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Yahoo
2 days ago
- Business
- Yahoo
New week sees ocean container rates soar
The pause in the tariff fight that amounted to a trade embargo between China and the United States has seen a marked increase in container shipping rates, particularly on trans-Pacific routes. The Freightos Baltic Index this past week saw Asia-U.S. West Coast rates fall 1% to $2,767 per forty-foot equivalent unit. While Asia-U.S. East Coast prices declined 6% to $3,979 per FEU, container rates on the Asia to North America route have again soared amid rising tensions between Washington and Beijing. This surge can be attributed to the looming deadline for a trade agreement, set for Aug. 14, and the potential for increased tariffs if negotiations falter. The anticipation of heightened tariffs has led to a rush among shippers to import goods before the deadline, consequently driving up rates sharply this week. General rate increases and peak season surcharges by carriers that went into effect June 1 saw prices to the West Coast spike by 72% to $4,765 per FEU, while East Coast prices climbed by 44%, reaching $5,721 per steep rise highlights the urgency among shippers to expedite deliveries, opting for shorter transit times amid uncertainty, said Freightos research chief Judah Levine, in a note. This urgency is further compounded by the strategic scheduling of additional capacity by carriers to the West Coast, aiming to accommodate the increased demand. Indeed, carriers have scheduled record capacity levels, extending through July, to cater to the augmented demand on this route. SONAR data for June 1-4 correlated the increases, as spot rates from Yantian to Los Angeles rose from $5,610 to $6,000 per FEU, while prices from Ningbo to LA moved from $5,151 to $5,431. Moreover, the swelling demand for trans-Pacific capacity has induced congestion at major Asian ports, including in China and Singapore. This congestion presents a bottleneck, testing the resiliency of supply chains. However, officials at the ports of Los Angeles and Long Beach have assured stakeholders that they are equipped to manage the increased cargo volumes without significant delays. On the Asia-Europe route, a similar trend in rising rates is observed, albeit driven by different for containers destined for Northern Europe have increased by $300, to $2,650 per FEU, while those bound for the Mediterranean saw a rise of about $600, reaching $3,575 per FEU. The fluctuations here are partially due to some carriers rerouting vessels to meet the heightened trans-Pacific demand, said Levine. That has inadvertently reduced capacity on the Asia-Europe routes. This shift has exerted upward pressure on prices, exacerbated by congestion at European ports. Despite the clear upward trajectory, market skepticism remains as to whether these increased rates are sustainable, given the relatively flat overall demand on these routes. Even so, the rates hold firm at double their 2019 levels, buoyed by constraints such as capacity limitations from Red Sea route diversions. Missile attacks on Israel by Houthi rebels in Yemen continue to make the Suez Canal route too unstable for most major container carriers. CMA CGM of France is the exception and recently announced additional scheduled services in the region. The American battle group led by the aircraft carrier USS Harry S. Truman recently exited the Red Sea after an intense month of bombing campaigns against Houthi targets. Find more articles by Stuart Chirls ports will hurt jobs, US maritime revival: AAPA Texas port completes $625M ship channel deepening project'Fear and uncertainty' driving up China-US container rates The post New week sees ocean container rates soar appeared first on FreightWaves.
Yahoo
13-05-2025
- Business
- Yahoo
Pause and effect: Container rates await new demand
While the United States and China exhale after the trading titans agreed to a 90-day pause in tariffs, it's not yet clear to what degree demand may rematerialize on the eastbound trans-Pacific, and how that could weigh on ocean container rates. The pause, which takes effect Wednesday, will see the U.S. knock down its reciprocal tariffs from 125% to 10% and, when combined with 20% tariff hikes aimed at blunting fentanyl from China, establish a new 30% baseline tariff on all Chinese imports. That also includes any tariffs that were in place prior to President Donald Trump's taking office for the second time. China's retaliatory tariffs on U.S. exports will fall into the basement, from 125% to 10%, while negotiations continue. This resulting 30% minimum tariff on all Chinese goods is higher than the highest tariffs applied to a more limited list of goods during the first Trump administration, said research head Judah Levine of shipping analyst Freightos, in a note. But Levine pointed to National Retail Federation U.S. ocean import data showing that even with a minimum 20% tariff on all Chinese goods in March, U.S. importers continued to frontload inventory ahead of the prospect of even higher tariffs. 'Volumes in March and April were 11% higher than in 2024 and featured one of the strongest Aprils on record, though some of that growth was from countries other than China, like Vietnam and Thailand.''The 145% tariffs drove a drop of 35% or more in China-U.S. ocean volumes since early April,' Levine said, 'so we're likely to see a significant demand rebound in the near term as shippers replenish inventories that may have started to run down in the past month, and as many Chinese manufacturers have high levels of finished goods already ready to ship.' Levine expects yet more frontloading ahead of the end of the pause in August as shippers hedge against the return of higher tariffs. That would mark the early start of this year's peak season when shippers bring in end-of-year holiday merchandise, which could end earlier than usual as well for the same reasons. While there has been some anecdotal evidence, the strength of the peak season is a matter of debate. Levine said the 30% tariff levels may deter some shippers, while earlier frontloading may have sated some peak season demand — and shrink those volumes compared to the same period a year ago. Despite the sharp drop in China-U.S. volumes since April, trans-Pacific container rates have remained level at about $2,300 per forty-foot equivalent unit to the West Coast and $3,400 per FEU to the East Coast, according to the Freightos Baltic Index, as carriers reduced capacity by an estimated 22% through blank sailings and service suspensions, and by deploying smaller vessels.'Carriers shifted some of that excess trans-pacific capacity and equipment to other lanes during the April-May pause, and the reduction in sailings over the last few weeks also means fewer empty containers than usual will be making their way back from the U.S. to China in the near term, said Levine. If demand snaps back, Levine said, shippers may face a period of tight capacity and equipment shortages as volumes rebound and vessels and containers are still being moved back into place. 'The quick restart could also mean a big bump in the number of vessels and container volumes arriving at U.S. ports in a few weeks. Taken together, shippers could face difficulty securing space and some congestion and delays in the next few weeks at both origins and U.S. destinations. Even if this is the start of peak season though, it's likely that this congestion will subside after the initial backlog and imbalances are cleared.' Levine said this should drive up near-term spot rates, though even with the Red Sea route shut down, rates are already more than 30% lower than a year ago due to fleet growth and increased competition between new carrier alliances. Peak season rates may not climb as high as in 2024, to $8,000 per FEU to the West Coast and more than $9,800 to the East Coast. Find more articles by Stuart Chirls here. Ocean lines welcome tariff pause, but is the supply chain ready? Less China means more business for Port of Virginia Maersk: US-China trade war will swing world container demand Maersk expects no changes from US port fees The post Pause and effect: Container rates await new demand appeared first on FreightWaves.
Yahoo
26-04-2025
- Business
- Yahoo
The China trade war will pummel America's small businesses, Apollo economist says
As trade between the U.S. and China collapses, small businesses will be hit hard, according to Torsten Sløk, chief economist at private equity giant Apollo. Many independent toy, hardware, and clothing stores rely on cheap imports, and firms with 500 employees or less account for nearly half of America's private workforce. Trade between the U.S. and China is falling off a cliff. Vacant shipping containers will soon mean empty shelves—and perhaps the dreaded combo of higher prices and unemployment. President Donald Trump is touting talks of a trade deal between the world's two biggest economies, but Beijing denies any negotiations have taken place. Container shipping from China spiked in late March and early April as firms presumably tried to front-run tariffs, said Torsten Sløk, chief economist at private equity giant Apollo. However, it went into free fall soon after April 9, when the full slate of Trump's taxes on Chinese imports went into effect. It takes about 20-to-30 days for Chinese cargo ships to reach U.S. ports, Sløk said, and another one-to-10 days for those goods to reach stores and factories across the country. 'It's probably sometime by the middle of May that we should begin to see more significant impacts of this in the form of empty shelves in stores with goods that are no longer arriving,' he told Fortune, 'because [of trade] collapsing the way it is.' The U.S. tariff on most Chinese goods, barring a significant carve-out for many electronics, sits at 145%. China has retaliated with a 125% tax on most U.S. imports but also rolled out exceptions for semiconductors and other sectors, like aviation, early Friday. China is America's third-largest trading partner, accounting for nearly $440 billion worth of U.S. imports in 2024, according to the United States Trade Representative. Meanwhile, shipping costs have roughly been cut in half since early January, per the Freightos Baltic Index, which tracks the spot rates for standard 40-foot containers across major international trade lanes. In other words, reduced demand is already hitting the industry's revenues. Significant layoffs in trucking and logistics could further drag down the economy, Sløk said in a note Friday morning. 'In addition, we will soon begin to see higher inflation because there are a significant number of product categories where China is the main provider of certain goods into the U.S. market,' he wrote. That's especially devastating for small businesses like independent toy, hardware, and clothing stores, he added. Most smaller firms rely on importing cheap goods to stay afloat, he explained, and do not have the working capital, or liquidity, that bigger businesses can leverage to weather the storm. 'Large businesses have flexible balance sheets,' Sløk said. 'They are more nimble. They have several product lines and are, therefore, able to easier adjust relative to a small business.' Mom-and-pop shops loom almost just as large, however, when it comes to the health of the broader economy. Small businesses employed about 62 million Americans in 2023, or more than 46% of the private-sector workforce, according to the U.S. Small Business Administration. These companies, which have 500 employees or less on the payroll, also accounted for nearly two-thirds of net job growth from 1995 to 2021, per the agency. Firms of all sizes, meanwhile, must deal with added uncertainty caused by the opposing messaging coming from Washington and Beijing. Trump and Treasury Secretary Scott Bessent have signaled tariffs will come down when a new trade agreement is reached. The president has insisted such talks are taking place, but China has denied those claims, saying it will not come to the table unless the U.S. walks back its 'unilateral' measures. The anxiety is apparent, Sløk said, in recent surveys from regional Federal Reserve banks, some of which showed big declines in new orders and plans for capital expenditures at a standstill. Companies like Southwest, Chipotle, and PepsiCo, he added, have warned on their most recent earnings calls that nervous consumers are starting to cut back. In short, he's worried things could get worse. This story was originally featured on
Yahoo
17-04-2025
- Business
- Yahoo
Trump trade war halts ships, strands empty containers
Container shipping, the linchpin of global trade, has been thrown into turmoil once again as President Donald Trump's trade war continues to escalate. Recent weeks have seen a dizzying array of tariff announcements, exemptions and retractions, leaving shippers and importers struggling to keep pace with the rapidly changing situation, analyst Judah Levine of Freightos said in a weekly research note. On April 2, Trump announced unprecedented reciprocal tariffs on about 60 U.S. trading partners, which went into effect on April 9. However, just a day later, these tariffs were paused for three months for most countries. China, which had chosen to retaliate against the reciprocal tariffs, was excluded from this pause, resulting in both countries imposing a minimum of 125% tariffs on each other's goods. Adding to the complexity, Trump exempted electronics including smartphones, computers and semiconductors from all reciprocal tariffs late last week for an unspecified period. This exemption applies to Chinese electronics as well, although the president's earlier 20% tariffs on China and any previous tariffs still apply. The situation remains fluid, with Trump initiating trade investigations into semiconductors and pharmaceuticals, which could lead to new sectoral tariffs in the coming weeks. The 90-day pause on reciprocal tariffs still leaves in place the 10% global tariff, 25% levy on Canada and Mexico, and 25% tariffs on vehicle imports, though Trump is considering a short-term exemption on the latter. Many countries are attempting to negotiate with the U.S. during this three-month reprieve, but no settlements have been announced. The European Union reports that talks have not been productive, while Trump has called on China to come to the negotiating table. The impact on freight has been significant, Levine said. The initial rollout of reciprocal tariffs led to a widespread drop in container bookings out of Asia. However, the subsequent 90-day pause and escalation with China have created a complex situation. While shipments out of China remain paused, many shippers sourcing from other Asian countries have started increasing their orders again, attempting to get ahead of possible tariff resumptions in July. The Freightos Baltic Index found Asia-U.S. West Coast rates increased 10% to $2,465 per forty-foot equivalent unit for the week ending April 11. Asia-U.S. East Coast prices rose 3% to $3,647 per FEU. While frontloading likely helped push container rates from China, Taiwan and Vietnam to the Port of Long Beach, California, sharply up ahead of the April 9 implementation of reciprocal tariffs, Freightos data showed rates from Shanghai have dropped 16% since tariffs went into effect, while prices from Taiwan and Vietnam have stayed elevated. That may indicate a realigning of manufacturing in the region. The extreme tariffs on Chinese goods have led to a sharp decline in container export bookings, with reports of increased blanked sailings on this lane as demand slumps. Many U.S. importers had been frontloading goods since the November election in anticipation of tariff hikes, building up inventory that may allow them to pause and assess the situation before deciding their next moves. For shippers on other lanes, the 90-day reprieve offers another opportunity to pull forward goods ahead of possible tariff increases. This is likely to increase demand for ocean freight on these lanes in the near term, followed by lower demand after the deadline passes. This pattern suggests that the typical peak season months may be subdued due to demand pulled forward since late last year. Asia-North Europe prices fell 1% to $2,365 per FEU, while Asia-Mediterranean prices declined 5% to $2,751 per FEU. The need to blank sailings out of China while potentially increasing services from other Asian origins poses challenges for ocean carriers and may cause delays for shippers. The concentration of empty containers in China is likely to exacerbate these issues. Trans-Atlantic surcharges announced for May could indicate carrier expectations of frontloading ahead of the July deadline. While overall Asia-North America container rates increased somewhat last week due to start-of-month general rate increases, daily rates have since reversed much of those modest gains. Demand patterns between China and other Asian origins may be reflected in diverging rates at the port-pair level. Maersk (OTC: AMKBY) this week announced a pair of peak season surcharges effective May 15: $2,000 per FEU transiting from Asia to the U.S. and Canada, and $750 per FEU for shipments from Turkey and Egypt to the U.S. Hapag-Lloyd (OTC: HPGLY), Maersk's partner in the new Gemini Cooperation, announced a peak season surcharge of $2,000 per FEU from East Asia to North America, effective May 12. Find more articles by Stuart Chirls warns of 'carnage' on shifts in container shipping US considering making port fees more affordable for Chinese ships: Report 'Tariff shockwave' leads to collapse in ocean container bookings Early container rush ahead as Asia-Pacific defies global growth slowdown The post Trump trade war halts ships, strands empty containers appeared first on FreightWaves.
Yahoo
09-04-2025
- Business
- Yahoo
Container rates see uptick as tariffs shock supply chain
The upheaval in global trade following President Donald Trump's tariff announcements is sending shockwaves through international markets and supply chains. But that's been good news, however temporary, for container rates that had been trending down for some time, analyst Freightos said in its weekly update. At the forefront of this trade war escalation is China, now facing a staggering minimum duty of 54% on all goods exported to the U.S., with some items subject to over 70%, and as much as 129%, in tariffs, after a new 50% duty announced by the White House Wednesday. This dramatic increase compounds existing Trump and Biden-era duties, creating a formidable barrier for Chinese exporters and U.S. importers alike. The ripple effects of these policy changes extend far beyond U.S.-China trade relations, said Freightos research chief Judah Levine, in the update. Many Asian countries that had previously benefited from trade diversion are now also subject to steep tariffs. This shift is forcing importers to reevaluate their sourcing strategies and supply chain configurations. In response to the U.S. measures, China has already announced retaliatory tariffs on U.S. exports. Other major trading partners, including Canada and the EU, are considering or implementing their own countermeasures. This tit-for-tat approach threatens to further destabilize global trade flows and increase the likelihood of a broader economic recession. The immediate impact on ocean freight has been swift. Shippers scrambled to load final shipments before the new tariffs took effect, leading to a short-term surge in demand for container space and even shifts to less-than-containerload (LCL) and air cargo options. However, this burst of activity is expected to give way to a significant drop in container demand to the U.S. in the coming months. For the week that ended on Friday, Asia-U.S. West Coast container rates increased 3% to $2,246 per forty-foot equivalent units, according to the Freightos Baltic Index. Asia-U.S. East Coast prices increased 5% to $3,541 per FEU. Looking ahead, the Port of Los Angeles anticipates a 10% decrease in volume for the second half of the year. This decline could be exacerbated by growing overcapacity in the container market, along with a recession potentially leading to a collapse in freight rates reminiscent of the 2008 financial crisis. Indeed, as capacity continues to grow from newbuild introductions on the major trade lanes, even with Red Sea diversions continuing to absorb capacity, rates out of Asia have fallen sharply since Lunar New Year, with container prices now beneath their 2024 floor. Rates rebounded by a few hundred dollars per FEU on the trans-Pacific on start-of-month general rate increases last week, though no bump came through for Asia-Europe lanes, as carriers increase capacity management efforts. The expected tariff-driven drop in demand will only put more downward pressure on rates. Find more articles by Stuart Chirls threatens retaliation over carbon tax on ocean shippingUnited States reverses course on proposed port fees for Chinese ships Ocean shipping carbon tax could gouge US consumers, say opponents Expect 'subdued' peak container season in wake of tariffs, says analyst The post Container rates see uptick as tariffs shock supply chain appeared first on FreightWaves.
