Westports, MISC ready to offset US tariff impact

PETALING JAYA: The proposed new port fees against China-owned and China-built ships by the United States may impact Westports Holdings Bhd and MISC Bhd.

However, CGS International (CGSI) Research said “the impact can be mitigated and investors need not be alarmed”.

On Feb 21, the Office of the United States Trade Representative proposed three levels of fees to be charged against certain vessels to address China’s dominance of the maritime and shipbuilding sectors.

The first proposed fee is intended to be charged to all “Chinese Maritime Transport Operators”, which will include Cosco Shipping and Orient Overseas Container Lines (OOCL).

The second fee is intended to be charged against all Chinese-built vessels that enter a US port, while the third is intended to hit all operators that have an order book at Chinese shipyards.

Hence, the Ocean Alliance (OA) members may be negatively affected from a relative competitive position, said the research house.

The OA consists of four carriers, including Chinese firms Cosco Shipping and OOCL.

“For container shipping, we believe that there could be some near-term volume uplift and port congestion if container liners rejuggled their vessels to avoid sending China-built ships to the United States.

“This may benefit some ports in South-East Asia, including Westports, on higher ad-hoc volumes and a rise in container yard storage demand,” said CGSI Research in a report.

In the longer term, the competitive position of OA could be negatively impacted if those liners pass on the extra fees to shippers.

“We believe this could affect the volume of transhipment boxes that currently pass through Westports on the way to the United States, as the OA is its single-largest customer. However, we do not expect any negative impact to Westports to be significant, since Asia-America’s trade route contributed only 9% to Westports’ total container volumes in the fourth quarter of 2024,” added CGSI Research.

According to the research firm, to minimise the proposed port fees, the OA members may strategically swap their vessels across different trades to avoid deploying a China-built vessel to the United States.

As for MISC, the first or second proposed fees will not have an impact on its tanker ships under subsidiary AET as they are built by South Korean and Japanese shipyards

It is noteworthy that in April last year, AET signed new building contracts with China’s Dalian Shipbuilding for two ammonia dual-fuelled aframax tankers. With only these outstanding orders, its entire order book is tied to Chinese shipyards.

Under the proposed rules, AET may be charged the highest level of the third proposed fee of up to US$1mil for each of its US port calls.

Once AET’s two orders are delivered in 2027, it will no longer be liable to pay the third proposed fee and if it avoids deploying its future China-built aframaxes to the US ports, it will also not be liable for the first or second proposed fees.

On MISC’s prospects, CGSI Research said the full-year contribution of the Mero-3 floating production storage and offloading vessel in the financial year 2025 may offset headwinds from the liquefied natural gas and petroleum tanker segments.

The potential merger with Bumi Armada Bhd may also help MISC raise a large sum of cash.