Regulatory impacts on shipping markets continue to develop. Since the final Section 301 actions against the Chinese shipbuilding industry were released by the USTR, US Senators have reintroduced the SHIPS for America Act 2.0, designed to revitalize US shipbuilding and strengthen national and economic security by rebuilding the US-flag fleet and maritime industrial base.  Aside from various supports for the US-flag fleet, US shipyards, and US ship finance, the bill also proposed a 70% duty on US-flagged vessels for any repairs made in a foreign shipyard of an allied country and 200% duty for repairs made in shipyards in foreign countries of concern (i.e. China).

Although this increased duty may only be applied to US-flagged tonnage, international shipowners are concerned that such regulations could be expanded to the global merchant fleet calling a US port.  According to our proprietary AIS data, Chinese drydocking yards have drastically increased their market share during the past 10 years – shares for VLCCs drydocked in Chinese shipyards increased from less than 40% in 2014-15 to 70% in 2024.  With USTR Section 301 actions and the latest Ship Act 2.0 proposals in recent months, shipowners are certainly much more cautious; the number of VLCCs drydocking in China dropped to only 47% in 2025 year-to-date (red dotted line in the left graph).  After crosschecking with drydocking survey date of VLCCs in the current trading fleet, one of every five VLCCs has been in the Americas continent since 2023 and is also due for the drydocking survey in the next 12 months. This gives these vessels potential exposure to pay a 70%-200% duty after completing drydocking surveys. However, it is worthwhile to note that the final actions of a possible SHIPS for America bill could be vastly different from the original proposal – as we recently observed with the USTR Section 301 final actions.

Figure 1: Chinese Share of VLCC Drydocking Activity       Figure 2: Breakdown of VLCC Fleet Drydocking (DD)
                                                                                                                 Schedule

Sources: AIS Tracking, S&P Global, McQuilling Services