Global shipping continues to experience significant fluctuations, primarily due to the U.S. tariff strategy involving numerous trading partners, with China remaining a major focal point.
Recent developments in U.S. tariff policies have drawn considerable attention to ocean freight rates, marking a significant shift in shipping dynamics, as noted by analyst and SONAR data contributor Freightos in an update.
The Freightos Baltic Index witnessed a decline in Asia-U.S. West Coast rates, falling by 8% to $3,124 per forty foot equivalent (FEU) for the week ending July 4. Conversely, Asia-U.S. East Coast prices experienced a drop of 16% to $5,159 per FEU.
SONAR’s Inbound Ocean TEUs Volume Index (IOTI.USA) surged ahead of 2022-2024 levels as of July 8.
President Donald Trump recently signed an executive order extending the pause on reciprocal tariff rollouts for several U.S. trading partners until August 1. This extension provides a temporary respite from imminent tariff hikes, allowing additional time for negotiations aimed at reducing or completely avoiding these increases. Notably, the existing tariffs with China will remain unchanged until their expiration on August 11. This pause has subtly influenced the overall volume and direction of international shipping activities.
Prior to the anticipated tariff hikes, significant frontloading of goods from various countries, particularly China, was observed due to previous tariff levels that reached an embargo-like 145%. This frontloading led to a decline in U.S. ocean imports during April and May. While trans-Pacific container rates maintained stability and, at times, decreased due to strategic blanked sailings by carriers, any potential spike in shipping activities in July is expected to be muted due to the short timeframe until the pause’s expiration.
Trans-Pacific spot rates from Asia to the U.S. West Coast experienced a significant decline, dropping by 8% during the week ending July 4 to $3,124 per forty foot equivalent unit (FEU). This further reduction led to a drop to $2,390 per FEU. This represents a substantial 60% decline from just three weeks prior, when rates were as high as $6,000 per FEU.
Similarly, East Coast rates have also fallen by 30% since mid-June, reaching $4,900 per FEU. However, these rates remain above their March-to-May levels, reflecting limited capacity additions on this route compared to the West Coast’s faster transit options.
To combat decreasing demand and falling rates, carriers are making strategic decisions regarding capacity adjustments. Planned general rate increases (GRIs) have been abandoned or reduced, with many carriers opting to remove capacity in an attempt to stabilize market conditions and halt the decline. This strategic reduction in vessel availability aims to align capacity with dropping demand and prevent further rate deterioration.
Rates on Europe trades have been influenced by relatively steady peak season demand coupled with ongoing congestion at key container hubs. Despite an overall reasonable demand, rates remain below last year’s peak due to continual fleet growth and substantial scheduled capacity on the Asia-North Europe lane. Carriers are reportedly planning to increase blankings, reducing scheduled capacity even amid typical peak season increases, to stabilize rates. Last week, rates rose by 14% to $3,384 per FEU, but they remain significantly below the previous year’s highs.
