Tariff Truce Spurs a Slow-Burn Surge in Transpacific Freight Rates

By Gavin van Marle (The Loadstar) –

Container spot freight rates on the transpacific continued to trend upwards this week, albeit at a far gentler pace than last week’s GRI-induced double-digit growth, as carriers rushed to return capacity in anticipation of at least a short-term demand bounce.

There are only rough estimates as to how much ready-to-load cargo has built up in China, waiting to ship to the US, since President Trump’s so-called reciprocal tariff announcement.

Sea Intelligence consulting suggested a broad range, of 180,000-540,00 teu, this week; and this was given some credence by Jim Boone, chief commercial officer at US intermodal provider CSX, who told a Wolfe Research event this week according to The Loadstar’s DeskOne: “We expect a lot of volume coming into the ports here as we move into July and into the third quarter with the 90-day relief on the tariffs from China.

“And we’ve heard from a number of customers, there’s 700,000 to 800,000 loaded containers ready to go,” he added.

Carriers have reacted incredibly quickly: consultant Linerlytica yesterday reported that “all of the Far East-US west coast transpacific services that were withdrawn in April and May will be fully re-instated following the rebound in cargo demand” with the China-US détente.

And today, Drewry warned that “carriers are reinstating suspended services and upsizing vessels to meet booming demand, yet near-term capacity remains tight due to redeployments and congestion, especially at Chinese ports”.

The effect on spot rates this week was muted however, with WCI’s Shanghai-Los Angeles leg showing a 2% week-on-week gain, to $3,197 per 40ft, while the Shanghai-New York spot rate rose 4%, to $4,257 per 40ft, and the Shanghai Containerised Freight Index (SCFI) saw week-on-week rises of 5% on both routes, to reach $3,275 and $4,284 per 40ft, respectively.

The acid test for the trade, and the prognosis for the remainder of the tariff time-out period to 9 July, are likely to be the stickiness of two general rate increases (GRIs), of $1,000-$3,000 per 40ft, slated for 1 and 15 June.

It is also unclear whether 90 days of reduced tariffs will be enough to boost demand. A Freightos survey of more than 100 US small-to-medium importers found there was still considerable concern over remaining tariffs, and which would likely be exacerbated by sharp freight rate rises.

“The 90-day tariff implementation delay hasn’t done much to ease importer concerns,” Freightos said. “Smaller importers remain deeply anxious, and are shifting behaviour – including changing shipment timing or even contending winding down their businesses – and are starting to adapt for the long term.

“While some are assessing domestic manufacturing, very few actually have. Meanwhile, delays in shipments as a result of tariffs led to significant gaps that importers are struggling to fill,” it added.

Meanwhile, spot rates on the Asia-Europe trade continued to flatline – the WCI’s Shanghai-Rotterdam leg was unchanged, at $2,030 per 40ft, while the Shanghai-Genoa leg was up 4% week on week, to $2,841 per 40ft.

With a series of rising carrier FAK spot rates due on 1 June, which would mean a 50% hike of current prices, forwarders and shippers will begin to see how demand is shaping for the peak season: whether capacity continues to outmatch demand; and the effect of the growing port congestion in Europe.

Outside the two largest east-west trades, evidence emerged this week that spot rates on some secondary trades were being hit by the capacity reshuffling on the transpacific.

The Ningbo Containerised Freight Index noted that spot rates on the Asia-South America west coast had surged over the past week.

“Affected by increased demand in North America, some box liners have significantly redeployed capacity from these routes, resulting in space shortages and substantial freight rate increases,” reported an NCFI commentary; its Ningbo-west South America rate up 71.7% against last week.

Similarly, the SCFI’s Shanghai-Manzanillo route showed a 50% week-on-week gain, to end at $2,387 per 40ft.

Subscribe for Daily Maritime Insights

Sign up for gCaptain’s newsletter and never miss an update

— trusted by our 109,064 members