Transpacific Gridlock Looms Tariff Truce Triggers Freight Frenzy

By Gavin van Marle (The Loadstar) –

Transpacific shippers keen to take advantage of the 90-day tariff time-out are likely to be faced with tight capacity and soaring freight rates as new volumes collide with delayed cargo.

According to new analysis from Sea-Intelligence Consulting, there is 180,000-540,000 teu of cargo in China that formed a ‘cargo pool’ in the immediate aftermath of President Trump’s “Liberation Day” tariff announcement on 2 April.

The estimate is based on widespread reports of a 30-40% decline in bookings post tariffs, and an assumption that between 25% and 55% of the cancelled bookings was for cargo already produced and subsequently stored in bonded warehouses and container freight stations in China.

Sea-Intelligence analysts further calculate that if this pool were added to the normal transpacific cargo flows over the remainder of this month, it would lead to a demand surge of 16%-48%; while if shipped during May and June, demand would grow by a far more manageable 5%-16%.

But they added: “It does not take into account that we might expect a clear and rapid surge in peak season cargo, as US importers will attempt to move as much product as possible before 14 August.”

Indeed, Loadstar Premium correspondent and OceanX founder Ruben Huber noted: “The reprieve from the US-China agreement for the next 90 days seems to have a triggered an early peak season, with bookings back up and importers embracing the window of certainty, even though at a still high tariff and likely higher ocean rates too.”

Despite the demand swing, carriers have yet to return capacity to the trade en masse, said Sea-Intelligence, noting that capacity on Asia-US west coast services is down 5% this week and down 3% next week, year on year.

And, while the week beginning 2 June could see capacity 5% up year on year, according to current service announcements from carriers, it is expected to decline again and, by the end of the month, is expected to be almost 10% down year on year.

The Asia-US east coast trade currently appears to be better equipped to handle an early peak season – this week’s capacity is at the same level as last year and is expected to rise throughout June to hit a 30% year-on-year increase at the end of the month.

Sea-Intelligence explained that it expected to see fresh capacity injections announced in the coming days, but questioned whether it would be enough to mitigate sharp freight rate increases.

“It is very likely that we will see a substantial increase of cargo in the coming weeks. This can better be managed if the [waiting] pool is distributed over the next six weeks – or longer.

“However, it is very likely that shippers will be anxious to move their cargo as fast as possible, before they are blindsided by new tariff changes.

“Consequently, we expect to see a sharp rise in spot rates in the coming weeks, as well as much more capacity insertion into the transpacific – at the expense of blanked sailings in other Asian export trades,” it said.

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