The Gemini Cooperation diverted two US-flag vessels in a trans-Pacific service away from China due to that country’s retaliatory port fees, with one of the alliance partners warning of a multimillion-dollar hit that carriers face on US-flag ships because of the fees.

Maersk and Hapag-Lloyd advised customers on Tuesday that two US-flag ships in their jointly-operated TP7/WC5 service will no longer call Ningbo. This week’s voyage of Hapag-Lloyd’s Potomac Express will discharge westbound cargo for China in Busan, South Korea, and then be transshipped on another ship. The Denmark-flagged Maersk Luz will carry outbound freight from Ningbo to South Korea’s Kwangyang port, which will then be loaded on the Potomac Express.

Next week’s voyage of the Maersk Kinloss will also discharge westbound China cargo in South Korea for transshipment on an unidentified ship, with eastbound cargo from Ningbo being shipped on a Gemini shuttle ship.

The service switch-up comes as China’s recently unveiled port fees on US-flag ships went into effect on Oct. 14, the same day as similar US port fees took effect on Chinese-built ships and carriers. While China has exempted US-flag ships built in China from the fees, both of Gemini’s affected ships were built in South Korea.

China plans to charge US-flag, non-Chinese vessels $56 per net ton, approximately similar to what the US is levying. Based on their net tonnage, each of the Gemini ships would incur a $2.5 million charge.

Hapag-Lloyd looks to adjust

Stuart Sandlin, Hapag-Lloyd’s North American president, said Wednesday at the Virginia Maritime Association trade conference in Norfolk that the carrier’s five US-flagged, South Korean-built ships would face a total of $125 million in Chinese port fees annually. The US-flag international fleet can also carry commercial cargo to and from China, in addition to any government or military cargo for other Asian countries. Sandlin said Hapag-Lloyd is now looking at how to split up that business to avoid the fees.

“We have a US-flag group, and we have a non-US-flag group, and that makes it a lot more difficult because of the current geopolitical situation,” he said. “We’re working to see how we actually manage through that.”

There are currently 57 ships in the US-flag international fleet, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. Those US-flag ships made 163 calls globally year to date. The US-flag Matson Waikiki, which called Shanghai on Tuesday, faces a $1.7 million fee.

Among US-flag carriers, CMA CGM’s APL division runs the only fleet solely built in China.