<div class="phx-topic abstract-wrapper">Disruption caused by trade wars will reach deep into global supply chains, depressing an already uncertain outlook for the US freight economy. </div>

Disruption caused by trade wars will reach deep into global supply chains, depressing an already uncertain outlook for the US freight economy.

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<div class="phx-topic">The tailwinds that brought a strong increase in US imports and certain exports last year have turned to cold, hard headwinds this year as disruptions caused by the Trump administration’s tariffs take root and multiply. The shock waves from those tariffs are rippling from ports in Asia and Europe through freight docks deep in industrial America. The latest shock came from the US Trade Representative (USTR), which said April 18 it will <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">charge entrance fees for China-based ocean carriers</a> and lines operating Chinese-built ships calling at US ports based on cargo capacity or container volume. Given the chaotic rollout of President Donald Trump’s trade policies, the outlook for the US freight economy in the second half of 2025 isn’t just cloudy — it’s reached a point of uncertainty that is crippling shippers’ ability to plan. US shippers “are waiting for the dust to settle to determine how tariffs might influence and change their short- and long-term business strategies,” Spencer Frazier, executive vice president of sales at J.B. Hunt Transport Services, said during an earnings call April 15. S&amp;P Global, the parent company of the Journal of Commerce, in April pulled down its US GDP growth forecasts for 2025 and 2026 from 1.9% in both years to 1.3% and 1.5%, respectively, thanks in part to expectations that tariffs will result in higher inflation. Although the risk of a recession in the US has diminished, US policy volatility and related economic uncertainties are likely to linger into the year, S&amp;P Global said. On land, the so-called freight recession that began in 2022, sending trucking and intermodal rates tumbling by double-digit percentages, is entering its fourth consecutive year. Shippers will maintain pricing power in the truckload and intermodal rail segments in 2025, but they’re also going to make, ship and sell less. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="9fd84e22-d76c-4e34-8c52-c038bd25ad91"></dynamic-object></div>Despite an uptick in truckload spot rates early this year, led by flatbed spot rates, truckload pricing is still bouncing along a bottom it reached in 2023. Less-than-truckload (LTL) pricing has been elevated since the collapse of Yellow in 2023, but volumes remain essentially flat aside from some tariff-driven frontloading. The question isn’t whether trucking volumes will decline in the second quarter or second half of 2025, but by how much. That may trigger a broader loss of truck capacity. <h3>Blanking and canceling </h3>On the seas, the Trump administration’s multi-front trade war has already led to a drop in shipments, compounding the disruption caused by attacks on shipping in the Red Sea, where the US is escalating attacks on Houthis in Yemen. Ocean freight rates have fallen steeply in the first four months of 2025. Average spot pricing from Asia to the US West Coast of $2,050 per FEU in the week of April 18 was down 61% from the beginning of the year and 74.8% from its most recent peak in July 2024, according to Platts, a sister product of the Journal of Commerce within S&amp;P Global. Asia-US East Coast spot rates have sunk 53.7% since Jan. 1 and 69.4% from last summer to $3,100 per FEU. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="cbb65e03-1d9b-43c6-97ee-0afa0e7dfc1d"></dynamic-object></div>A slew of booking cancellations by US importers is leading ocean carriers to <a href="https://www.joc.com/article/trans-pacific-blank-sailings-set-to-rise-after-china-bookings-drop-sharply-5984166">blank more voyages</a> in the eastbound trans-Pacific. Some ships are leaving China half-empty. The scale-back in US-bound imports from China is affecting the entire ocean carrier industry. “People are canceling and putting cargo [from] China on pause,” a source at a trans-Pacific container line who asked not to be identified told the Journal of Commerce in April. The broad pause in bookings and orders extends beyond China to other sourcing origins. Amazon, for example, has canceled orders of goods ranging from beach chairs and scooters to air conditioners from Vietnam and Thailand, as well as China, according to a report from Bloomberg. Retailer Five Below paused orders from China in April as those tariffs escalated, CFO Kristy Chipman told analysts during a March 19 call. “The breadth and magnitude of the tariffs are significant given that approximately 60% of our total cost of goods are imported from China, either directly or through our domestic vendors,” Chipman said. Trans-Pacific air cargo traffic, meanwhile, is expected to increase through May 2 as importers rush to beat the end of the exclusion from tariffs for low-value imports. After that final spurt of frontloading, tariffs and the loss of the de minimis exemption for shipments from China and Hong Kong are expected to <a href="https://www.joc.com/article/prepare-for-period-of-panic-in-trans-pacific-air-cargo-market-tiaca-5978829">drag on demand</a>. Limited blank sailings have been announced on the trans-Atlantic trade in the coming weeks, with just 7,124 TEUs from North Europe to the US East and Gulf coasts <a href="https://www.joc.com/article/early-signs-of-rising-tariff-driven-demand-emerge-on-the-trans-atlantic-5986678">scheduled to be withdrawn</a> in May, according to maritime data provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” said Peter Sand, chief analyst at rate benchmarking platform Xeneta. <h3>A bubble about to burst </h3>In 2024, containerized US imports jumped 15.3% to 27.7 million TEUs, while exports rose 0.9% to 11.3 million TEUs, according to PIERS, also part of S&amp;P Global. Manufactured goods, machinery and mechanical products and minerals rode atop the wave of imports, spiking 17.6%, 14.8% and 11.4%, respectively. Goods were still pouring into the US in the first three months of 2025, with container imports rising 9.2% year over year, according to PIERS, but retailers say the import wave is collapsing as the race to beat the US tariffs ends. The Global Port Tracker report, produced by the National Retail Federation (NRF) and Hackett Associates, forecasts imports to plunge 20.5% in May, 26.6% in June, 27% in July and 26.7% in August. “At present, we expect to see imports begin to decline by May and that they will drop dramatically during the remainder of the year,” Hackett Associates Founder Ben Hackett said in the April Global Port Tracker report. The NRF and Hackett project inbound container shipments will fall 20% in the second half from the year-ago period, which would result in a full-year decline of 15% or more, approximately equal to last year’s gain. Exporters are feeling the effects of tariffs, too, especially those shipping <a href="https://www.joc.com/article/uncertain-trade-environment-especially-fraught-for-us-ag-shippers-5987561">US agricultural and forestry products</a>. China, the largest US market for those products, levied a 125% tariff on them in retaliation for new US tariffs. Bookings for US exports to China for the week of April 15 <a href="https://www.joc.com/article/us-exporters-see-rise-in-canceled-orders-from-chinese-buyers-amid-trade-war-5986165">were down 5.4%</a> from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun &amp; Bradstreet. “In [the] short term, I think we’re going to see a lot of agriculture sourcing shift [from China] to other countries,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said in an interview with the Journal of Commerce. A drop in the value of the US dollar — down about 5% against other major world currencies after April’s tariff announcements — could help exporters sell goods overseas, but retaliatory tariffs and backlash among foreign consumers will likely dampen any currency gains. Such backlash has already occurred in Canada, where retailers have withdrawn American-made items from whiskey to diapers from their shelves. <h3>Manufacturing losing momentum </h3>Fewer US imports mean fewer intermodal containers moving inland to Chicago or Dallas and fewer truckload and LTL shipments. But a continued decline in US factory output will have an even greater impact on demand for trucking and rail services. Almost 60% of US truck tonnage is tied to industrial output, according to US Census Bureau data. North America manufacturing output fell at one of the steepest rates seen in the past two years in March, according to S&amp;P Global, with broad-based production losses in the US, Canada and Mexico. The US Manufacturing Purchasing Managers’ Index (PMI) from S&amp;P Global dropped to 50.2 in March from 52.7 in February and 51.2 in January. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e4bcb827-f97b-43d7-a4df-83a0b6ac9b48"></dynamic-object></div>Optimism surrounding the Trump administration and the need to “front run” tariffs buoyed manufacturers in the first two months of the year, but “cracks are now starting to appear,” S&amp;P Global said in its PMI release in April. The longer trade disputes last, the more US manufacturers will have difficulty finding specific components, including some that are critical to production, said Michael Regan, chief relationship officer at logistics company and shipper consultant TranzAct Technologies, citing Chinese-made magnets used in automotive transmissions as an example. “These are ‘dirty magnets’ produced from rare earth metals, and China is limiting their export,” Regan told the Journal of Commerce in mid-April. “A company I know has enough inventory to last only through July.” <h3>Resilient, but worried </h3>US consumer spending has been relatively steadfast so far this year, supported by continued wage increases and low unemployment. US retail sales grew 1.4% month over month in March, the biggest monthly increase since January 2023. Excluding sales of cars and trucks and automotive parts, retail sales only rose 0.5% from February, according to US Census Bureau data. But those results fly in the face of consumer sentiment. The University of Michigan Index of Consumer Sentiment dropped 11% sequentially in April, its fourth consecutive monthly decline. The Conference Board’s monthly index of consumer expectations dropped 9.6 points in March to 65.2, its lowest level in 12 years and far below the threshold of 80 that usually signals a recession ahead. Unlike in 2024, the consumer “is not feeling great,” NRF Chief Economist Jack Kleinhenz said in a statement in mid-April, but the NRF still expects US retail sales to rise this year with or without tariffs. The retailers’ association forecasts retail sales will grow between 2.7% and 3.7% year over year to between $5.42 trillion and $5.48 trillion. What’s more, there’s no expectation the disputes will end in the near future, and even if they do, damage has already been done that will take time to repair. The Trump administration’s goals, whether achievable or not, are part of a long-term strategy that is likely to survive weekly or even daily policy flips. As long as tariff uncertainty and trade wars linger, however, it will be more difficult to find a catalyst that will increase freight demand in the US. That’s pushing hopes for a freight recovery farther into 2026. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. Journal of Commerce editors Ari Ashe, Greg Knowler, Bill Mongelluzzo and Laura Robb contributed to this report, along with Research Analyst Cathy Morrow Roberson. </div>

The tailwinds that brought a strong increase in US imports and certain exports last year have turned to cold, hard headwinds this year as disruptions caused by the Trump administration’s tariffs take root and multiply. The shock waves from those tariffs are rippling from ports in Asia and Europe through freight docks deep in industrial America. The latest shock came from the US Trade Representative (USTR), which said April 18 it will charge entrance fees for China-based ocean carriers and lines operating Chinese-built ships calling at US ports based on cargo capacity or container volume. Given the chaotic rollout of President Donald Trump’s trade policies, the outlook for the US freight economy in the second half of 2025 isn’t just cloudy — it’s reached a point of uncertainty that is crippling shippers’ ability to plan. US shippers “are waiting for the dust to settle to determine how tariffs might influence and change their short- and long-term business strategies,” Spencer Frazier, executive vice president of sales at J.B. Hunt Transport Services, said during an earnings call April 15. S&P Global, the parent company of the Journal of Commerce, in April pulled down its US GDP growth forecasts for 2025 and 2026 from 1.9% in both years to 1.3% and 1.5%, respectively, thanks in part to expectations that tariffs will result in higher inflation. Although the risk of a recession in the US has diminished, US policy volatility and related economic uncertainties are likely to linger into the year, S&P Global said. On land, the so-called freight recession that began in 2022, sending trucking and intermodal rates tumbling by double-digit percentages, is entering its fourth consecutive year. Shippers will maintain pricing power in the truckload and intermodal rail segments in 2025, but they’re also going to make, ship and sell less. Despite an uptick in truckload spot rates early this year, led by flatbed spot rates, truckload pricing is still bouncing along a bottom it reached in 2023. Less-than-truckload (LTL) pricing has been elevated since the collapse of Yellow in 2023, but volumes remain essentially flat aside from some tariff-driven frontloading. The question isn’t whether trucking volumes will decline in the second quarter or second half of 2025, but by how much. That may trigger a broader loss of truck capacity. Blanking and canceling On the seas, the Trump administration’s multi-front trade war has already led to a drop in shipments, compounding the disruption caused by attacks on shipping in the Red Sea, where the US is escalating attacks on Houthis in Yemen. Ocean freight rates have fallen steeply in the first four months of 2025. Average spot pricing from Asia to the US West Coast of $2,050 per FEU in the week of April 18 was down 61% from the beginning of the year and 74.8% from its most recent peak in July 2024, according to Platts, a sister product of the Journal of Commerce within S&P Global. Asia-US East Coast spot rates have sunk 53.7% since Jan. 1 and 69.4% from last summer to $3,100 per FEU. A slew of booking cancellations by US importers is leading ocean carriers to blank more voyages in the eastbound trans-Pacific. Some ships are leaving China half-empty. The scale-back in US-bound imports from China is affecting the entire ocean carrier industry. “People are canceling and putting cargo [from] China on pause,” a source at a trans-Pacific container line who asked not to be identified told the Journal of Commerce in April. The broad pause in bookings and orders extends beyond China to other sourcing origins. Amazon, for example, has canceled orders of goods ranging from beach chairs and scooters to air conditioners from Vietnam and Thailand, as well as China, according to a report from Bloomberg. Retailer Five Below paused orders from China in April as those tariffs escalated, CFO Kristy Chipman told analysts during a March 19 call. “The breadth and magnitude of the tariffs are significant given that approximately 60% of our total cost of goods are imported from China, either directly or through our domestic vendors,” Chipman said. Trans-Pacific air cargo traffic, meanwhile, is expected to increase through May 2 as importers rush to beat the end of the exclusion from tariffs for low-value imports. After that final spurt of frontloading, tariffs and the loss of the de minimis exemption for shipments from China and Hong Kong are expected to drag on demand . Limited blank sailings have been announced on the trans-Atlantic trade in the coming weeks, with just 7,124 TEUs from North Europe to the US East and Gulf coasts scheduled to be withdrawn in May, according to maritime data provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” said Peter Sand, chief analyst at rate benchmarking platform Xeneta. A bubble about to burst In 2024, containerized US imports jumped 15.3% to 27.7 million TEUs, while exports rose 0.9% to 11.3 million TEUs, according to PIERS, also part of S&P Global. Manufactured goods, machinery and mechanical products and minerals rode atop the wave of imports, spiking 17.6%, 14.8% and 11.4%, respectively. Goods were still pouring into the US in the first three months of 2025, with container imports rising 9.2% year over year, according to PIERS, but retailers say the import wave is collapsing as the race to beat the US tariffs ends. The Global Port Tracker report, produced by the National Retail Federation (NRF) and Hackett Associates, forecasts imports to plunge 20.5% in May, 26.6% in June, 27% in July and 26.7% in August. “At present, we expect to see imports begin to decline by May and that they will drop dramatically during the remainder of the year,” Hackett Associates Founder Ben Hackett said in the April Global Port Tracker report. The NRF and Hackett project inbound container shipments will fall 20% in the second half from the year-ago period, which would result in a full-year decline of 15% or more, approximately equal to last year’s gain. Exporters are feeling the effects of tariffs, too, especially those shipping US agricultural and forestry products . China, the largest US market for those products, levied a 125% tariff on them in retaliation for new US tariffs. Bookings for US exports to China for the week of April 15 were down 5.4% from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun & Bradstreet. “In [the] short term, I think we’re going to see a lot of agriculture sourcing shift [from China] to other countries,” Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), said in an interview with the Journal of Commerce. A drop in the value of the US dollar — down about 5% against other major world currencies after April’s tariff announcements — could help exporters sell goods overseas, but retaliatory tariffs and backlash among foreign consumers will likely dampen any currency gains. Such backlash has already occurred in Canada, where retailers have withdrawn American-made items from whiskey to diapers from their shelves. Manufacturing losing momentum Fewer US imports mean fewer intermodal containers moving inland to Chicago or Dallas and fewer truckload and LTL shipments. But a continued decline in US factory output will have an even greater impact on demand for trucking and rail services. Almost 60% of US truck tonnage is tied to industrial output, according to US Census Bureau data. North America manufacturing output fell at one of the steepest rates seen in the past two years in March, according to S&P Global, with broad-based production losses in the US, Canada and Mexico. The US Manufacturing Purchasing Managers’ Index (PMI) from S&P Global dropped to 50.2 in March from 52.7 in February and 51.2 in January. Optimism surrounding the Trump administration and the need to “front run” tariffs buoyed manufacturers in the first two months of the year, but “cracks are now starting to appear,” S&P Global said in its PMI release in April. The longer trade disputes last, the more US manufacturers will have difficulty finding specific components, including some that are critical to production, said Michael Regan, chief relationship officer at logistics company and shipper consultant TranzAct Technologies, citing Chinese-made magnets used in automotive transmissions as an example. “These are ‘dirty magnets’ produced from rare earth metals, and China is limiting their export,” Regan told the Journal of Commerce in mid-April. “A company I know has enough inventory to last only through July.” Resilient, but worried US consumer spending has been relatively steadfast so far this year, supported by continued wage increases and low unemployment. US retail sales grew 1.4% month over month in March, the biggest monthly increase since January 2023. Excluding sales of cars and trucks and automotive parts, retail sales only rose 0.5% from February, according to US Census Bureau data. But those results fly in the face of consumer sentiment. The University of Michigan Index of Consumer Sentiment dropped 11% sequentially in April, its fourth consecutive monthly decline. The Conference Board’s monthly index of consumer expectations dropped 9.6 points in March to 65.2, its lowest level in 12 years and far below the threshold of 80 that usually signals a recession ahead. Unlike in 2024, the consumer “is not feeling great,” NRF Chief Economist Jack Kleinhenz said in a statement in mid-April, but the NRF still expects US retail sales to rise this year with or without tariffs. The retailers’ association forecasts retail sales will grow between 2.7% and 3.7% year over year to between $5.42 trillion and $5.48 trillion. What’s more, there’s no expectation the disputes will end in the near future, and even if they do, damage has already been done that will take time to repair. The Trump administration’s goals, whether achievable or not, are part of a long-term strategy that is likely to survive weekly or even daily policy flips. As long as tariff uncertainty and trade wars linger, however, it will be more difficult to find a catalyst that will increase freight demand in the US. That’s pushing hopes for a freight recovery farther into 2026. Contact William B. Cassidy at bill.cassidy@spglobal.com . Journal of Commerce editors Ari Ashe, Greg Knowler, Bill Mongelluzzo and Laura Robb contributed to this report, along with Research Analyst Cathy Morrow Roberson.

Surface

Air Cargo

Supply chain

Maritime

Tariff-related disruption spreading as US shippers ‘pause’ plans

<div class="phx-topic abstract-wrapper">Container lines have blanked at least 80 sailings this month compared with 51 in March 2020, when volumes crashed amid early COVID-19 lockdowns, according to Sea-Intelligence Maritime Analysis. </div>

Container lines have blanked at least 80 sailings this month compared with 51 in March 2020, when volumes crashed amid early COVID-19 lockdowns, according to Sea-Intelligence Maritime Analysis.

<div class="phx-topic">Container lines are blanking trans-Pacific capacity at rates higher than in the early days of the COVID-19 pandemic as US importers are increasingly canceling or suspending orders due to tariff increases that have made some business infeasible. Carriers are skipping at least 80 sailings this month, compared with the 51 sailings canceled in March 2020, when US imports from Asia plunged due to pandemic-induced recession fears, according to Sea-Intelligence Maritime Analysis. The escalation in blank sailings in the last two weeks has been “staggering,” giving a glimpse of just how sharp the decline could be next month, said Sea-Intelligence CEO Alan Murphy. Based on the removal of functional capacity, “carriers now clearly anticipate container demand in week 18 to be 28% lower than expected, and on Asia-North America East Coast in week 19, they now expect shippers to move as much as 42% less cargo than anticipated,” Murphy wrote in the analyst’s Sunday Spotlight newsletter. The increase in blank sailings coincides with the Port of Los Angeles’ expectation that container volumes will plunge 14% month over month in week 18 and 38.6% in week 19, respectively, according to the port’s forecasting tool. In the first full week of May, volumes through the country’s largest import gateway are projected to plummet 43% year over year. Forwarders say bookings from Southeast Asia to the US have held up better than those for shipments from China, presumably thanks to the 90-day suspension of significantly higher tariffs on goods sourced from Vietnam and Cambodia. Imports from those countries now face a 10% tariff, rather than the initially announced duties of 46% and 49%, respectively. Weekly bookings for shipments from China have plunged 37% since March 31, while bookings for Southeast Asian imports from have risen 10%, according to a Monday analysis of data from maritime visibility provider Vizion and analytics firm Dun &amp; Bradstreet. Earlier this month, US retailers slashed their outlook for US imports in the second quarter and the second half, warning that volumes would fall by more than 20% on an annual basis in every month from May through August. <h3>‘Consolidating’ services </h3>Container lines have yet to outright cancel container services, however, choosing instead to blank sailings and skip individual port calls. Taiwan-based Evergreen Marine, which operates the Hangzhou Bay Bridge (HBB) service as part of the Ocean Alliance, has canceled sailings for four straight weeks into Los Angeles and Oakland, removing 8,000 TEUs to 12,000 TEUs of weekly capacity. South Korea, which is serviced on HBB’s call at Busan, reported a 5% drop in exports during the first 20 days of April, following the release of Trump’s reciprocal tariffs. Ocean Alliance’s Bohai service, operated by Cosco Shipping, will cancel a China departure for Long Beach in the first week of May, according to vessel schedules, removing 10,000 TEUs of capacity during that time. Ocean Alliance’s Hibiscus Express and Yangtze services are also expected to blank one weekly departure each from China. A US-based executive with an independent ocean carrier who asked not to be identified said that while they have not yet seen further cancellations of their China bookings, there will likely be fewer China port calls as carriers prepare for lower volumes. “We have not seen an increase in cancellations, but the market is still soft,” he told the Journal of Commerce. “It’s likely that carriers will start to consolidate their China services in the short term.” While services may be outright canceled, there appears to be some withdrawal of vessels in the trans-Pacific trade. The 8,500-TEU Cosco Thailand, part of the Pacific South China Express Service operated by OOCL, appears to have been removed from the service’s schedule for May, along with the 8,800-TEU OOCL Utah. Following its voyage back to China, the Cosco Thailand will start calling Mexico’s West Coast ports in late June, according to the vessel’s schedule. The withdrawals effectively leave the 8,063-TEU OOCL Southampton as the only nominated ship in the service, which will require it to only offer a once-a-month service from Asia. <h3>Then, and now </h3>Approximately five years ago, when volumes plunged 62% from February to March, imports from Asia came roaring back and demand remained at historic highs for two years. This time around, however, there’s less reason to expect a similar rebound given the high level of uncertainty around US tariffs — now 145% on imports from China — and months of frontloading in anticipation of the higher duties. Various US retailers tell the Journal of Commerce that they’ve got as much as three and a half months of core inventory, allowing logistics managers to see if President Donald Trump reduces tariff levels or adds exemptions. Some shippers are moving inventory into bonded warehouses to avoid paying tariffs, betting that the severity of US tariffs can’t last more than a few months. Senior Editors Bill Mongelluzzo and Michael Angell and associate editor Laura Robb contributed to this report. Contact Mark Szakonyi at <a href="mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. </div>

Container lines are blanking trans-Pacific capacity at rates higher than in the early days of the COVID-19 pandemic as US importers are increasingly canceling or suspending orders due to tariff increases that have made some business infeasible. Carriers are skipping at least 80 sailings this month, compared with the 51 sailings canceled in March 2020, when US imports from Asia plunged due to pandemic-induced recession fears, according to Sea-Intelligence Maritime Analysis. The escalation in blank sailings in the last two weeks has been “staggering,” giving a glimpse of just how sharp the decline could be next month, said Sea-Intelligence CEO Alan Murphy. Based on the removal of functional capacity, “carriers now clearly anticipate container demand in week 18 to be 28% lower than expected, and on Asia-North America East Coast in week 19, they now expect shippers to move as much as 42% less cargo than anticipated,” Murphy wrote in the analyst’s Sunday Spotlight newsletter. The increase in blank sailings coincides with the Port of Los Angeles’ expectation that container volumes will plunge 14% month over month in week 18 and 38.6% in week 19, respectively, according to the port’s forecasting tool. In the first full week of May, volumes through the country’s largest import gateway are projected to plummet 43% year over year. Forwarders say bookings from Southeast Asia to the US have held up better than those for shipments from China, presumably thanks to the 90-day suspension of significantly higher tariffs on goods sourced from Vietnam and Cambodia. Imports from those countries now face a 10% tariff, rather than the initially announced duties of 46% and 49%, respectively. Weekly bookings for shipments from China have plunged 37% since March 31, while bookings for Southeast Asian imports from have risen 10%, according to a Monday analysis of data from maritime visibility provider Vizion and analytics firm Dun & Bradstreet. Earlier this month, US retailers slashed their outlook for US imports in the second quarter and the second half, warning that volumes would fall by more than 20% on an annual basis in every month from May through August. ‘Consolidating’ services Container lines have yet to outright cancel container services, however, choosing instead to blank sailings and skip individual port calls. Taiwan-based Evergreen Marine, which operates the Hangzhou Bay Bridge (HBB) service as part of the Ocean Alliance, has canceled sailings for four straight weeks into Los Angeles and Oakland, removing 8,000 TEUs to 12,000 TEUs of weekly capacity. South Korea, which is serviced on HBB’s call at Busan, reported a 5% drop in exports during the first 20 days of April, following the release of Trump’s reciprocal tariffs. Ocean Alliance’s Bohai service, operated by Cosco Shipping, will cancel a China departure for Long Beach in the first week of May, according to vessel schedules, removing 10,000 TEUs of capacity during that time. Ocean Alliance’s Hibiscus Express and Yangtze services are also expected to blank one weekly departure each from China. A US-based executive with an independent ocean carrier who asked not to be identified said that while they have not yet seen further cancellations of their China bookings, there will likely be fewer China port calls as carriers prepare for lower volumes. “We have not seen an increase in cancellations, but the market is still soft,” he told the Journal of Commerce. “It’s likely that carriers will start to consolidate their China services in the short term.” While services may be outright canceled, there appears to be some withdrawal of vessels in the trans-Pacific trade. The 8,500-TEU Cosco Thailand, part of the Pacific South China Express Service operated by OOCL, appears to have been removed from the service’s schedule for May, along with the 8,800-TEU OOCL Utah. Following its voyage back to China, the Cosco Thailand will start calling Mexico’s West Coast ports in late June, according to the vessel’s schedule. The withdrawals effectively leave the 8,063-TEU OOCL Southampton as the only nominated ship in the service, which will require it to only offer a once-a-month service from Asia. Then, and now Approximately five years ago, when volumes plunged 62% from February to March, imports from Asia came roaring back and demand remained at historic highs for two years. This time around, however, there’s less reason to expect a similar rebound given the high level of uncertainty around US tariffs — now 145% on imports from China — and months of frontloading in anticipation of the higher duties. Various US retailers tell the Journal of Commerce that they’ve got as much as three and a half months of core inventory, allowing logistics managers to see if President Donald Trump reduces tariff levels or adds exemptions. Some shippers are moving inventory into bonded warehouses to avoid paying tariffs, betting that the severity of US tariffs can’t last more than a few months. Senior Editors Bill Mongelluzzo and Michael Angell and associate editor Laura Robb contributed to this report. Contact Mark Szakonyi at mark.szakonyi@spglobal.com .

Container Shipping News

Port News

Container lines

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Trans-Pacific

Asia-US blank sailings exceed early pandemic levels: analyst

<div class="phx-topic abstract-wrapper">The alcoholic beverage industry is in decline as consumer tastes change, which is being felt in the import business as it deals with flat volumes. </div>

The alcoholic beverage industry is in decline as consumer tastes change, which is being felt in the import business as it deals with flat volumes.

<div class="phx-topic">Higher tariffs on US imports of wine and other alcoholic beverages are a nightcap the industry doesn’t need given a broader multi-year decline in drinking among Americans. After draining down inventories in 2023, wine and spirits shipments into the US rebounded last year, but volumes remain below levels prior to the COVID-19 pandemic amid a secular downturn in alcohol consumption, forcing retailers and wholesalers to be more selective in which products to stock. Total containerized imports of alcoholic beverages rose 12.8% in 2024, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. However, that growth came after an 18% plunge in 2023, and volumes were the second lowest in six years of data and down 6.4% from 2019. Alison Leavitt, managing director of the Wine and Spirits Shippers Association, told the Journal of Commerce that last year’s growth reflects some restocking among importers and distributors after they had reduced a pandemic-era oversupply throughout 2023. Census Bureau data show monthly wholesale US alcoholic beverage inventories peaking at just over $26 billion in March 2023, with inventories hovering at about $25 billion since then. However, it appears unlikely that distributors would build up inventories in the short term, Leavitt said. Merchant wholesalers of alcoholic beverages saw annual sales peak at $191.1 billion in 2022 before falling to $185.4 billion in 2024. Leavitt said the drop in sales reflects a trend of some consumers eschewing alcohol for cannabis, as well as lower drinking rates among members of Generation Z. “There’s a decline in overall consumption, in all categories,” Leavitt said. “The decline is a factor in shipping volumes. The US is a dead market for most categories.” Leavitt said there are a few categories that are still growing at a decent clip, such as Sauvignon Blancs from New Zealand, but those volumes are not enough to make up for the declines in “Old World” wine and spirits from Europe, Leavitt said. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="9a4ef4ce-e8b7-4577-8464-187b9b81b4be"></dynamic-object></div>The decline is reflected in the long-term growth trends for various US gateways. The Port of New York and New Jersey, the first port of call for most European wine and spirits imports, has seen a 3% average annual decline in such shipments since 2019. Even South American wines from Chile and Argentina appear to be taking a hit, with alcoholic beverage imports into the ports of Los Angeles and Long Beach down 4.2% per year on average since 2019. The Florida ports of Miami and Jacksonville have bucked this trend. Miami has seen five-year average annual growth of 4.5% while Jacksonville has seen 17% growth. Leavitt said these numbers reflect the healthy demand in Florida’s cruise industry, which continues to rebound after the pandemic, along with alcohol reexported to Caribbean resorts. “The cruise and duty-free trade came back strong after COVID, and Miami is the hub for that,” Leavitt said. Trump’s ongoing trade dispute will further scramble the outlook for alcoholic beverage imports in 2025, Leavitt said. Most European wine only had a small duty rate under previous administrations. Constellation Brands, the bottler of Corona and other Mexican beer brands, said on an April 10 earnings call that the 25% tariff on imported beer and empty aluminum cans will affect earnings results for 2025. Constellation said the tariffs will also affect imports from New Zealand and Italy. With a 20% base tariff on all imported goods from the EU, along with the threat of further reciprocal tariffs, wine and spirits distributors’ already thin margins are getting squeezed even more, Leavitt added. “The tariff issues have created a lot of uncertainty,” she said. “Companies are looking seriously at their products and wondering, ‘Do I order this?’” Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

Higher tariffs on US imports of wine and other alcoholic beverages are a nightcap the industry doesn’t need given a broader multi-year decline in drinking among Americans. After draining down inventories in 2023, wine and spirits shipments into the US rebounded last year, but volumes remain below levels prior to the COVID-19 pandemic amid a secular downturn in alcohol consumption, forcing retailers and wholesalers to be more selective in which products to stock. Total containerized imports of alcoholic beverages rose 12.8% in 2024, according to PIERS, a sister product of the Journal of Commerce within S&P Global. However, that growth came after an 18% plunge in 2023, and volumes were the second lowest in six years of data and down 6.4% from 2019. Alison Leavitt, managing director of the Wine and Spirits Shippers Association, told the Journal of Commerce that last year’s growth reflects some restocking among importers and distributors after they had reduced a pandemic-era oversupply throughout 2023. Census Bureau data show monthly wholesale US alcoholic beverage inventories peaking at just over $26 billion in March 2023, with inventories hovering at about $25 billion since then. However, it appears unlikely that distributors would build up inventories in the short term, Leavitt said. Merchant wholesalers of alcoholic beverages saw annual sales peak at $191.1 billion in 2022 before falling to $185.4 billion in 2024. Leavitt said the drop in sales reflects a trend of some consumers eschewing alcohol for cannabis, as well as lower drinking rates among members of Generation Z. “There’s a decline in overall consumption, in all categories,” Leavitt said. “The decline is a factor in shipping volumes. The US is a dead market for most categories.” Leavitt said there are a few categories that are still growing at a decent clip, such as Sauvignon Blancs from New Zealand, but those volumes are not enough to make up for the declines in “Old World” wine and spirits from Europe, Leavitt said. The decline is reflected in the long-term growth trends for various US gateways. The Port of New York and New Jersey, the first port of call for most European wine and spirits imports, has seen a 3% average annual decline in such shipments since 2019. Even South American wines from Chile and Argentina appear to be taking a hit, with alcoholic beverage imports into the ports of Los Angeles and Long Beach down 4.2% per year on average since 2019. The Florida ports of Miami and Jacksonville have bucked this trend. Miami has seen five-year average annual growth of 4.5% while Jacksonville has seen 17% growth. Leavitt said these numbers reflect the healthy demand in Florida’s cruise industry, which continues to rebound after the pandemic, along with alcohol reexported to Caribbean resorts. “The cruise and duty-free trade came back strong after COVID, and Miami is the hub for that,” Leavitt said. Trump’s ongoing trade dispute will further scramble the outlook for alcoholic beverage imports in 2025, Leavitt said. Most European wine only had a small duty rate under previous administrations. Constellation Brands, the bottler of Corona and other Mexican beer brands, said on an April 10 earnings call that the 25% tariff on imported beer and empty aluminum cans will affect earnings results for 2025. Constellation said the tariffs will also affect imports from New Zealand and Italy. With a 20% base tariff on all imported goods from the EU, along with the threat of further reciprocal tariffs, wine and spirits distributors’ already thin margins are getting squeezed even more, Leavitt added. “The tariff issues have created a lot of uncertainty,” she said. “Companies are looking seriously at their products and wondering, ‘Do I order this?’” Contact Michael Angell at michael.angell@spglobal.com .

Trans-Atlantic

Fewer drinkers keep lid on US wine and spirits imports

<div class="phx-topic abstract-wrapper">The very idea of the United States getting back into shipbuilding at scale shows an erosion in acceptance of the concept of global trade, specifically comparative advantage. </div>

The very idea of the United States getting back into shipbuilding at scale shows an erosion in acceptance of the concept of global trade, specifically comparative advantage.

<div class="phx-topic"><div class="wrapper-narrow float-right-element"><img src="/images/phoenix/5985578_0.1.jpg"></img></div>Should the United States be building commercial ships at scale? We know President Trump’s answer to that question — supporting US shipbuilding was a key rationale for the <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">fines on China-built</a> and -owned ships announced on April 17 by the United States Trade Representative (USTR). The action “sends a demand signal for US-built ships,” said USTR Jamieson Greer.Whether the US should engage in a massive ramp-up in non-military shipbuilding is a worthy question to ask, raising far-reaching questions of reindustrialization, national security, and trade facilitation. Let’s be clear: A bipartisan consensus has existed for decades that the US should at some level be a commercial shipbuilder. That explains the stubborn endurance of the Jones Act, the world’s most protectionist maritime law. Despite its critics — Sen. John McCain once called it “an archaic 1920s-era law that hinders free trade, stifles the economy and hurts consumers” — it survived the long era of trade liberalization. Political support from US seagoing unions and other interests that benefit from the Jones Act kept the law entrenched, with supportive members of Congress and other leaders of the cause feted at the annual Admiral of the Ocean Seas (AOTOS) dinner. But behind that lies more visceral support for commercial shipbuilding. Long memories of World War II help explain that — without 2,800 Liberty ships and thousands of other merchant vessels launched from US shipyards in just a few years’ time, the US and its allies would not have won the war. It is thus not surprising that the US had a 0.1% share of shipbuilding as of 2023, with only the Jones Act keeping deep draft commercial shipbuilding afloat. That is in stark contrast to China — a rising power that catapulted from building less than 5% of global tonnage in 1999 to commanding more than half of the tonnage by 2023, according to the USTR. But does that justify the massive revival of shipbuilding Trump has envisioned? “We’re going to resurrect the American shipbuilding industry,” he said in March. <h3>Aging rationales amid new landscapes </h3>The question is, why? The two reasons the US used to need its own commercial fleet and the shipbuilding capacity behind it are no longer relevant. One is sealift during conflict. The armada built during World War II was required to support eight million US troops deployed overseas fighting in two theaters of war, as well as support for allies. Given technology and the evolution toward asymmetric conflict, US troop numbers were far lower in subsequent conflicts and will likely be further diminished in the future. As it stands today the US military has access to considerable sealift, including 60 subsidized US-flag vessels under the Maritime Security Program operated by divisions of Maersk, Hapag-Lloyd, CMA CGM and others — all based in US ally countries. The program was created in the 1990s to maintain a US-flag fleet for military purposes as APL and Sea-Land, the largest US-based carriers, were sold to foreign owners. US forces overseas receive support from commercial container and roll-on/roll-off services, in addition to 125 civilian-crewed ships under the Navy’s Military Sealift Command. The other rationale — indeed, for shipbuilding in any country — is to support exports. In the postwar decades, carriers such as American Export Lines symbolized US export dominance. A rough analogy today is the Chinese electric car maker BYD building its own fleet of car carriers as its exports rapidly ramp up. The US will regain manufacturing — it’s hard to see Trump not accomplishing that — but if predictions are accurate, to the extent manufacturing is dominated by high-end goods such as semiconductors that can be profitably manufactured in the US, it won’t be ships but planes that will be the primary mode of shipment. The very idea of the US getting back into shipbuilding at scale, moreover, shows an erosion in acceptance of the concept of global trade, specifically comparative advantage, as a means of building countries’ wealth and prosperity by focusing on what each does best. It is hard to see a comparative advantage to Americans’ building ships when the cost is three times what other nations’ shipbuilders charge. The <a href="https://www.phillyshipyard.com/philly-shipyard-wins-usd-1-billion-contract-to-build-three-aloha-class-lng-fueled-containerships-for-matson/">$333 million per ship price</a> charged a few years ago by the Philly Shipyard to build three 3,600-TEU ships for Matson Navigation compares with $50 million for building a ship of that same size in an Asian yard, according to carrier sources. The US-built cost would be even more today given that US-built container ships increased in price by approximately $56,000 per TEU since 2002, while foreign-built container ships increased by less than $7,000 over the same period, <a href="https://www.cato.org/blog/competitiveness-protected-us-shipyards-continues-erode#:~:text=The%20recent%20run%2Dup%20in,beyond%20their%20normal%20life%20cycle.">according to the Cato Institute</a>, a libertarian think-tank. Thus, if it’s not military sealift or support for exports, what is the rationale? The lack of one is why criticism has been heaped on the USTR action. “The US shipbuilding sector already faces significant constraints, including a backlog of military orders and ongoing labor shortages,” said World Shipping Council president and CEO Joe Kramek. The action “is a step in the wrong direction as it will raise prices for consumers, weaken US trade and do little to revitalize the US maritime industry.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

Should the United States be building commercial ships at scale? We know President Trump’s answer to that question — supporting US shipbuilding was a key rationale for the fines on China-built and -owned ships announced on April 17 by the United States Trade Representative (USTR). The action “sends a demand signal for US-built ships,” said USTR Jamieson Greer. Whether the US should engage in a massive ramp-up in non-military shipbuilding is a worthy question to ask, raising far-reaching questions of reindustrialization, national security, and trade facilitation. Let’s be clear: A bipartisan consensus has existed for decades that the US should at some level be a commercial shipbuilder. That explains the stubborn endurance of the Jones Act, the world’s most protectionist maritime law. Despite its critics — Sen. John McCain once called it “an archaic 1920s-era law that hinders free trade, stifles the economy and hurts consumers” — it survived the long era of trade liberalization. Political support from US seagoing unions and other interests that benefit from the Jones Act kept the law entrenched, with supportive members of Congress and other leaders of the cause feted at the annual Admiral of the Ocean Seas (AOTOS) dinner. But behind that lies more visceral support for commercial shipbuilding. Long memories of World War II help explain that — without 2,800 Liberty ships and thousands of other merchant vessels launched from US shipyards in just a few years’ time, the US and its allies would not have won the war. It is thus not surprising that the US had a 0.1% share of shipbuilding as of 2023, with only the Jones Act keeping deep draft commercial shipbuilding afloat. That is in stark contrast to China — a rising power that catapulted from building less than 5% of global tonnage in 1999 to commanding more than half of the tonnage by 2023, according to the USTR. But does that justify the massive revival of shipbuilding Trump has envisioned? “We’re going to resurrect the American shipbuilding industry,” he said in March. Aging rationales amid new landscapes The question is, why? The two reasons the US used to need its own commercial fleet and the shipbuilding capacity behind it are no longer relevant. One is sealift during conflict. The armada built during World War II was required to support eight million US troops deployed overseas fighting in two theaters of war, as well as support for allies. Given technology and the evolution toward asymmetric conflict, US troop numbers were far lower in subsequent conflicts and will likely be further diminished in the future. As it stands today the US military has access to considerable sealift, including 60 subsidized US-flag vessels under the Maritime Security Program operated by divisions of Maersk, Hapag-Lloyd, CMA CGM and others — all based in US ally countries. The program was created in the 1990s to maintain a US-flag fleet for military purposes as APL and Sea-Land, the largest US-based carriers, were sold to foreign owners. US forces overseas receive support from commercial container and roll-on/roll-off services, in addition to 125 civilian-crewed ships under the Navy’s Military Sealift Command. The other rationale — indeed, for shipbuilding in any country — is to support exports. In the postwar decades, carriers such as American Export Lines symbolized US export dominance. A rough analogy today is the Chinese electric car maker BYD building its own fleet of car carriers as its exports rapidly ramp up. The US will regain manufacturing — it’s hard to see Trump not accomplishing that — but if predictions are accurate, to the extent manufacturing is dominated by high-end goods such as semiconductors that can be profitably manufactured in the US, it won’t be ships but planes that will be the primary mode of shipment. The very idea of the US getting back into shipbuilding at scale, moreover, shows an erosion in acceptance of the concept of global trade, specifically comparative advantage, as a means of building countries’ wealth and prosperity by focusing on what each does best. It is hard to see a comparative advantage to Americans’ building ships when the cost is three times what other nations’ shipbuilders charge. The $333 million per ship price charged a few years ago by the Philly Shipyard to build three 3,600-TEU ships for Matson Navigation compares with $50 million for building a ship of that same size in an Asian yard, according to carrier sources. The US-built cost would be even more today given that US-built container ships increased in price by approximately $56,000 per TEU since 2002, while foreign-built container ships increased by less than $7,000 over the same period, according to the Cato Institute , a libertarian think-tank. Thus, if it’s not military sealift or support for exports, what is the rationale? The lack of one is why criticism has been heaped on the USTR action. “The US shipbuilding sector already faces significant constraints, including a backlog of military orders and ongoing labor shortages,” said World Shipping Council president and CEO Joe Kramek. The action “is a step in the wrong direction as it will raise prices for consumers, weaken US trade and do little to revitalize the US maritime industry.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Transport, Trade and Regulation News

Questions of need, cost dog US shipbuilding ambitions

<div class="phx-topic abstract-wrapper">Apparel importers are concerned that tariffs on China will do harm given more than 4 out of every 10 shipments of the product come from China.</div>

Apparel importers are concerned that tariffs on China will do harm given more than 4 out of every 10 shipments of the product come from China.

<div class="phx-topic">A March study from consultancy firm Trade Partnership Worldwide has warned of a modest reduction in clothing imports if the US government makes higher tariffs on imported goods permanent and imposes fees on Chinese ships calling US ports. The US Trade Representative (USTR) on Thursday <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">scaled back the scope of planned port fees</a> on Chinese-built ships, but a 124.1% tariff on clothing and shoes from China remains in place. And with China supplying the lion’s share of apparel and footwear imports, US importers have limited options to shift sourcing elsewhere. Imports of apparel and footwear rose 13.3% year over year in 2024, including a 28.2% jump in shipments through the ports of Los Angeles and Long Beach, according to PIERS, a sister product of the Journal of Commerce within S&amp;P Global. However, compared with pre-pandemic 2019 levels, clothing imports were up just 3.8%. The five-year compound annual growth rates of 4% nationally and a mere 0.5% in Los Angeles and Long Beach also betray a much slower long-term expansion of consumer demand. While sourcing has increased from Bangladesh, India, Indonesia and Vietnam since 2019, China still accounted for 41.7% of containerized US apparel and footwear imports last year, according to PIERS. Citing a study by <a href="https://tradepartnership.com/reports/the-economic-effects-of-proposed-action-in-the-section-301-investigation-of-chinas-maritime-logistics-and-shipbuilding-policies-and-practices-2025/">Trade Partnership Worldwide</a>, the American Apparel and Footwear Association (AAFA) said in comments to the USTR that tariffs will cause apparel imports to decline 1.6% annually and leather imports such as shoes and accessories 2.7% annually. In addition, the study estimated retaliatory tariffs imposed by China and other countries would cause US apparel exports to drop 11.1% and leather products shipments to fall 13%, assuming current tariffs remain in place. Even with the 90-day pause to reciprocal tariffs, the association is concerned about how the uncertainty impacts shippers. Many of its members shifted sourcing to Vietnam during the first Trump administration. “The on-again, off-again tariff policy is forcing companies to careen between chaos and costs,” said AAFA CEO Steve Lamar in an April 9 statement. “This extreme tariff on US imports from China, which is in addition to President Trump’s Section 301 tariffs, will lead to higher prices for everyday apparel, footwear, and accessories and higher costs for US manufacturers who rely on materials and items they can only source from China.” The group is also worried about whether US terminal and rail infrastructure can handle the consolidation of calls and volumes at larger ports that ocean carriers have warned would result from the USTR port fees. “The supply of intermodal transportation is already limited, and the increased demand to move goods to major ports would further aggravate this issue, causing significant congestion,” said Nate Herman, AAFA senior vice president of policy, in a letter to the USTR. Apparel and footwear shippers have also lost traction on other key issues in the last year. The AAFA pushed for the US Foreign Trade Zone Parity Act to expand de minimis rules to foreign trade zones and against efforts to eliminate the de minimis rules on China. The de minimis rule allows packages under $800 to enter duty-free. Retailers and trade groups say removing this exemption for China will increase costs and delay deliveries. The de minimis exemption for China was set to end May 2, barring a reversal from the Trump administration. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. </div>

A March study from consultancy firm Trade Partnership Worldwide has warned of a modest reduction in clothing imports if the US government makes higher tariffs on imported goods permanent and imposes fees on Chinese ships calling US ports. The US Trade Representative (USTR) on Thursday scaled back the scope of planned port fees on Chinese-built ships, but a 124.1% tariff on clothing and shoes from China remains in place. And with China supplying the lion’s share of apparel and footwear imports, US importers have limited options to shift sourcing elsewhere. Imports of apparel and footwear rose 13.3% year over year in 2024, including a 28.2% jump in shipments through the ports of Los Angeles and Long Beach, according to PIERS, a sister product of the Journal of Commerce within S&P Global. However, compared with pre-pandemic 2019 levels, clothing imports were up just 3.8%. The five-year compound annual growth rates of 4% nationally and a mere 0.5% in Los Angeles and Long Beach also betray a much slower long-term expansion of consumer demand. While sourcing has increased from Bangladesh, India, Indonesia and Vietnam since 2019, China still accounted for 41.7% of containerized US apparel and footwear imports last year, according to PIERS. Citing a study by Trade Partnership Worldwide , the American Apparel and Footwear Association (AAFA) said in comments to the USTR that tariffs will cause apparel imports to decline 1.6% annually and leather imports such as shoes and accessories 2.7% annually. In addition, the study estimated retaliatory tariffs imposed by China and other countries would cause US apparel exports to drop 11.1% and leather products shipments to fall 13%, assuming current tariffs remain in place. Even with the 90-day pause to reciprocal tariffs, the association is concerned about how the uncertainty impacts shippers. Many of its members shifted sourcing to Vietnam during the first Trump administration. “The on-again, off-again tariff policy is forcing companies to careen between chaos and costs,” said AAFA CEO Steve Lamar in an April 9 statement. “This extreme tariff on US imports from China, which is in addition to President Trump’s Section 301 tariffs, will lead to higher prices for everyday apparel, footwear, and accessories and higher costs for US manufacturers who rely on materials and items they can only source from China.” The group is also worried about whether US terminal and rail infrastructure can handle the consolidation of calls and volumes at larger ports that ocean carriers have warned would result from the USTR port fees. “The supply of intermodal transportation is already limited, and the increased demand to move goods to major ports would further aggravate this issue, causing significant congestion,” said Nate Herman, AAFA senior vice president of policy, in a letter to the USTR. Apparel and footwear shippers have also lost traction on other key issues in the last year. The AAFA pushed for the US Foreign Trade Zone Parity Act to expand de minimis rules to foreign trade zones and against efforts to eliminate the de minimis rules on China. The de minimis rule allows packages under $800 to enter duty-free. Retailers and trade groups say removing this exemption for China will increase costs and delay deliveries. The de minimis exemption for China was set to end May 2, barring a reversal from the Trump administration. Contact Ari Ashe at ari.ashe@spglobal.com .

US apparel shippers brace for tariff-driven volume decline

<div class="phx-topic abstract-wrapper">US maritime regulators’ decision to add the multipurpose vessel operator to the controlled-carrier list comes amid a wider US-China trade dispute. </div>

US maritime regulators’ decision to add the multipurpose vessel operator to the controlled-carrier list comes amid a wider US-China trade dispute.

<div class="phx-topic">US maritime regulators’ decision to add the multipurpose vessel operator to the controlled-carrier list comes amid a wider US-China trade dispute. US maritime regulators have added Chipolbrok, a multipurpose vessel operator 50/50 owned by the governments of China and Poland, to a list of entities deemed to be under Chinese government control, triggering extra scrutiny of the carrier. The move comes amid increasingly fractious relations between the US and China, with both countries imposing tit-for-tat tariffs and the US proposing port fees on commercial ships built in China. Other carriers on the Federal Maritime Commission’s (FMC’s) controlled-carrier list include China-based Cosco Shipping and its Hong Kong-based subsidiary OOCL, as well as South Korea-based HMM. The firm, which takes its name from its official title — the Chinese-Polish Joint Stock Shipping Company — was initially designated as a controlled carrier in November but confirmation was delayed while the company appealed the decision. Upholding the original ruling in a three-page determination this week, the FMC said a comprehensive review of the company’s ownership structure found that the Chinese government “exerts more control over the corporate structure and commercial activities of Chipolbrok than the Polish partner.” “For example, the company’s office in Shanghai is a headquarters office, while the Polish office is a branch office,” the FMC said in its determination. “The Chinese portion of the company is also more complex than the Polish one, with more subsidiaries and more executives. In addition, Cosco Shipping Group, a Chinese-controlled carrier, provides funding and other support to Chipolbrok.” Controlled carriers are subject to enhanced regulatory oversight on the basis that government-subsidized shipping firms could undercut privately owned carriers to gain access to the US market or disrupt trade, the FMC said. Chipolbrok has an owned fleet of 31 multipurpose vessels ranging in size up to 62,000 deadweight tons (dwt) that operate semi-liner and tramp services and four 38,000-dwt ships on order for delivery starting next year. In the US, the firm operates through Houston-based Chipolbrok Americas, formed in 2004. Recent shipments have included components for LNG facilities along the Gulf of Mexico, wind power equipment and breakbulk cargoes including steel coils. Oslo, Norway-headquartered maritime consultancy Esgian said 19% of Chipolbrok’s total vessel sailings last year were US-related, of which 15% were between the US and Mexico. Chipolbrok representatives in the US and Europe were not immediately available for comment. Contact Keith Wallis at <a href="keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

US maritime regulators’ decision to add the multipurpose vessel operator to the controlled-carrier list comes amid a wider US-China trade dispute. US maritime regulators have added Chipolbrok, a multipurpose vessel operator 50/50 owned by the governments of China and Poland, to a list of entities deemed to be under Chinese government control, triggering extra scrutiny of the carrier. The move comes amid increasingly fractious relations between the US and China, with both countries imposing tit-for-tat tariffs and the US proposing port fees on commercial ships built in China. Other carriers on the Federal Maritime Commission’s (FMC’s) controlled-carrier list include China-based Cosco Shipping and its Hong Kong-based subsidiary OOCL, as well as South Korea-based HMM. The firm, which takes its name from its official title — the Chinese-Polish Joint Stock Shipping Company — was initially designated as a controlled carrier in November but confirmation was delayed while the company appealed the decision. Upholding the original ruling in a three-page determination this week, the FMC said a comprehensive review of the company’s ownership structure found that the Chinese government “exerts more control over the corporate structure and commercial activities of Chipolbrok than the Polish partner.” “For example, the company’s office in Shanghai is a headquarters office, while the Polish office is a branch office,” the FMC said in its determination. “The Chinese portion of the company is also more complex than the Polish one, with more subsidiaries and more executives. In addition, Cosco Shipping Group, a Chinese-controlled carrier, provides funding and other support to Chipolbrok.” Controlled carriers are subject to enhanced regulatory oversight on the basis that government-subsidized shipping firms could undercut privately owned carriers to gain access to the US market or disrupt trade, the FMC said. Chipolbrok has an owned fleet of 31 multipurpose vessels ranging in size up to 62,000 deadweight tons (dwt) that operate semi-liner and tramp services and four 38,000-dwt ships on order for delivery starting next year. In the US, the firm operates through Houston-based Chipolbrok Americas, formed in 2004. Recent shipments have included components for LNG facilities along the Gulf of Mexico, wind power equipment and breakbulk cargoes including steel coils. Oslo, Norway-headquartered maritime consultancy Esgian said 19% of Chipolbrok’s total vessel sailings last year were US-related, of which 15% were between the US and Mexico. Chipolbrok representatives in the US and Europe were not immediately available for comment. Contact Keith Wallis at keithwallis@hotmail.com .

Breakbulk carriers

Project cargo

Breakbulk News

FMC to scrutinize Chipolbrok, citing Chinese government control

<div class="phx-topic abstract-wrapper">There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession — rate deflation accompanied by cost inflation — and if carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. </div>

There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession — rate deflation accompanied by cost inflation — and if carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth.

<div class="phx-topic">The surface freight transportation industry is now pinning its hope on economic recovery — for the third straight year — on an expected recovery in the second half of the year. The industry consensus calls for incremental improvement in truckload rates driven by gradual improvement in sector fundamentals throughout the year. Nevertheless, the most recent results of many public truckload stocks have been sobering. Although some carriers observed some “green shoots” during peak season, post-election gains have been given back — and then some. Multiples are below historic norms, and fleet sizes continue to contract — despite several years of shrinkage. There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession caused by rate deflation accompanied by cost inflation. If carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. To analyze this dichotomy, I utilized “An Analysis of the Operational Cost of Trucking: 2024 Update.” Prepared by the American Transportation Research Institute (ATRI), this annual report casts a wide net in respondent type, size and operating model; provides historical context for almost the past 20 years and is remarkably transparent when compared with other self-anointed experts. The first chart explains this difference by looking at two distinct metrics: driver cost per hour and fuel cost per mile. Fuel costs have deviated wildly over this period, whereas driver cost has been steadily increasing. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="b372d175-2a73-40b7-83a0-f350f63093d1"></dynamic-object></div>Nevertheless, in an environment where trucking costs are on an inexorable inflationary arc, how have rates remained so depressed? I believe that the issue is that the trucking market is less “free” since the COVID-19 pandemic. A free market exists when supply and demand (through “voluntary exchange”) determine economic outcomes. Buyers and sellers are free to trade goods and services free of governmental intervention or market dominance by one side: monopoly, oligopoly or monopsony. A free market also requires the freedom of firms to enter that market because there are no barriers of entry. Since deregulation, the truckload market has had this freedom. However, market freedom also permits firms to freely depart from the market without any barriers to exit. This has not necessarily been the case since the pandemic. At the smallest increment of production, an individual with a commercial driver’s license could acquire a tractor and trailer, obtain insurance, register with the government and be in business. If the business did not work out, the individual could hand the keys to the equipment lender and be on with their life. COVID changed these dynamics. Equipment was wildly expensive and lenders required more security than just the underlying asset. New entrants needed to pledge their homes or life savings. When the market turned, there was no exit possible because they were “upside down.” The asset was worth less than they paid for it. These owner-operators are now forced into an untenable situation. Having no exit, their only choice is to keep driving until the market changes. Because survival — not profitability — is the goal, their floor price is what I call “direct cash costs.” In the ATRI model, this is fuel, insurance, permits/licenses and tolls. Costs such as equipment payments, maintenance and repair and tires are deferred until the end. I call them “episodic cash.” Driver wages and benefits are notional. The second chart shows how these costs have tracked the past 10 years. I have also included traditional truckload and intermodal. The former has no episodic cash. Maintenance is maintained, and equipment cost is deferred by parking equipment. Non-asset intermodal is all “direct cash” because all components are purchased. Bimodal intermodal providers are not shown, but they would be between traditional truckload and non-asset intermodal. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="7c8a9981-9386-4062-844d-cd07eb8ea529"></dynamic-object></div>The second chart also explains the freight recession. The traditional economies of scale enjoyed by large truckload carriers over owner-operators are meaningless when costs are not “apples to apples.” The same applies to intermodal’s competitive advantage. The intermodal line may be a little high; however, we have not seen a widespread willingness of railroads to cut their rates. This situation is not The Flying Dutchman, a phantom ship doomed to sail forever. Eventually, the equipment will be retired, and “normal” market conditions will return. Until then, this market situation is likely to maintain. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>.</div>

The surface freight transportation industry is now pinning its hope on economic recovery — for the third straight year — on an expected recovery in the second half of the year. The industry consensus calls for incremental improvement in truckload rates driven by gradual improvement in sector fundamentals throughout the year. Nevertheless, the most recent results of many public truckload stocks have been sobering. Although some carriers observed some “green shoots” during peak season, post-election gains have been given back — and then some. Multiples are below historic norms, and fleet sizes continue to contract — despite several years of shrinkage. There is widespread recognition that the industry has been caught in the jaws of a historically unprecedented freight recession caused by rate deflation accompanied by cost inflation. If carriers are to return to historical levels of profitability, there is a need for rate and volume increases to deliver top-line growth. To analyze this dichotomy, I utilized “An Analysis of the Operational Cost of Trucking: 2024 Update.” Prepared by the American Transportation Research Institute (ATRI), this annual report casts a wide net in respondent type, size and operating model; provides historical context for almost the past 20 years and is remarkably transparent when compared with other self-anointed experts. The first chart explains this difference by looking at two distinct metrics: driver cost per hour and fuel cost per mile. Fuel costs have deviated wildly over this period, whereas driver cost has been steadily increasing. Nevertheless, in an environment where trucking costs are on an inexorable inflationary arc, how have rates remained so depressed? I believe that the issue is that the trucking market is less “free” since the COVID-19 pandemic. A free market exists when supply and demand (through “voluntary exchange”) determine economic outcomes. Buyers and sellers are free to trade goods and services free of governmental intervention or market dominance by one side: monopoly, oligopoly or monopsony. A free market also requires the freedom of firms to enter that market because there are no barriers of entry. Since deregulation, the truckload market has had this freedom. However, market freedom also permits firms to freely depart from the market without any barriers to exit. This has not necessarily been the case since the pandemic. At the smallest increment of production, an individual with a commercial driver’s license could acquire a tractor and trailer, obtain insurance, register with the government and be in business. If the business did not work out, the individual could hand the keys to the equipment lender and be on with their life. COVID changed these dynamics. Equipment was wildly expensive and lenders required more security than just the underlying asset. New entrants needed to pledge their homes or life savings. When the market turned, there was no exit possible because they were “upside down.” The asset was worth less than they paid for it. These owner-operators are now forced into an untenable situation. Having no exit, their only choice is to keep driving until the market changes. Because survival — not profitability — is the goal, their floor price is what I call “direct cash costs.” In the ATRI model, this is fuel, insurance, permits/licenses and tolls. Costs such as equipment payments, maintenance and repair and tires are deferred until the end. I call them “episodic cash.” Driver wages and benefits are notional. The second chart shows how these costs have tracked the past 10 years. I have also included traditional truckload and intermodal. The former has no episodic cash. Maintenance is maintained, and equipment cost is deferred by parking equipment. Non-asset intermodal is all “direct cash” because all components are purchased. Bimodal intermodal providers are not shown, but they would be between traditional truckload and non-asset intermodal. The second chart also explains the freight recession. The traditional economies of scale enjoyed by large truckload carriers over owner-operators are meaningless when costs are not “apples to apples.” The same applies to intermodal’s competitive advantage. The intermodal line may be a little high; however, we have not seen a widespread willingness of railroads to cut their rates. This situation is not The Flying Dutchman, a phantom ship doomed to sail forever. Eventually, the equipment will be retired, and “normal” market conditions will return. Until then, this market situation is likely to maintain. Contact Ted Prince at ted@tricitiesintermodal.com .

Surface industry faces obstacles on way to hoped-for H2 recovery

<div class="phx-topic abstract-wrapper">No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.</div>

No matter what changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry, writes Satish Jindel.

<div class="phx-topic">On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, <a href="https://www.joc.com/article/fedex-freight-spinoff-is-latest-move-to-reshape-us-ltl-market-5909683">the leadership announced that a spinoff</a> was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. <h3>Greater role for technology </h3>While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at <a href="mailto:info@shipmatrix.com">info@shipmatrix.com</a>. </div>

On June 25, 2024, during an earnings call, FedEx leaders announced that the company’s board had authorized management to explore options for a sale or spinoff of FedEx Freight, and that a decision would be announced by the end of the year. On Dec. 19, the leadership announced that a spinoff was the best option and would be completed over 18 months. Why tell the shareholders and the less-than-truckload (LTL) market of this move if it is not happening for many months? Now, competitors and shippers can prepare for the various changes that could result from the FedEx Freight spinoff. Competing carriers and shippers should benefit from FedEx’s Priority and Economy services getting merged for a number of reasons. While the parcel market supports express and ground services, the FedEx Express volume has been shrinking for many years, with FedEx Ground now representing over 80% of total parcel volume. So, if there is a rationale to merge the Express and Ground parcel networks, FedEx Freight’s Priority and Economy services should also be merged. The premium for the Priority service price is so small that it does not make up for the various costs related to offering two services. If the two services were so appealing and financially rewarding, other LTL carriers would have done the same. Yet after 12 years, no other LTL carrier has followed suit. Many LTL carriers with just one service are generating operating margins better than 14.5% of FedEx Freight. As the LTL industry speeds up the transit times on high-volume lanes, the gap between Priority and Economy services will shrink. Greater role for technology While the parent company wants to spin it off as FedEx Freight, expect the new board to rename it American Freightways. With relief from intercompany charges of $528 million during fiscal year 2024 paid to FedEx Corporation for marketing, sales, technology and billing support, the spinoff will save FedEx Freight a few hundred million dollars by handling those corporate support functions itself. If it uses that money to go for greater market share with pricing initiatives, it could be good news for shippers. Shippers should get ready for a greater role of technology. With the National Motor Freight Traffic Association finally adopting dimensional pricing, there will be a greater need by shippers and carriers to capture shipment dimensions. This change should ensure more accurate billing and reduce the cost for auditing all freight bills for proper classification. With shippers being required to pay greater attention to the dimensions of the pallets, they can expect FedEx Freight support to improve their palletizing just as FedEx helps parcel customers improve their packaging. Because there are practically no appointment deliveries in the parcel business, expect FedEx Freight to embrace opportunities with AI to reduce the number of appointment deliveries, which should help shippers avoid charges for such service. We can also expect FedEx Freight to take greater interest in participating in LTL industry conferences and contributing its shipment data to SMC3’s national LTL database. No matter which of these changes occur, a FedEx Freight spinoff as a standalone LTL carrier will be good for the entire industry. And for those wondering why FedEx needs 18 months to spin off Freight, just imagine the pressure on the board and leadership that may find that investors are valuing its LTL business at a higher market cap than its parcel business, which is generating just a 5.5% margin compared with 14.5% for LTL business. Contact Satish Jindel at info@shipmatrix.com .

How the LTL market could evolve as the FedEx Freight spinoff plays out

Dry Van

{name} 
{dateX.formatDate('MMM dd, yyyy')}: ${valueY}
 Weekly % change: {van_rate_previous_week_change.formatNumber('#.##%')}

Flatbed

{name} 
{dateX.formatDate('MMM dd, yyyy')}: ${valueY}
 Weekly % change: {flatbed_rate_previous_week_change.formatNumber('#.##%')}

Refrigerated

{name} 
{dateX.formatDate('MMM dd, yyyy')}: ${valueY} 
 Weekly % change: {reefer_rate_previous_week_change.formatNumber('#.##%')}

DAT Freight & Analytics is an independent source of truckload pricing and business intelligence. Using an automated daily process, DAT collects invoices from nearly 1,200 transportation companies totaling more than $137 billion in freight spend annually. It verifies and updates data daily; each market rate reported in RateView Analytics requires a minimum number of submissions, so prices cannot be manipulated; and the algorithms account for outliers. [DAT](https://dat.com)

US dry-van, flatbed and refrigerated truckload spot rates (DAT)

US Truckload spot rates weekly (DAT) Gateway

<div class="phx-topic abstract-wrapper">With the door to US trade effectively slammed shut by tariffs, Chinese manufacturers are urgently looking for alternative markets in which to offload their surplus inventory.</div>

With the door to US trade effectively slammed shut by tariffs, Chinese manufacturers are urgently looking for alternative markets in which to offload their surplus inventory.

<div class="phx-topic">The European Commission is closely monitoring containerized imports from China amid growing fears that the high US tariffs will force a redirection of trans-Pacific trade flows and flood Europe with Chinese goods. While there is no evidence yet of increasing volume from China above seasonal norms, the commission is taking no chances and has deployed an “Import Surveillance Task Force” to track any irregular changes in trade. “The commission is monitoring imports closely to ensure that it detects in good time any potential increase in imports due to trade diversion,” Olof Gill, spokesperson for trade at the European Commission, told the Journal of Commerce Wednesday. The US’ 145% tariffs on Chinese imports came into effect April 9, leading to significant frontloading ahead of that date and a <a href="https://www.joc.com/article/trans-pacific-blank-sailings-set-to-rise-after-china-bookings-drop-sharply-5984166">large-scale cancellation of cargo bookings</a> thereafter. Some shippers are requesting containers already in-gated at Chinese origins not be loaded on ships, while others have asked that containers be pulled completely from port, according to a trans-Pacific carrier executive. Ships leaving China for the US in the coming weeks are expected to be half-full as the cancellations continue, with significant blank sailings likely on the trans-Pacific and carriers seeking out other markets to utilize their capacity. Southeast Asian origins, for instance, are seeing a surge in ship utilization as shippers frontload exports from those nations to the US to take advantage of a 90-day reprieve on reciprocal tariffs. With the door to US trade effectively slammed shut, Chinese manufacturers are urgently looking for alternative markets in which to offload their surplus inventory. Europe’s huge consumer base is an attractive target, and the European Commission is shoring up its defenses against any incoming wave of cheap Chinese products that could displace European-made goods. Gill said if the new monitoring mechanism detected an increase in Chinese imports that could harm European Union industry, the EU “will be ready to respond appropriately.” “In such a case, the commission could deploy ... its trade defense instruments, including a safeguard investigation that could be initiated in case an import surge causes, or threatens to cause, serious injury to EU industry,” the spokesman added. Such is the concern in Europe that European Commission President Ursula von der Leyen called Chinese Premier Li Qiang last week to urge Beijing to address possible trade diversions due to US tariffs. <h3>Record capacity deployed on Asia-Europe trade </h3>The concerns of the European Commission might be valid. According to Sea-Intelligence Maritime Analysis, carriers have announced an all-time high in capacity sailing out of Asia toward North Europe this week at 411,600 TEUs, beating the record set in early March of 2021, with very limited capacity blanked. “Surely not a coincidence, and even though some of it should have sailed last week, it’s not canceled but set to sail this week,” said Peter Sand, chief analyst for rate benchmarking platform Xeneta. The average transit time from China to North Europe is 54 days, meaning the first shipments from any diverted trade will begin to arrive in early June. Casper Ellerbaek, global head of ocean freight at DHL Global Forwarding, said strong bookings from Asia to Europe have been sustained through recent weeks, but that was aligned with DHL’s usual book of business. “There is indeed speculation within the market that, as US demand decreases due to the Trump tariffs, China may seek alternative markets to offload its goods at competitive prices,” Ellerbaek told the Journal of Commerce, adding, however, that it was too early to definitively identify that trend. “Currently, many Chinese factories have likely manufactured products based on existing orders from US importers,” he said. “These finished goods or in-progress orders may not be easily cancellable, and some are already awaiting shipment to the US. As such, we have not yet seen a significant increase in Chinese containers destined for European ports.” Also not yet seeing a significant rise in China volume was Marc Meier, global head of ocean freight at Toll Group. But he warned that could change. “One thing we can say is that all signs point towards China and others having to play more in other markets, so Asia to Europe will surely receive more focus,” Meier told the Journal of Commerce Wednesday. Carriers shifting capacity around to mitigate the impact of US tariffs is bringing a familiar disruptive factor back into the mix — equipment imbalances. “If we do begin to see trade flow impacts from the tariffs, it is likely that shipping lines will adjust their sailing schedules, potentially omitting some or all Chinese ports on certain voyages to accommodate increased demand from other regions,” Ellerbaek said. “This adjustment will lead to an equipment imbalance, as seen in previous disruptions like the Red Sea crisis and during the pandemic, where repositioning equipment to align with new trade flows takes time,” he added. <h3>China surge would worsen persistent port congestion </h3>Another potential issue is that any surge in Chinese imports will quickly exacerbate the severe port congestion that is still causing delays across the major North Europe and Mediterranean gateways. A host of factors are responsible for the bottlenecks, including full container yards at most terminals, crane maintenance in some ports, berth congestion, rail disruption from line closures in northern Germany and low water levels on the Rhine River impacting inland connections. HMM is reporting berth waiting times of 18 days in London Gateway and 4.5 days at the Greek hub of Piraeus, where 12 feeder vessels are currently waiting to be handled. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="0e7c6c96-deff-4701-bb62-76f7f3ffef74"></dynamic-object></div>While Europe prepares for a possible wave of Chinese imports, the spot market has finally arrested its steady slide that began in late December. Xeneta data shows that China to North Europe rates are up 7% since April 1 at $2,514 per FEU. But while an increase in Chinese imports may help rising rates, it won’t last, according to Rico Luman, senior economist at global Bank ING. “It will be the first reaction because of this disruption but afterwards the massive overcapacity in container shipping will weigh on rates once again, because that is the backdrop to all of this,” Luman told the Journal of Commerce. “This tariff discussion is not good news for global trade, and I expect rates to drop again over the course of this year,” he added. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The European Commission is closely monitoring containerized imports from China amid growing fears that the high US tariffs will force a redirection of trans-Pacific trade flows and flood Europe with Chinese goods. While there is no evidence yet of increasing volume from China above seasonal norms, the commission is taking no chances and has deployed an “Import Surveillance Task Force” to track any irregular changes in trade. “The commission is monitoring imports closely to ensure that it detects in good time any potential increase in imports due to trade diversion,” Olof Gill, spokesperson for trade at the European Commission, told the Journal of Commerce Wednesday. The US’ 145% tariffs on Chinese imports came into effect April 9, leading to significant frontloading ahead of that date and a large-scale cancellation of cargo bookings thereafter. Some shippers are requesting containers already in-gated at Chinese origins not be loaded on ships, while others have asked that containers be pulled completely from port, according to a trans-Pacific carrier executive. Ships leaving China for the US in the coming weeks are expected to be half-full as the cancellations continue, with significant blank sailings likely on the trans-Pacific and carriers seeking out other markets to utilize their capacity. Southeast Asian origins, for instance, are seeing a surge in ship utilization as shippers frontload exports from those nations to the US to take advantage of a 90-day reprieve on reciprocal tariffs. With the door to US trade effectively slammed shut, Chinese manufacturers are urgently looking for alternative markets in which to offload their surplus inventory. Europe’s huge consumer base is an attractive target, and the European Commission is shoring up its defenses against any incoming wave of cheap Chinese products that could displace European-made goods. Gill said if the new monitoring mechanism detected an increase in Chinese imports that could harm European Union industry, the EU “will be ready to respond appropriately.” “In such a case, the commission could deploy ... its trade defense instruments, including a safeguard investigation that could be initiated in case an import surge causes, or threatens to cause, serious injury to EU industry,” the spokesman added. Such is the concern in Europe that European Commission President Ursula von der Leyen called Chinese Premier Li Qiang last week to urge Beijing to address possible trade diversions due to US tariffs. Record capacity deployed on Asia-Europe trade The concerns of the European Commission might be valid. According to Sea-Intelligence Maritime Analysis, carriers have announced an all-time high in capacity sailing out of Asia toward North Europe this week at 411,600 TEUs, beating the record set in early March of 2021, with very limited capacity blanked. “Surely not a coincidence, and even though some of it should have sailed last week, it’s not canceled but set to sail this week,” said Peter Sand, chief analyst for rate benchmarking platform Xeneta. The average transit time from China to North Europe is 54 days, meaning the first shipments from any diverted trade will begin to arrive in early June. Casper Ellerbaek, global head of ocean freight at DHL Global Forwarding, said strong bookings from Asia to Europe have been sustained through recent weeks, but that was aligned with DHL’s usual book of business. “There is indeed speculation within the market that, as US demand decreases due to the Trump tariffs, China may seek alternative markets to offload its goods at competitive prices,” Ellerbaek told the Journal of Commerce, adding, however, that it was too early to definitively identify that trend. “Currently, many Chinese factories have likely manufactured products based on existing orders from US importers,” he said. “These finished goods or in-progress orders may not be easily cancellable, and some are already awaiting shipment to the US. As such, we have not yet seen a significant increase in Chinese containers destined for European ports.” Also not yet seeing a significant rise in China volume was Marc Meier, global head of ocean freight at Toll Group. But he warned that could change. “One thing we can say is that all signs point towards China and others having to play more in other markets, so Asia to Europe will surely receive more focus,” Meier told the Journal of Commerce Wednesday. Carriers shifting capacity around to mitigate the impact of US tariffs is bringing a familiar disruptive factor back into the mix — equipment imbalances. “If we do begin to see trade flow impacts from the tariffs, it is likely that shipping lines will adjust their sailing schedules, potentially omitting some or all Chinese ports on certain voyages to accommodate increased demand from other regions,” Ellerbaek said. “This adjustment will lead to an equipment imbalance, as seen in previous disruptions like the Red Sea crisis and during the pandemic, where repositioning equipment to align with new trade flows takes time,” he added. China surge would worsen persistent port congestion Another potential issue is that any surge in Chinese imports will quickly exacerbate the severe port congestion that is still causing delays across the major North Europe and Mediterranean gateways. A host of factors are responsible for the bottlenecks, including full container yards at most terminals, crane maintenance in some ports, berth congestion, rail disruption from line closures in northern Germany and low water levels on the Rhine River impacting inland connections. HMM is reporting berth waiting times of 18 days in London Gateway and 4.5 days at the Greek hub of Piraeus, where 12 feeder vessels are currently waiting to be handled. While Europe prepares for a possible wave of Chinese imports, the spot market has finally arrested its steady slide that began in late December. Xeneta data shows that China to North Europe rates are up 7% since April 1 at $2,514 per FEU. But while an increase in Chinese imports may help rising rates, it won’t last, according to Rico Luman, senior economist at global Bank ING. “It will be the first reaction because of this disruption but afterwards the massive overcapacity in container shipping will weigh on rates once again, because that is the backdrop to all of this,” Luman told the Journal of Commerce. “This tariff discussion is not good news for global trade, and I expect rates to drop again over the course of this year,” he added. Contact Greg Knowler at greg.knowler@spglobal.com .

Forwarding

Asia-Europe

International ports

Europe on alert to track any wave of diverted Chinese imports

<div class="phx-topic abstract-wrapper">US tariffs are forcing shippers in Mexico to rethink global sourcing and logistics strategies as complying with the USMCA becomes more complex. </div>

US tariffs are forcing shippers in Mexico to rethink global sourcing and logistics strategies as complying with the USMCA becomes more complex.

<div class="phx-topic">For logistics manager Yuri Garcia, the confusion surrounding US trade disputes with Mexico, China and the rest of the globe increasingly resembles the chaotic early days of the COVID-19 pandemic. “Every day back then, we were turning on our TVs in the morning to see where we were going, what are they saying now, right?” Garcia said during a panel discussion at the Redwood Mexico Cross-Border Logistics Council in Monterrey last week. Today, she’s tuning into the news each morning to find out which nations and what goods are being hit with US tariffs, how high duties are going to go, and what may come next. “Are the tariffs on China going to be 125% or 145%?” Garcia said. The total tariffs imposed on China reached 145% as of April 10, the date she spoke at the conference. “You know tomorrow it’s going to be something else, so you’ve got to be prepared.” Being prepared for the unknown in terms of tariffs and trade was the crux of many discussions at the logistics conference in Monterrey, where Garcia works for Japan-based Nidec Motor Corp. Nidec produces industrial motors and generators, moving about 800 shipments a month across the US-Mexico border in both directions. Nidec also imports goods to Mexico from Europe and Asia, including China. So, knowing precisely what products and nations are being affected or targeted by tariffs is critical to planning and preparation for shippers with suppliers and customers in several international markets, not just the US and Mexico. Goods produced in Mexico typically contain components from several countries. Measuring the exact percentage of inputs from each international source is key to knowing whether a shipment will enter the US duty-free or be hit with a 25% import tax. “Right now, we have a lot of suppliers in Asia, so we have to have some other sources,” said Garcia. Nidec isn’t looking to drop any suppliers, she said, but the company needs to add some alternative vendors in the US and in Mexico to its portfolio. <h3>Diversifying sourcing </h3>The same issue is hitting manufacturers in Mexico across industrial sectors, speakers and sources at the Redwood Mexico event told the Journal of Commerce. “We’ve done a little more exploring to give ourselves more options,” said Bill Fogt, senior vice president at Dometic, a maker of outdoor products, including Igloo coolers. Based in Sweden, Dometic has 23 manufacturing facilities in 11 countries, with two factories in Mexico. Expecting change in the “supply chain climate” to accelerate, Dometic is leaning into its existing supplier relationships. “We want to be very close to our suppliers, whether in logistics or raw materials,” Fogt said. Maintaining close communications with suppliers, partners and customers is key to making sure US imports are <a href="https://www.joc.com/article/tariff-uncertainty-pushing-up-transportation-costs-at-us-mexico-border-5984698">compliant with the rules of origin</a> in the US-Mexico-Canada Agreement (USMCA) to avoid the Trump administration’s 25% tariff. “You need to keep your paper trail carefully, and make sure you’re adjusting for any changes” in components and global supply, said trade attorney Luis Martinez, a partner at Abogados Martinez Serna S.C. and a board member of the US Mexico Bar Association. Martinez urged shippers to audit the procedures they use to verify USMCA compliance. “A lot of companies do it yearly, but I know companies that do reviews every month,” he said. Daikin, a maker of air conditioners and refrigeration equipment, is in the midst of planning for potentially abrupt transportation and sourcing changes caused by tariffs, said Joe McAbee, the company’s vice president of domestic and international transportation. “We have manufacturing around the world, and so we can, to some degree, shift our production, although not quickly,” McAbee said in Monterrey. But he advises caution. “Every day is a new dynamic,” he said. “Every time a new tariff drops, your strategy changes. I think it’s important to let this play out and see where it’s going to go, because at some point it has to level out. We can't live in this continual chaos forever.” Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

For logistics manager Yuri Garcia, the confusion surrounding US trade disputes with Mexico, China and the rest of the globe increasingly resembles the chaotic early days of the COVID-19 pandemic. “Every day back then, we were turning on our TVs in the morning to see where we were going, what are they saying now, right?” Garcia said during a panel discussion at the Redwood Mexico Cross-Border Logistics Council in Monterrey last week. Today, she’s tuning into the news each morning to find out which nations and what goods are being hit with US tariffs, how high duties are going to go, and what may come next. “Are the tariffs on China going to be 125% or 145%?” Garcia said. The total tariffs imposed on China reached 145% as of April 10, the date she spoke at the conference. “You know tomorrow it’s going to be something else, so you’ve got to be prepared.” Being prepared for the unknown in terms of tariffs and trade was the crux of many discussions at the logistics conference in Monterrey, where Garcia works for Japan-based Nidec Motor Corp. Nidec produces industrial motors and generators, moving about 800 shipments a month across the US-Mexico border in both directions. Nidec also imports goods to Mexico from Europe and Asia, including China. So, knowing precisely what products and nations are being affected or targeted by tariffs is critical to planning and preparation for shippers with suppliers and customers in several international markets, not just the US and Mexico. Goods produced in Mexico typically contain components from several countries. Measuring the exact percentage of inputs from each international source is key to knowing whether a shipment will enter the US duty-free or be hit with a 25% import tax. “Right now, we have a lot of suppliers in Asia, so we have to have some other sources,” said Garcia. Nidec isn’t looking to drop any suppliers, she said, but the company needs to add some alternative vendors in the US and in Mexico to its portfolio. Diversifying sourcing The same issue is hitting manufacturers in Mexico across industrial sectors, speakers and sources at the Redwood Mexico event told the Journal of Commerce. “We’ve done a little more exploring to give ourselves more options,” said Bill Fogt, senior vice president at Dometic, a maker of outdoor products, including Igloo coolers. Based in Sweden, Dometic has 23 manufacturing facilities in 11 countries, with two factories in Mexico. Expecting change in the “supply chain climate” to accelerate, Dometic is leaning into its existing supplier relationships. “We want to be very close to our suppliers, whether in logistics or raw materials,” Fogt said. Maintaining close communications with suppliers, partners and customers is key to making sure US imports are compliant with the rules of origin in the US-Mexico-Canada Agreement (USMCA) to avoid the Trump administration’s 25% tariff. “You need to keep your paper trail carefully, and make sure you’re adjusting for any changes” in components and global supply, said trade attorney Luis Martinez, a partner at Abogados Martinez Serna S.C. and a board member of the US Mexico Bar Association. Martinez urged shippers to audit the procedures they use to verify USMCA compliance. “A lot of companies do it yearly, but I know companies that do reviews every month,” he said. Daikin, a maker of air conditioners and refrigeration equipment, is in the midst of planning for potentially abrupt transportation and sourcing changes caused by tariffs, said Joe McAbee, the company’s vice president of domestic and international transportation. “We have manufacturing around the world, and so we can, to some degree, shift our production, although not quickly,” McAbee said in Monterrey. But he advises caution. “Every day is a new dynamic,” he said. “Every time a new tariff drops, your strategy changes. I think it’s important to let this play out and see where it’s going to go, because at some point it has to level out. We can't live in this continual chaos forever.” Contact William B. Cassidy at bill.cassidy@spglobal.com .

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In Mexico, global shippers seek new logistics options amid shifting US tariffs

<div class="phx-topic abstract-wrapper">Some ships are leaving China just half-full as the Trump administration’s rush of tariffs sends shippers into contortions about what to do with their freight. </div>

Some ships are leaving China just half-full as the Trump administration’s rush of tariffs sends shippers into contortions about what to do with their freight.

<div class="phx-topic">Ocean carriers on the eastbound trans-Pacific are poised to blank more voyages after a slew of booking cancellations last week that could leave some ships departing China half-empty through May. As the uncertainty around US tariffs on Chinese goods drags out, shippers face on-the-fly decisions about what to do with their suddenly more expensive freight. Port of Los Angeles Executive Director Gene Seroka said Friday that 12 sailings from China to the US West Coast in May have been canceled due to the Trump administration’s decision to put tariffs of 145% on most goods from China. Those dozen cancellations would put May’s blanks above April’s, according to data from third-party logistics provider Spedag Americas, which recorded 11 blanked voyages to Los Angeles during April, including three weekly voyages from a small independent carrier with about 2,000 TEUs of capacity. Ocean Alliance member Evergreen Marine, which operates the CPS service to Los Angeles, will have the service’s last scheduled voyage from Shanghai depart on Tuesday. No further sailings from China are scheduled until May 21, according to China-based shipping agents and the latest CPS schedule, which would mark four straight weeks of blanked service. The canceled voyages would remove 32,000 TEUs of capacity from the trans-Pacific over that period. Evergreen declined a request for comment about the CPS service. James Caradonna, executive vice president of Spedag Americas, told the Journal of Commerce that April’s blank sailings were for just one or two non-consecutive weeks. Carriers had been expected to start bringing more ships into service as 2025–26 annual service contracts are signed and seasonal summer shipments start. “Four consecutive weeks [of blank sailings on the service] is extreme,” Caradonna said. <h3>Half-full ships from China </h3>A senior vice president for an independent ocean carrier in the trans-Pacific trades told the Journal of Commerce that his company saw an immediate 30% drop in container bookings out of China last week due to the new tariffs. Other customers are requesting that containers already in-gated at origin not be loaded on ships, while others have asked that containers be pulled completely from the port, the source said, not an easy task inside of China’s high-volume gateways. Likewise, the source said there is concern that cargo already loaded on ships from China may be abandoned at US ports due to the tariff costs. He expects that ships leaving China for the US in the coming weeks will be less than half-full as the cancellations continue, forcing the carrier to blank more voyages. “People are canceling and putting cargo [from] China on pause,” the source said. “It will accelerate our blank sailing schedule because vessel utilization is dropping.” While utilization out of China is falling, he said ships in the Southeast Asia trade are seeing 90% to 100% utilization as US shippers seek to use the 90-day reprieve from reciprocal tariffs on other countries to frontload cargo, adding that vessels in China-US trades could be redeployed to Southeast Asia. Likewise, Asia-Mediterranean trades are seeing increasing strength, sending vessels in yet another direction. The longer the US and China engage in a back-and-forth on tariffs, the more it will force a long-term reconsideration of the carrier’s trans-Pacific network and whether there is enough volume out of China to support calls. “Our short-term reaction is to blank,” the source said. “But as people are accelerating their alternative sourcing — and this is giving everyone reason to accelerate those efforts — the effect is that we have to look at our rotations. We would probably eliminate some of the China ports.” Jason Cook, managing director of non-vessel-operating common carrier (NVO) Ardent Global Logistics, told the Journal of Commerce he’s seen a 60% drop in bookings out of China this week due to the tariffs. While the cancellations were initially among intermittent, low-volume shippers, he said the concerns about tariffs are now spreading to larger shippers with regular, consistent volume. “Whatever [was] leaving China on April 9, we [were] told to cancel it,” Cook said. “It’s not only the smaller customers, but the big ones as well saying we’re going to pause for two weeks.” April 9 was the date country-specific reciprocal tariffs took effect; they have since been paused for 90 days. But the China reciprocal tariffs remain in place. Ardent’s customers are also asking that their US-bound cargo at Chinese ports not be loaded or be removed from the marine terminal, Cook said. One customer tried to have the goods returned to the Chinese manufacturer, but it refused, he added. “The lack of clarity about tariffs has left so many customers confused that they are canceling all bookings, even if the container was already gated into the terminal,” Cook said. Cook is now fielding requests for use of bonded warehouses and foreign trade zones in the US as a short-term way to deal with the tariffs. He also expects that there will much more demand for freight out of Southeast Asia and India that will keep ships on those trades full. But with most of the empty containers still in China, US shippers may see delays at origin. “Once cargo out of China dries up, Southeast Asia is going to go a bit ballistic,” Cook said. “There’s not enough equipment and not enough calls. It’s setting up for some serious disruption.” <h3>Preparing for decline in volumes </h3>A New Jersey-based executive with a forwarder that handles 40,000 containers per year into the US told the Journal of Commerce there has been about a 20% drop in China-origin freight over the past week due to the tariffs. He said that most of the cancellations are among intermittent or low-volume shippers with about 2,000 containers per year. So far, the cancellations mostly just cover anything that would land in May, but as the tariff policy remains in place, he expects to see the cancellations start to affect cargo further out in June. The forwarder said some ocean carriers are deferring 2025 contract signings until May due to the uncertainty around tariffs. “I think this can get worse,” he said. A US-based executive for an alliance ocean carrier said that while some shippers immediately canceled bookings from China, other major customers are still proceeding with their shipments. But he said caution is increasing the longer Trump’s trade war with China drags out, adding that he expects tariffs will eventually cause more shippers to halt their freight from China. “Orders may be canceled or delayed until there’s more clarity on tariffs, so we’re preparing for a potential [volume] dip in the coming months,” the source said. And if the tariffs on China persist, the issue could reach far beyond volume retractions. According to Sanjay Tejwani, CEO of consulting firm 365 Logistics, the third quarter could bring tough decisions for some shippers moving Chinese cargo. “In Q3, if it remains as-is, some people are not going to ship,” said Tejwani. “Some things are just unaffordable. I am hearing that [some] containers might get abandoned. The importers may not even take delivery because they don’t want to pay the duties.” Benton Kauffman, head of trans-Pacific air and sea logistics at the forwarder DSV Global, told the Journal of Commerce Monday that overall eastbound freight in the trans-Pacific is down about 20%, but 60% of that volume is out of China. “I think in the next two weeks we will see Southeast Asia bounce back,” Kauffman said. A second carrier source said most retailers and direct importers are covered for at least the next three months because they have sufficient inventory to get them well into the summer. After that, they will have to decide how much they have to import and from which countries in the second half of the year, he said. “Eventually they will have to restock,” the carrier executive said. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. Senior Editor Bill Mongelluzzo and Associate Editor Laura Robb contributed to this report. </div>

Ocean carriers on the eastbound trans-Pacific are poised to blank more voyages after a slew of booking cancellations last week that could leave some ships departing China half-empty through May. As the uncertainty around US tariffs on Chinese goods drags out, shippers face on-the-fly decisions about what to do with their suddenly more expensive freight. Port of Los Angeles Executive Director Gene Seroka said Friday that 12 sailings from China to the US West Coast in May have been canceled due to the Trump administration’s decision to put tariffs of 145% on most goods from China. Those dozen cancellations would put May’s blanks above April’s, according to data from third-party logistics provider Spedag Americas, which recorded 11 blanked voyages to Los Angeles during April, including three weekly voyages from a small independent carrier with about 2,000 TEUs of capacity. Ocean Alliance member Evergreen Marine, which operates the CPS service to Los Angeles, will have the service’s last scheduled voyage from Shanghai depart on Tuesday. No further sailings from China are scheduled until May 21, according to China-based shipping agents and the latest CPS schedule, which would mark four straight weeks of blanked service. The canceled voyages would remove 32,000 TEUs of capacity from the trans-Pacific over that period. Evergreen declined a request for comment about the CPS service. James Caradonna, executive vice president of Spedag Americas, told the Journal of Commerce that April’s blank sailings were for just one or two non-consecutive weeks. Carriers had been expected to start bringing more ships into service as 2025–26 annual service contracts are signed and seasonal summer shipments start. “Four consecutive weeks [of blank sailings on the service] is extreme,” Caradonna said. Half-full ships from China A senior vice president for an independent ocean carrier in the trans-Pacific trades told the Journal of Commerce that his company saw an immediate 30% drop in container bookings out of China last week due to the new tariffs. Other customers are requesting that containers already in-gated at origin not be loaded on ships, while others have asked that containers be pulled completely from the port, the source said, not an easy task inside of China’s high-volume gateways. Likewise, the source said there is concern that cargo already loaded on ships from China may be abandoned at US ports due to the tariff costs. He expects that ships leaving China for the US in the coming weeks will be less than half-full as the cancellations continue, forcing the carrier to blank more voyages. “People are canceling and putting cargo [from] China on pause,” the source said. “It will accelerate our blank sailing schedule because vessel utilization is dropping.” While utilization out of China is falling, he said ships in the Southeast Asia trade are seeing 90% to 100% utilization as US shippers seek to use the 90-day reprieve from reciprocal tariffs on other countries to frontload cargo, adding that vessels in China-US trades could be redeployed to Southeast Asia. Likewise, Asia-Mediterranean trades are seeing increasing strength, sending vessels in yet another direction. The longer the US and China engage in a back-and-forth on tariffs, the more it will force a long-term reconsideration of the carrier’s trans-Pacific network and whether there is enough volume out of China to support calls. “Our short-term reaction is to blank,” the source said. “But as people are accelerating their alternative sourcing — and this is giving everyone reason to accelerate those efforts — the effect is that we have to look at our rotations. We would probably eliminate some of the China ports.” Jason Cook, managing director of non-vessel-operating common carrier (NVO) Ardent Global Logistics, told the Journal of Commerce he’s seen a 60% drop in bookings out of China this week due to the tariffs. While the cancellations were initially among intermittent, low-volume shippers, he said the concerns about tariffs are now spreading to larger shippers with regular, consistent volume. “Whatever [was] leaving China on April 9, we [were] told to cancel it,” Cook said. “It’s not only the smaller customers, but the big ones as well saying we’re going to pause for two weeks.” April 9 was the date country-specific reciprocal tariffs took effect; they have since been paused for 90 days. But the China reciprocal tariffs remain in place. Ardent’s customers are also asking that their US-bound cargo at Chinese ports not be loaded or be removed from the marine terminal, Cook said. One customer tried to have the goods returned to the Chinese manufacturer, but it refused, he added. “The lack of clarity about tariffs has left so many customers confused that they are canceling all bookings, even if the container was already gated into the terminal,” Cook said. Cook is now fielding requests for use of bonded warehouses and foreign trade zones in the US as a short-term way to deal with the tariffs. He also expects that there will much more demand for freight out of Southeast Asia and India that will keep ships on those trades full. But with most of the empty containers still in China, US shippers may see delays at origin. “Once cargo out of China dries up, Southeast Asia is going to go a bit ballistic,” Cook said. “There’s not enough equipment and not enough calls. It’s setting up for some serious disruption.” Preparing for decline in volumes A New Jersey-based executive with a forwarder that handles 40,000 containers per year into the US told the Journal of Commerce there has been about a 20% drop in China-origin freight over the past week due to the tariffs. He said that most of the cancellations are among intermittent or low-volume shippers with about 2,000 containers per year. So far, the cancellations mostly just cover anything that would land in May, but as the tariff policy remains in place, he expects to see the cancellations start to affect cargo further out in June. The forwarder said some ocean carriers are deferring 2025 contract signings until May due to the uncertainty around tariffs. “I think this can get worse,” he said. A US-based executive for an alliance ocean carrier said that while some shippers immediately canceled bookings from China, other major customers are still proceeding with their shipments. But he said caution is increasing the longer Trump’s trade war with China drags out, adding that he expects tariffs will eventually cause more shippers to halt their freight from China. “Orders may be canceled or delayed until there’s more clarity on tariffs, so we’re preparing for a potential [volume] dip in the coming months,” the source said. And if the tariffs on China persist, the issue could reach far beyond volume retractions. According to Sanjay Tejwani, CEO of consulting firm 365 Logistics, the third quarter could bring tough decisions for some shippers moving Chinese cargo. “In Q3, if it remains as-is, some people are not going to ship,” said Tejwani. “Some things are just unaffordable. I am hearing that [some] containers might get abandoned. The importers may not even take delivery because they don’t want to pay the duties.” Benton Kauffman, head of trans-Pacific air and sea logistics at the forwarder DSV Global, told the Journal of Commerce Monday that overall eastbound freight in the trans-Pacific is down about 20%, but 60% of that volume is out of China. “I think in the next two weeks we will see Southeast Asia bounce back,” Kauffman said. A second carrier source said most retailers and direct importers are covered for at least the next three months because they have sufficient inventory to get them well into the summer. After that, they will have to decide how much they have to import and from which countries in the second half of the year, he said. “Eventually they will have to restock,” the carrier executive said. Contact Michael Angell at michael.angell@spglobal.com . Senior Editor Bill Mongelluzzo and Associate Editor Laura Robb contributed to this report.

Trans-Pacific blank sailings set to rise after China bookings drop sharply

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The world of LTL is slow to embrace change. Business anachronisms permeate current supply chain processes. These vestiges of the way things used to work define the LTL freight transportation procurement process of many modern shippers.David Knuth, logistics specialist at IEWC, a global supplier of cable and wire based in Wisconsin, is happy to have modernized the RFP process, automating the entire LTL bidding procedure with Bid$ense, SMC³’s automated truckload and LTL freight transportation sourcing solution. But when prompted, he can still recall what once was.In his previous job, a large part of his duties were consumed by creating an intermodal bid package for carriers. In a spreadsheet, Knuth detailed the company’s volumes lane by lane, taking care to delete any errant keystrokes or misleading data. He would then email out the information to each carrier, taking time to respond to detailed technical questions about the spreadsheet data. Finally, he had to compile all the results, create an algorithm that would compare the carriers on each lane, and award the business.“It was a huge undertaking. It took about four months to do,” Knuth said of the old process. “It was almost a full-time job for that part of the year, every year.”In his new job at IEWC, he sat down with Bid$ense on day one and was amazed at the capabilities. Knuth had never before used a bid tool. SMC³’s latest versions of Bid$ense automate the process even further, taking truckload and LTL RFPs entirely online. The tool draws on RFP best-practices protocols to streamline the bidding communication process, enabling bidding carriers to respond accurately and promptly to shipper requests. The solution also does all the distribution work automatically, electronically submitting shipper bid data to carriers based on their actual service capabilities and performance records. Carriers are alerted with timely prompts for RFP deliverables, so shippers aren’t waiting by the phone for responses.Another benefit of automating the process is the data-cleansing assistance. When Knuth sent spreadsheets to carriers, data errors might cloud the bidding process; he might have to resend data or simply accept a price that did not truly reflect the costs of doing business. Data cleansing is incredibly beneficial, he said.The spreadsheet technique also made bidding analysis an onerous task. Since Bid$ense automates and streamlines the entire RFP process, intensive examination is now simple. SMC³ knows that each bid has more than one best outcome. With uniform responses from each carrier, shippers can quickly rank results and create an unlimited quantity of what-if scenarios to make the optimal procurement decision.Jesse Burnett of Central Garden &amp; Pet experiences many of the same benefits. Founded in 1980, Central Garden &amp; Pet has spent the last three decades growing from a small garden supply company to a provider of a range of products from dog chews and bird seed to soil supplements and natural insecticides. For much of its life, the company shipped these disparate goods via LTL and truckload carriers to retailers throughout the country, relying on each business unit to negotiate directly with their freight transportation providers. This arrangement worked fairly well for a small company, but as Central Garden &amp; Pet expanded, leadership decided to consolidate decision making.Burnett helped centralize the transportation decision making in 2015 with SMC³’s Bid$ense. Before Bid$ense, every business unit operated independently as far as negotiating with carriers.“There were a lot of different things just floating around,” he said. “We didn’t have master agreements in place; no national pricing at all. The pricing from carriers was just all over the place, depending on where you were.”The transformations he saw with Bid$ense were immediate. Burnett has been using the tool about every other year since its implementation at the company. Central Garden and Pet’s $19.6 million 2019 LTL bid saved the company just more than 9 percent when compared to its historical average. For Burnett, though, bid automation extends far beyond savings.“We knew that we weren’t getting the best pricing offer from our carriers just because nothing was centralized,” he continued. “We knew that if we combined everything from all these business units and paired it with one corporate offering, then it would drive some cost benefit with it.”When the company initially decided to centralize bid procurement, executives researched a number of different methodologies and technologies. In the end, though, Burnett found that Bid$ense was both widespread and well known, and that his carrier partners already knew how to use the application. Burnett also highlighted the data-cleansing process as a major benefit, saying the rigorous process ensures that carriers always return the best price.“It definitely has helped drive savings,” he said. “Any time you go out there and you drive that competitiveness with the carriers and they know they’re in a bid environment, it seems to sharpen their pencils.”Transportation procurement is an integral part of the modern supply chain. With Bid$ense, shippers can develop a strategic implementation plan that saves them time and money, but also helps them create strong relationships with their carrier partners. These carriers appreciate the solution’s data-cleansing process; when carriers receive a complete shipment history and future volume forecast, they don’t have to guess on pricing. Carriers that receive more data from shippers get a complete picture of that shipper’s freight, allowing them to accurately plan instead of simply preparing for the worst-case scenario. Clean data presented through an automated system can lead to both bigger shipment savings and a lasting partnership between carrier and customer.Whether customers are looking to streamline over-the-road transportation bidding by automating the RFP process or create an entirely new, centralized sourcing process, Bid$ense has the analytical horsepower to get the job done.SMC³ 2020 Customer Case Study

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Shippers save money, time with automated transportation bidding tools

If there’s one immutable truth in the world of logistics, it’s this: LTL is an inherently complex form of transportation. Tariffs, rates, DIM weights, transit times — it’s enough to confuse even seasoned logistics professionals. The solution to this knowledge gap has historically been on-the-job training or university supply chain education, but for a variety of reasons there is now a pressing need for third-party, remote LTL training that prepares logistics workers for transportation success. Global Scope Can Overlook Local Intricacies In the past, professionals looking to move into a supply chain career learned about the basics of supply chain from universities. However, many of these college supply chain programs are now global in scope, focusing on worldwide supply chain management instead of the intricacies of specialized domestic transportation. And even these programs, which used to be widespread, are becoming less common. LTL is not an industry of broad-brush strokes; supply chain professionals really need a pointillistic understanding of the logistics of LTL in order to excel in the industry. Accelerating Need for Dedicated LTL Education This lack of specified training put the onus on employers to prepare new hires with the LTL knowledge needed to do their jobs. Dedicated LTL study is a necessity, not a luxury. At the same time, changes in LTL and the broader supply chain world are accelerating. The reliance on e-commerce has ballooned since the start of the pandemic, and last-mile LTL shipments and related e-commerce strains on the supply chain won’t diminish once social distancing abates. That genie isn’t going back into the bottle. So supply chain employers need logistics workers that are fully versed in all aspects of the industry, ready to solve unique shipping and delivery problems based on their extensive supply chain knowledge But why care about LTL? It’s been reported that some shippers in today’s world are no longer concerned with what mode is used to ship their goods. A Multimodal Approach Ensures On-Time Delivery This mode agnosticism means supply chain stakeholders have to be well versed in all modes of transportation. As unforeseen weather events and other disruptions, such as protests, become more common, savvy logistics employees will need to be armed with familiarity of all modes, not just the most popular, to ensure that freight is delivered on time, without damage, and in the most financially expedient way possible. Offerings like SMC³’s LTL online education courses cover a wide range of topics from LTL basics and operations to more advanced concepts like pricing analytics and transportation law. The company also has plans to continually refresh content, adding new expert presenters and taking the feedback of students to make the courses even better as time goes on. Learn more about&nbsp;<a href="https://logisticstrainingcenter.com/smc3-courses/" rel="noreferrer" class="joc_admin__link">SMC³’s LTL Online Education program</a>&nbsp;and view the 2021 hybrid schedule, featuring live industry experts,&nbsp;<a href="https://www.smc3.com/onlinelearning2021/" rel="noreferrer" class="joc_admin__link">here.</a>

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Filling the Supply Chain Education Gap with LTL Education Courses

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Quarterly Intelligence

<div class="phx-topic abstract-wrapper">The export decline is already showing up in some data, with bookings for US exports to China for the week of April 8–15 down 5.4% from the prior week.</div>

The export decline is already showing up in some data, with bookings for US exports to China for the week of April 8–15 down 5.4% from the prior week.

<div class="phx-topic">Chinese buyers have begun to cancel orders of goods and commodities from US exporters amid the escalating trade conflict between the two nations, and stakeholders expect the cancellations to continue until the battle over tariffs is resolved.Exporters also expect they will need redirect their cargo to other Asian countries to make up for the diminished Chinese market. M. Can Fidan, vice president of business development at New York-based MTS Logistics, told the Journal of Commerce he’s already seen the cancellation of 250 polymers containers and another customer’s entire fertilizer order. “If these tariffs stay, there is no way China will keep buying these products from us,” said Fidan.The export decline is already showing up in data. Bookings for US exports to China for the week of April 8–15 were down 5.4% from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun &amp; Bradstreet. Two exporters, five forwarders and the head of a shipping group who spoke to the Journal of Commerce said a further drop in China-bound volumes is inevitable if tariffs on China persist, mirroring <a href="https://www.joc.com/article/trans-pacific-blank-sailings-set-to-rise-after-china-bookings-drop-sharply-5984166">the market shift already observed with imports</a>.“If they had contracts to [export containers to China], my assumption would be that a lot of them would likely be canceled,” one exporter said.Another non-vessel-operating common carrier source said they are seeing cancellations on many China-bound exports, especially goods with lower margins where the buyers cannot afford the additional cost. At the same time, the source is seeing sellers of more valuable commodities attempt to pass down the cost to their customers.Meanwhile, several forwarders said demand is strong from other countries that have had their reciprocal US import tariffs paused for 90 days. Shippers and forwarders are forecasting a pickup in export cargo volumes bound for other Southeast Asia countries.“In [the] short term, I think we’re going to see a lot of agriculture sourcing shift [from China] to other countries,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC). Friedmann said he is also seeing canceled China-bound shipments in the agriculture sector. Shippers agreed that US exporters — and farmers in particular — are especially vulnerable to the new tariffs and reciprocal responses from China, adding that the impacts from tariffs implemented during President Donald Trump’s first term can still be felt in many markets. “We’re obviously really concerned,” said Mike Steenhoek, executive director of the Soybean Transportation Coalition. “People have been debating about the impact of these tariffs, [and] some people will say [that we’re speculating] ... It’s not speculation. It’s recollection. When we look at what happened in 2018 and 2019, we still haven’t recovered.”<h3>Cold chain stability, for now</h3>Despite the tariff-related hurdles for many US exporters, there are still calm spots, for now. A forwarding source in refrigerated exports said the cold chain market has been largely stable thus far.“We haven’t really seen such a change when it comes to the tariffs because these are planned so far ahead, and production is scheduled around them,” said the forwarder, who added that impacts to even their China-bound shipments were minimal.Friedmann agreed that many time-sensitive agriculture exports are less flexible, so many shipments are still moving forward. But they are being met with the potential for schedule reliability hurdles. “A lot of the steamship lines are canceling, blanking, delaying, [and] changing routes,” he said. “So, we are not going to have the same ocean transportation options we’re used to. Even if [customers] want to buy it, we’re still going to have increased difficulty delivering it.”Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

Chinese buyers have begun to cancel orders of goods and commodities from US exporters amid the escalating trade conflict between the two nations, and stakeholders expect the cancellations to continue until the battle over tariffs is resolved. Exporters also expect they will need redirect their cargo to other Asian countries to make up for the diminished Chinese market. M. Can Fidan, vice president of business development at New York-based MTS Logistics, told the Journal of Commerce he’s already seen the cancellation of 250 polymers containers and another customer’s entire fertilizer order. “If these tariffs stay, there is no way China will keep buying these products from us,” said Fidan. The export decline is already showing up in data. Bookings for US exports to China for the week of April 8–15 were down 5.4% from the prior week at 17,220 TEUs, according to maritime visibility provider Vizion and data and analytics company Dun & Bradstreet. Two exporters, five forwarders and the head of a shipping group who spoke to the Journal of Commerce said a further drop in China-bound volumes is inevitable if tariffs on China persist, mirroring the market shift already observed with imports . “If they had contracts to [export containers to China], my assumption would be that a lot of them would likely be canceled,” one exporter said. Another non-vessel-operating common carrier source said they are seeing cancellations on many China-bound exports, especially goods with lower margins where the buyers cannot afford the additional cost. At the same time, the source is seeing sellers of more valuable commodities attempt to pass down the cost to their customers. Meanwhile, several forwarders said demand is strong from other countries that have had their reciprocal US import tariffs paused for 90 days. Shippers and forwarders are forecasting a pickup in export cargo volumes bound for other Southeast Asia countries. “In [the] short term, I think we’re going to see a lot of agriculture sourcing shift [from China] to other countries,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC). Friedmann said he is also seeing canceled China-bound shipments in the agriculture sector. Shippers agreed that US exporters — and farmers in particular — are especially vulnerable to the new tariffs and reciprocal responses from China, adding that the impacts from tariffs implemented during President Donald Trump’s first term can still be felt in many markets. “We’re obviously really concerned,” said Mike Steenhoek, executive director of the Soybean Transportation Coalition. “People have been debating about the impact of these tariffs, [and] some people will say [that we’re speculating] ... It’s not speculation. It’s recollection. When we look at what happened in 2018 and 2019, we still haven’t recovered.” Cold chain stability, for now Despite the tariff-related hurdles for many US exporters, there are still calm spots, for now. A forwarding source in refrigerated exports said the cold chain market has been largely stable thus far. “We haven’t really seen such a change when it comes to the tariffs because these are planned so far ahead, and production is scheduled around them,” said the forwarder, who added that impacts to even their China-bound shipments were minimal. Friedmann agreed that many time-sensitive agriculture exports are less flexible, so many shipments are still moving forward. But they are being met with the potential for schedule reliability hurdles. “A lot of the steamship lines are canceling, blanking, delaying, [and] changing routes,” he said. “So, we are not going to have the same ocean transportation options we’re used to. Even if [customers] want to buy it, we’re still going to have increased difficulty delivering it.” Contact Laura Robb at laura.robb@spglobal.com .

US exporters see rise in canceled orders from Chinese buyers amid trade war

<div class="phx-topic abstract-wrapper">The US Trade Representative (USTR) laid out actions to counter China’s maritime dominance that could put Cosco Shipping and subsidiary OOCL on the hook for millions when their ships call the US. </div>

The US Trade Representative (USTR) laid out actions to counter China’s maritime dominance that could put Cosco Shipping and subsidiary OOCL on the hook for millions when their ships call the US.

<div class="phx-topic">The US Trade Representative (USTR) has narrowed the scope of its tariffs against China’s maritime industry to a fee based on the cargo capacity or container volume of Chinese-operated and -built ships entering US ports. The more targeted actions follow industry warnings that earlier proposals <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">would increase costs for US shippers and pose an existential threat to smaller ports</a>, but China-based ocean carriers could still face millions in fees under the tariffs. In its list of tariff actions that take effect Oct. 14, the USTR said Chinese ocean carriers will be subject to a fee of $50 per net ton of capacity upon arrival at a US port. The fee will go up to $80 after one year, rising each year before topping out at $140 in 2028. Net tonnage measures a ship’s overall cargo capacity, regardless of vessel type. The fee will only be charged at the first port of call on a vessel string and will not stack on top of other port calls. The fee will only be charged five times per year on each vessel. Ocean carriers based outside of China operating Chinese-built ships will face a fee based on either net tonnage or container volume, whichever is higher. Ships built in other countries will not face the same fees, nor will fees be assessed based on the percentage of Chinese-built ships in a carrier’s fleet or orders at Chinese shipyards. The tonnage fee for non-Chinese carriers starts at $18, escalating to $23 by April 2026 and topping out at $33 in 2028. The per-container fee starts at $120 and rises to $153 next year and $250 in 2028. Non-Chinese ocean carriers will be able to waive the fee if they take delivery of a US-built ship of at least the same size within three years. The fees will not apply to Chinese-built ships in US-flag fleets, container ships that are 4,000 TEUs or smaller, voyages of less than 2,000 nautical miles or Chinese-built ships owned by US-based carriers. The capacity-based tariffs come after a series of proposals that included fees of up to $1.5 million based on US port calls by Chinese carriers and similar fees on non-Chinese ocean carriers with Chinese-built ships in their fleets and orders at Chinese shipyards. Other proposals included an export cargo preference for US-built ships. After two days of hearings, <a href="https://www.joc.com/article/ustrs-china-tonnage-tax-would-squeeze-smaller-trades-stakeholders-5967638">the USTR said it wanted to reduce the potential impact on US shippers</a>, particularly exporters and dry-bulk shippers. Still, the USTR plans tariffs based on the capacity of China-built ships and will still charge fees on that country’s ocean carriers. The goal of the fees is “to further disincentivize use of Chinese shipping services,” the USTR said. <h3>Cosco, OOCL in crosshairs </h3>The USTR’s fees will have the largest impact on ships operated by Cosco Shipping and its subsidiary Orient Overseas Container Line (OOCL). For example, the 13,092-TEU Cosco Hope made five calls to the Port of New York and New Jersey over the last 12 months as part of the Ocean Alliance’s Liberty Bridge service from Europe to the US East Coast, according to Sea-web, a sister company of the Journal of Commerce within S&amp;P Global. With a net tonnage of 63,544 tons, according to Sea-web, the Cosco Hope would have incurred a fee of $3.2 million for each port call. A similar capacity ship operated by a non-Chinese carrier would result in a fee of about $1 million per call. The 13,386-TEU Cosco Italy made 10 calls to the Port of Long Beach during the same period as part of Ocean Alliance’s Hibiscus Express service, Sea-web data show. Its net tonnage would put its fee at $3.3 million per call. The 16,828-TEU OOCL Bauhinia made three port calls to Long Beach as part of the South China Pacific Service. Its net tonnage would result in a fee of $2.8 million per call, according to the USTR’s formula. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

The US Trade Representative (USTR) has narrowed the scope of its tariffs against China’s maritime industry to a fee based on the cargo capacity or container volume of Chinese-operated and -built ships entering US ports. The more targeted actions follow industry warnings that earlier proposals would increase costs for US shippers and pose an existential threat to smaller ports , but China-based ocean carriers could still face millions in fees under the tariffs. In its list of tariff actions that take effect Oct. 14, the USTR said Chinese ocean carriers will be subject to a fee of $50 per net ton of capacity upon arrival at a US port. The fee will go up to $80 after one year, rising each year before topping out at $140 in 2028. Net tonnage measures a ship’s overall cargo capacity, regardless of vessel type. The fee will only be charged at the first port of call on a vessel string and will not stack on top of other port calls. The fee will only be charged five times per year on each vessel. Ocean carriers based outside of China operating Chinese-built ships will face a fee based on either net tonnage or container volume, whichever is higher. Ships built in other countries will not face the same fees, nor will fees be assessed based on the percentage of Chinese-built ships in a carrier’s fleet or orders at Chinese shipyards. The tonnage fee for non-Chinese carriers starts at $18, escalating to $23 by April 2026 and topping out at $33 in 2028. The per-container fee starts at $120 and rises to $153 next year and $250 in 2028. Non-Chinese ocean carriers will be able to waive the fee if they take delivery of a US-built ship of at least the same size within three years. The fees will not apply to Chinese-built ships in US-flag fleets, container ships that are 4,000 TEUs or smaller, voyages of less than 2,000 nautical miles or Chinese-built ships owned by US-based carriers. The capacity-based tariffs come after a series of proposals that included fees of up to $1.5 million based on US port calls by Chinese carriers and similar fees on non-Chinese ocean carriers with Chinese-built ships in their fleets and orders at Chinese shipyards. Other proposals included an export cargo preference for US-built ships. After two days of hearings, the USTR said it wanted to reduce the potential impact on US shippers , particularly exporters and dry-bulk shippers. Still, the USTR plans tariffs based on the capacity of China-built ships and will still charge fees on that country’s ocean carriers. The goal of the fees is “to further disincentivize use of Chinese shipping services,” the USTR said. Cosco, OOCL in crosshairs The USTR’s fees will have the largest impact on ships operated by Cosco Shipping and its subsidiary Orient Overseas Container Line (OOCL). For example, the 13,092-TEU Cosco Hope made five calls to the Port of New York and New Jersey over the last 12 months as part of the Ocean Alliance’s Liberty Bridge service from Europe to the US East Coast, according to Sea-web, a sister company of the Journal of Commerce within S&P Global. With a net tonnage of 63,544 tons, according to Sea-web, the Cosco Hope would have incurred a fee of $3.2 million for each port call. A similar capacity ship operated by a non-Chinese carrier would result in a fee of about $1 million per call. The 13,386-TEU Cosco Italy made 10 calls to the Port of Long Beach during the same period as part of Ocean Alliance’s Hibiscus Express service, Sea-web data show. Its net tonnage would put its fee at $3.3 million per call. The 16,828-TEU OOCL Bauhinia made three port calls to Long Beach as part of the South China Pacific Service. Its net tonnage would result in a fee of $2.8 million per call, according to the USTR’s formula. Contact Michael Angell at michael.angell@spglobal.com .

Scaled back USTR port tariff to hit Chinese carriers hardest

<div class="phx-topic abstract-wrapper">While no surge in volume has been reported on the trade lane, capacity deployment data shows ocean carriers are expecting an increase in demand over the coming weeks as shippers use the 90-day tariff pause to advance US orders.</div>

While no surge in volume has been reported on the trade lane, capacity deployment data shows ocean carriers are expecting an increase in demand over the coming weeks as shippers use the 90-day tariff pause to advance US orders.

<div class="phx-topic">The 90-day pause in US tariffs on its non-China trading partners is not yet causing a significant increase in frontloading on the trans-Atlantic, but there are signs of rising demand on the westbound trade lane. For a start, there have been limited blank sailings announced on the trans-Atlantic in the coming weeks, with just 7,124 TEUs to be withdrawn from North Europe to the US East and Gulf coasts in May, according to ocean visibility provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” Peter Sand, chief analyst at rate benchmarking platform Xeneta, told the Journal of Commerce. “By reducing the number of blank sailings, the offered capacity is close to an all-time high, which is indicative of fairly strong demand right now as spot rates go up,” Sand added. “The 90-day pause in tariffs-on/tariffs-off is seen by some shippers as an opportunity to fill inventories while hoping for a more permanent situation without flip-flopping political proposals.” Data from eeSea shows capacity of 340,616 TEUs will be deployed in May on the westbound trans-Atlantic, a 1.4% increase compared with April. But the blanked capacity in May is significantly less than the 17,256 TEUs withdrawn in April <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="dfd67cef-2540-4a5a-8d1a-6185d4324049"></dynamic-object></div>Another potential sign of shippers advancing orders is an increase in rates. After months of decline, the spot market on the North Europe-US East Coast trade is up almost 4% since late March, reversing the downward trend following <a href="https://www.joc.com/article/ila-usmx-agree-on-new-wage-offer-and-contract-extension-that-reopens-ports-5741882">the brief strike at ports along the East and Gulf coasts</a> last October. Spot rates are currently at $2,162 per FEU, according to Xeneta. The third sign of an expected surge in trans-Atlantic demand comes from the peak season surcharges (PSS) being levied by some carriers. Mediterranean Shipping Co., one of the most active carriers on the trade lane, has announced a $1,000-per-FEU PSS to take effect on May 13 from North Europe to the US, Canada and Mexico. Peak season surcharges are also planned for the Mediterranean to North America trade lane from May 3. Hapag-Lloyd will add $750/FEU, while MSC and CMA CGM will implement a $1,000/FEU PSS. <h3>European ports monitoring for volume shifts </h3>On March 12, the US applied a 25% tariff to iron, steel, aluminum and derived products from around the world. On April 3, that was extended to include cars and car parts, also at 25%, with an additional 20% increase on goods originating from the European Union. Then on April 9, the Trump administration announced a 90-day temporary pause for countries open to negotiations, leaving the 10% across-the-board baseline tariff on Europe in place during the negotiating period. The European Union has also suspended its reciprocal tariffs on US exports such as Harley-Davidson motorcycles, bourbon whiskey and boats. A second phase of tariffs due to take effect April 15 has also been suspended for the 90-day period. Those target industrial and agricultural products from the US, including steel and aluminum, textiles, leather goods, household appliances, tools, plastics, wood products and foodstuffs such as poultry, beef, seafood, nuts, dairy, sugar and vegetables. With the 90-day window open to shippers, Europe’s port of Antwerp-Bruges is watching closely for changes in trade flows with the US, the Belgian hub’s second-largest trading partner. In 2024, exports to the US totaled 613,437 TEUs, consisting mainly of auto and machinery parts from Germany, chemicals, vehicles, food, plastics and pharmaceuticals. Imports from the US included plastics, polymers, chemicals, rubber, vehicles, food and pharmaceuticals. “So far, there have been no significant traffic shifts directly linked to the recent measures,” the port of Antwerp-Bruges said in a statement Wednesday. “While some companies are acting in anticipation, a marked increase in exports to the US has not materialized.” While the direct impact of US tariffs was limited “for now,” Antwerp-Bruges warned that could change quickly amid geopolitical tensions and further development in trade tariffs. Meanwhile, Maersk has issued a customer advisory warning of increasing congestion levels and operational disruptions at several ports across Northern Europe, specifically Antwerp and Bremerhaven, adding delays to ships on both Asia-Europe and trans-Atlantic trades. “This is a result of multiple factors affecting the ports, such as strike actions, phase-in and phase-out plans of ocean networks across the industry, low water levels on continental hinterland arteries and the lower than usual labor availability ahead of the Easter holidays,” the carrier advised. “The combination of these factors is leading to additional yard density and increased container dwelling above the ports’ operational capacity,” Maersk added. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

The 90-day pause in US tariffs on its non-China trading partners is not yet causing a significant increase in frontloading on the trans-Atlantic, but there are signs of rising demand on the westbound trade lane. For a start, there have been limited blank sailings announced on the trans-Atlantic in the coming weeks, with just 7,124 TEUs to be withdrawn from North Europe to the US East and Gulf coasts in May, according to ocean visibility provider eeSea. “It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” Peter Sand, chief analyst at rate benchmarking platform Xeneta, told the Journal of Commerce. “By reducing the number of blank sailings, the offered capacity is close to an all-time high, which is indicative of fairly strong demand right now as spot rates go up,” Sand added. “The 90-day pause in tariffs-on/tariffs-off is seen by some shippers as an opportunity to fill inventories while hoping for a more permanent situation without flip-flopping political proposals.” Data from eeSea shows capacity of 340,616 TEUs will be deployed in May on the westbound trans-Atlantic, a 1.4% increase compared with April. But the blanked capacity in May is significantly less than the 17,256 TEUs withdrawn in April Another potential sign of shippers advancing orders is an increase in rates. After months of decline, the spot market on the North Europe-US East Coast trade is up almost 4% since late March, reversing the downward trend following the brief strike at ports along the East and Gulf coasts last October. Spot rates are currently at $2,162 per FEU, according to Xeneta. The third sign of an expected surge in trans-Atlantic demand comes from the peak season surcharges (PSS) being levied by some carriers. Mediterranean Shipping Co., one of the most active carriers on the trade lane, has announced a $1,000-per-FEU PSS to take effect on May 13 from North Europe to the US, Canada and Mexico. Peak season surcharges are also planned for the Mediterranean to North America trade lane from May 3. Hapag-Lloyd will add $750/FEU, while MSC and CMA CGM will implement a $1,000/FEU PSS. European ports monitoring for volume shifts On March 12, the US applied a 25% tariff to iron, steel, aluminum and derived products from around the world. On April 3, that was extended to include cars and car parts, also at 25%, with an additional 20% increase on goods originating from the European Union. Then on April 9, the Trump administration announced a 90-day temporary pause for countries open to negotiations, leaving the 10% across-the-board baseline tariff on Europe in place during the negotiating period. The European Union has also suspended its reciprocal tariffs on US exports such as Harley-Davidson motorcycles, bourbon whiskey and boats. A second phase of tariffs due to take effect April 15 has also been suspended for the 90-day period. Those target industrial and agricultural products from the US, including steel and aluminum, textiles, leather goods, household appliances, tools, plastics, wood products and foodstuffs such as poultry, beef, seafood, nuts, dairy, sugar and vegetables. With the 90-day window open to shippers, Europe’s port of Antwerp-Bruges is watching closely for changes in trade flows with the US, the Belgian hub’s second-largest trading partner. In 2024, exports to the US totaled 613,437 TEUs, consisting mainly of auto and machinery parts from Germany, chemicals, vehicles, food, plastics and pharmaceuticals. Imports from the US included plastics, polymers, chemicals, rubber, vehicles, food and pharmaceuticals. “So far, there have been no significant traffic shifts directly linked to the recent measures,” the port of Antwerp-Bruges said in a statement Wednesday. “While some companies are acting in anticipation, a marked increase in exports to the US has not materialized.” While the direct impact of US tariffs was limited “for now,” Antwerp-Bruges warned that could change quickly amid geopolitical tensions and further development in trade tariffs. Meanwhile, Maersk has issued a customer advisory warning of increasing congestion levels and operational disruptions at several ports across Northern Europe, specifically Antwerp and Bremerhaven, adding delays to ships on both Asia-Europe and trans-Atlantic trades. “This is a result of multiple factors affecting the ports, such as strike actions, phase-in and phase-out plans of ocean networks across the industry, low water levels on continental hinterland arteries and the lower than usual labor availability ahead of the Easter holidays,” the carrier advised. “The combination of these factors is leading to additional yard density and increased container dwelling above the ports’ operational capacity,” Maersk added. Contact Greg Knowler at greg.knowler@spglobal.com .