UAE consumers face price hike as shipping costs surge after China-US export rush

Khaleej Times

3 days ago

Shipping costs have surged dramatically in recent days, doubling due to a container shortage triggered by an export rush from China to the US. This followed a temporary easing of tariffs between the US and the world's second-largest economy.
Industry executives warn that businesses in the UAE are unable to absorb the entire increase in freight charges and are therefore passing part of the cost onto consumers.
'Shipping costs have more than doubled over the past 10 to 15 days. We used to pay between $1,000 to $1,400 per container, but now we're being quoted $2,500 to $3,000,' Anis Sajan, Vice-Chairman of Danube Group, in an interview with Khaleej Times. 'This sharp rise is a direct result of the sudden surge in shipments after the US temporarily relaxed tariffs on Chinese goods.'
Despite the steep rise in prices, Sajan noted that container availability remains limited. 'In some cases, we're willing to pay double, but we still can't secure containers. Most vessels and containers have been redirected to the US, leaving Middle Eastern importers struggling to find capacity.'
The current shipping disruption follows a period of uncertainty after former US President Donald Trump announced tariff hikes on Chinese imports, initially raising them to 145 per cent before reducing them to 30 per cent.
The escalating trade tensions caused turmoil in global stock markets and commodity prices, amid fears of a broader slowdown in global trade. In April, the World Trade Organisation projected a 0.2 per cent contraction in global merchandise trade volumes due to the ongoing trade war and associated policy uncertainties.
According to the Drewry World Container Index, the cost of shipping a 40-foot container rose from $2,076 on May 8 to $2,508 by May 29 – a 21 per cent increase in just three weeks. The surge is attributed to a renewed wave of US-bound shipments following the US administration's temporary suspension of tariff hikes.
'Shipping rates spiked abruptly when the US paused or delayed its tariff increases on Chinese goods. This triggered a flood of shipments to the US, all at once, causing a shortage of vessels and containers. It wasn't a gradual rise – it was driven by panic and urgency,' Sajan explained.
Impact on UAE Consumers
The UAE and China maintain strong trade ties, with bilateral trade expected to reach $100 billion in the coming years. The UAE imports a wide range of products from China, including electronics, machinery, vehicles, toys, sports equipment, furniture, lighting, chemicals, footwear, and apparel.
In a bid to enhance trade relations, China has initiated talks with the UAE for a potential free trade agreement, UAE Minister of State for Foreign Trade Thani Al Zeyoudi told Reuters last week.
While tariff tensions had been brewing for some time, Sajan said the current shipping chaos began only after the US unexpectedly paused its tariff hikes, giving American buyers a brief window to place large orders at pre-tariff rates. This overwhelmed global shipping networks.
'It's been especially difficult for small and medium-sized traders. Larger firms like ours are able to manage using existing inventories and established logistics networks, but even we're struggling to secure containers. For smaller traders, the costs are prohibitive, and delays are damaging supply chains and profit margins,' he said.
Sajan acknowledged that the rising shipping costs are ultimately being passed on to consumers.
'Ultimately, the end consumer pays the price. If freight costs rise, businesses can't absorb the entire increase. We pass on a portion to our clients, who then adjust their pricing accordingly — it creates a ripple effect. So yes, UAE residents will likely see price increases in certain goods, particularly imported building materials and essential items,' he said.
Looking ahead, Sajan anticipates a gradual decline in freight rates once the immediate US demand subsides and global container circulation begins to normalise.
'But that could take at least 2 to 3 months — and only if there are no further disruptions. The market is extremely sensitive right now. Any new geopolitical event or supply chain disruption could prolong the situation,' he warned.