Q2 2025 report until further notice. [editor’s italics]. Our Q3 2025 results are not impacted by the above port fees, but Q4 may be affected.”
Ro/Ro ports are also worried about the effect of the fees and tariffs on foreign vehicles not to mention the administration’s anti- wind power stance, which is the source of many high and heavy loads for Ro/Ro carriers and their ports of call.
And the first of these Ro/Ro port call “fees” is hitting the carriers now. On October 14th Ro/Ro operator Atlantic Container Line, better known as ACL, reportedly got wacked with a $1.4 million fee. The ACL ship was at the time carrying 80% containers,10% typical Ro/Ro freights such, as vehicles, tractors and construction equipment and 10% high and heavy freight — outsized project cargo. With slight-of-hand switch in the legislation from fees on the vehicles carried to the vessel’s net tons, the bill for a port call significantly changed for the Ro/Ro operators.
In an interview on CNBC Andrew Abbott, CEO of ACL, said of the situation, “That’s 25 vessels being charged $1.4 million a year,” Andrew Abbott, CEO of Atlantic Container Line…. We are looking at a total of $34 million a year.” And $34 million is far and away an unsustainable amount of money for any carrier to pay to maintain a rotation.
In an interview back in March with AJOT commenting on the original USTR 301 proposal, Abbott offered what could be a prescient view of the decision making happening now in the board rooms of Ro/Ro operators, “ACL already calls Halifax, Canada and serves the US Midwest that way because of speed and lower cost. But Halifax or Montreal could never compete with carriers calling New York for US coastal points because the inlands [transportation charges] are too high. I do not see a huge volume diverting to eastern Canadian ports. I just see a lot fewer US ports being called. That changes distribution patterns, warehousing locations, etc. A few big winners but a lot of big losers.”
It is Abbott’s contention that the fees should be levied on the freight [vehicles as the legislation was originally written] not the type of ship. In the case of ACL’s Ro/Ro ships, they are designed to multi-purpose carriers whereas many of the Ro/Ro vessels are purpose-built as Pure Car Truck Carriers (PCTC) dedicated to largely moving vehicles. But even in the case of PCTC, penalizing the carrier for oversized freight doesn’t seem in character with the purpose of the legislation.
But design aside, the question remains how Ro/Ro carriers can handle the fee structure, and the simple answer is some won’t, they will simply stop calling US ports. And the Ro/Ro ports may well have to rethink their future strategy without a change in the new fee structure.
AJOT correspondent Stas Margaronis in a September 25th article (see AJOT.com for full article) on the Southern California Port of Hueneme, interviewed the Ro/Ro port’s director Kristin Decas who said, “Cars are down 11%. In July, we are down 9,000 cars. So, we are starting to really see a hit from the tariffs. And we are trying to dissect it and talking to our customers. We have meetings next week with the Glovis executive team [which handles ocean transportation of cars]. They are still investing … Glovis is getting another 10 acres over at East Ventura County. It really is going to depend, I think, on what US consumers do and what happens with the economy and the purchasing power… I just do not know.”
Ro/Ro ports, like the carriers are stymied by the legislation and the potential impact on their facilities. Many of the Ro/Ro ports have expanded in recent years to support both the movement of vehicles and the high and heavy loads associated with wind power projects — and now both of which are under siege through tariffs and regulatory maneuvers.
For example, in Rhode Island, the Quonset Development Corporation (QDC) celebrated the opening of the Port of Davisville’s Terminal 5 and the Blue Economy Support Docks, the first new pier built in Quonset in nearly 70-years. The Port of Davisville is one of the top ten auto importer ports in the US as well as being the staging area for the offshore wind power farm located off of Block Island, a dual role common to many Ro/Ro ports. Terminal 5 was funded through State Fiscal Recovery Funds, allocated to Rhode Island as part of the American Rescue Plan Act. However, Quonset like other Ro/Ro ports is feeling targeted, as Rhode Island Senator Jack Reed said at the ribbon cutting, “The Trump Administration’s needless halting of the Revolution Wind project has cast a shadow of uncertainty on thousands of jobs and could raise energy prices. And the Administration’s recent termination of a separate $11.25 million federal grant for additional upgrades at Quonset is a senseless attack on this economic center for our state.”
The Dollar Impact
The immediate impact is the cost of a call for a Ro/Ro carrier at a US port. The increase from $14 per net ton to $46 was unexpected by both the foreign Ro/Ro carriers and the US Ro/Ro ports themselves. The hike dramatically changes the cost of a ship call. For example, a line haul size Ro/Ro carrier of 75,000 dwt or 27,000 net tons (reflecting the actual cargo capacity) of around 6,000 CEUs (Car Equivalent Units) would rise from $378,000 per call to $1,242,000 — a massive $864,000 increase per call. The fees add about $207 per vehicle per trip (as opposed to the original $150). These Ro/Ro fees add to the landed costs of a foreign built vehicle along with the recently adjusted 15% tariffs levied on vehicles imported from Europe, Japan and South Korea.
Since the charges can be levied up to five times per calendar year the new levy could add up to $6.21 million in fees for the first five calls.
And just how will the Ro/Ro carriers adjust to the new version of fees? It is clear that the Ro/Ro sector is being targeted out of proportion to other vessel calls…and the car carrying port sector is much smaller than say container ports or even dry and wet bulks. Fewer Ro/Ro ships calling at a US Ro/Ro port represents a far bigger slice of the port’s vehicle business than missing a few containership or bulk ship calls.
While cutting rotations to a minimum at US port calls is a partial solution for foreign Ro/Ro carriers the real long-term question is, how can these fees be covered? The foreign car manufacturers have begun moving some portion of the tariff costs downstream to the US consumers — although there has been a mixed approach to raising car prices by the various foreign car manufacturers early at this stage.
But the levy on a ship call is a bit different and impacts the relationship between the carriers and their car manufacturing clients. How these costs will be absorbed is still an open question as is why the Ro/Ro sector was targeted in the first place. As Abbott pointed out in March and is even more relevant today, “Don’t punish carriers and Americans exporters who have followed every rule and regulation for commercial decisions made in the past.”
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