ExxonMobil canceled an order for two liquefied natural gas bunkering vessels (LNGBVs) initially planned for construction at a Chinese shipyard, according to The Chosun Daily.
The U.S. energy company had secured production slots but chose not to finalize the contracts, effectively voiding the orders.
This development follows a public hearing held on March 24 by the Office of the United States Trade Representative (USTR), which discussed imposing port fees ranging from $1 million to $3 million on Chinese-built vessels and Chinese shipping companies operating in U.S. ports.
The proposed fee structure includes a $1 million charge for ships operated by Chinese shipping firms and a $1.5 million fee for vessels constructed in China.
During the USTR hearing, industry representatives expressed mixed opinions regarding the potential impact of these fees. Some cautioned that the additional costs could elevate logistics expenses and negatively affect U.S. exports of energy and agricultural products. Others supported the measures, suggesting they could rejuvenate the domestic maritime sector.
While ExxonMobil has not publicly disclosed the reasons for canceling the LNGBV orders, many industry observers attribute the decision to the anticipated tariffs.
The prospect of incurring millions in fees diminishes the appeal of commissioning Chinese-built vessels.
Shipping companies with fleets primarily composed of Chinese-built ships are now reevaluating their procurement strategies. According to U.K.-based Clarkson Research, Chinese shipyards accounted for nearly 70% of global ship orders in 2023.
A decline in demand for Chinese-built ships could present opportunities for shipbuilders in South Korea and Japan. Data from the Congressional Research Service indicate that in 2023, China represented 51% of global ship deliveries, followed by South Korea at 28.3% and Japan at 15.4%. As the likelihood of U.S. tariffs on Chinese vessels and shipping companies increases, interest in non-Chinese shipbuilders is growing.
The USTR is accepting public comments on the proposed port fee policy through April 2. In a report published on March 29, the Korea Trade-Investment Promotion Agency (KOTRA) highlighted that the U.S. shipbuilding industry remains significantly less competitive than China's.
The agency suggested that the current situation could create opportunities for South Korean exporters in the U.S. market, particularly in areas such as maintenance, repair, and overhaul (MRO) services for military vessels, as well as new shipbuilding contracts for the U.S. Navy and Coast Guard.
ExxonMobil is a multinational oil and gas corporation headquartered in Irving, Texas. As one of the world's largest publicly traded energy providers, the company engages in the exploration, production, and distribution of petroleum products globally.
Korea Trade-Investment Promotion Agency (KOTRA) is a South Korean government agency established to promote trade and investment. It facilitates international business opportunities for Korean companies and provides market intelligence and support services to foreign investors interested in South Korea.