Ocean shipping firm welcomes China-US tariff reprieve
BERLIN/LOS ANGELES (Reuters) -German container shipping firm Hapag-Lloyd on Monday welcomed an agreement between the United States and China to temporarily slash reciprocal tariffs, saying it expected to be buoyed by a resulting increase in bookings from China to the U.S.
The United States will cut extra tariffs it imposed on Chinese imports in April to 30% from 145% and Chinese duties on U.S. imports will fall to 10% from 125% for the next 90 days, the two sides said on Monday.
Trade between the world's two largest economies plummeted in the midst of the trade standoff, prompting container shipping companies like MSC and Cosco to suspend regular routes or cancel individual voyages. Others considered switching to smaller ships.
The reprieve could spark a rush of shipments to the United States, which some Chinese factories were preparing for, and send off-contract spot rates higher.
"We expect bookings from China to the U.S. to increase, which should help us... into peak season," the company said in an emailed statement.
The ocean shipping peak season typically refers to the August to October period, when U.S. retailers stock up on goods for the winter holiday season dominated by Halloween, Thanksgiving and Christmas.
Hapag-Lloyd continued sailing during the downturn, albeit with plans to downsize ships - a move that could put the carrier at an advantage over rivals that culled sailings, should customers rush in goods during the 90-day reprieve.
"Originally, we had planned to use smaller ships for transports from China to (the U.S. coasts) but may reverse that if demand is strong," Hapag-Lloyd said.
Maersk CEO Vincent Clerc said on Thursday that in two weeks the Danish firm had removed 20% of capacity on the China to United States route and transferred it to other routes.
Maersk could switch that back as quickly if customers ask for it, Clerc said.
Average transit time on the Transpacific trade is 22 days, so customers will take the 90-day window of opportunity to ship as many goods as possible into the United States, said Peter Sand, chief analyst at pricing platform Xeneta.
"This will put upward pressure on freight rates."
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