Shipping companies around the world are rushing to find different funding sources to avoid potential multi-million dollar fees in the US from a new rule, which comes into force in October, that requires a payment for any ship that is Chinese-owned or operated. This includes a number of ships that are part of “sale and leaseback” deals—whereby a shipping company sells a vessel to a financial institution and then leases it back for operational use—which make up the large majority of the $100 billion in outstanding financing from Chinese institutions for shipping companies worldwide.
It is quite a complex web to get out of for many companies—can they afford to buy the ships back and are the Chinese financial institutions willing to sell?—and as a result adds yet another layer of uncertainty to global trade. What is more certain is that the likelihood of any shipping firm in the future taking up a sale and leaseback plan with a Chinese institution will drop significantly.
On the US side of things, they are already seeing some core inflation trackers ticking up, and it is just a matter of time until at least a portion of these new fees begin to get passed on to consumers, driving wider inflation.