Calm Before the Wave: Gradual Rise in Transpacific Freight Costs Following Tariff Agreement

By Gavin van Marle (The Loadstar) – This week, container spot freight rates on the transpacific route have been inching upward, though not as dramatically as last week’s surge driven by a General rate Increase (GRI). Carriers are quickly adjusting their capacity in anticipation of a potential uptick in demand.

Estimates suggest that a important amount of cargo is poised to leave China for the US,especially following President Trump’s tariff announcements. Sea Intelligence consulting has put this figure between 180,000 and 540,000 TEUs.Jim Boone from CSX mentioned at a Wolfe Research event that they expect substantial volumes arriving at US ports as we approach July and the third quarter due to a temporary relief on tariffs from China. He noted there could be around 700,000 to 800,000 loaded containers ready for shipment.

In response to this anticipated demand rebound, carriers are swiftly reinstating services that were previously suspended. Linerlytica reported that all Far East-US west coast services withdrawn earlier will be back online soon thanks to improved cargo demand stemming from easing tensions between China and the US. However, Drewry cautioned that while carriers are ramping up operations and increasing vessel sizes to meet rising demand, immediate capacity remains constrained due to redeployments and congestion at Chinese ports.

Despite these developments, spot rates saw only modest increases this week: WCI’s Shanghai-Los Angeles rate climbed by 2% week-on-week to $3,197 per 40ft container; meanwhile, the shanghai-New York rate rose by 4% to $4,257 per unit. The Shanghai Containerised Freight Index (SCFI) also reflected gains of about 5% across both routes.

Looking ahead towards July when tariff reductions will end temporarily on July 9th raises questions about whether these measures will sufficiently stimulate demand. A recent survey by Freightos involving over a hundred small-to-medium importers revealed lingering concerns regarding existing tariffs—many importers are adapting their strategies amid fears of rising freight costs during this period.

Freightos pointed out that smaller businesses remain anxious; some are even reconsidering their operational timelines or contemplating winding down altogether while others explore domestic manufacturing options—though few have made any concrete moves yet due to ongoing shipment delays caused by tariffs.

On another front—the Asia-Europe trade—spot rates remained relatively stable wiht WCI’s Shanghai-Rotterdam leg holding steady at $2,030 per container while the Shanghai-Genoa route saw an increase of about 4%, reaching $2,841 per unit.As we approach June’s GRI implementation—which could see prices rise significantly—forwarders and shippers will closely monitor how demand shapes up for peak season amidst growing port congestion in Europe.Interestingly enough outside major east-west trades; secondary routes like Asia-South America have experienced notable shifts too—with spot rates soaring recently due largely in part as some shipping lines redirected capacity towards North America resulting in shortages elsewhere. The Ningbo Containerised Freight Index highlighted an extraordinary spike of over 71% for shipments heading westward from ningbo compared with last week’s figures—a clear indication of shifting dynamics within global shipping lanes.

In summary: As we navigate through these turbulent waters marked by fluctuating demands and evolving trade policies—it’s crucial for stakeholders across logistics and supply chain management sectors to stay informed about market trends impacting freight movements globally.