<div class="phx-topic abstract-wrapper">With less than half the CMA CGM's fleet built in China, CFO Ramon Fernandez believes US services can be structured to avoid the incoming tonnage fees.</div>

With less than half the CMA CGM's fleet built in China, CFO Ramon Fernandez believes US services can be structured to avoid the incoming tonnage fees.

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<div class="phx-topic">CMA CGM will arrange its fleet and Ocean Alliance services to ensure it does not have to pay the recently revised Chinese tonnage tax plan that for some carriers could add $1 million per voyage calling at US ports, said CFO Ramon Fernandez. Fernandez told reporters Friday that less than half the CMA CGM fleet of 680 ships were built in China, which enables the carrier to avoid the tonnage tax to be imposed from Oct. 14. “If Chinese built vessels have to pay a fee, we will make sure that this will not happen to us,” he said in a press conference to announce CMA CGM’s first quarter result. Asked if CMA CGM would shoulder the load of US services in the Ocean Alliance, Fernandez only said, “We have plenty of vessels which have not been built in China, so we can make sure that these vessels will be reaching US ports.” The US Trade Representative (USTR) in April <a href="https://www.joc.com/article/revised-china-tonnage-tax-less-disruptive-still-costly-6005402">narrowed the scope of its tariffs against China’s maritime industry</a> 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 <a href="https://www.joc.com/article/us-port-tax-would-scramble-ocean-services-raise-shipper-costs-drewry-5952046">increase costs for US shippers and pose an existential threat to smaller ports</a>. CMA CGM’s Ocean Alliance partners Cosco and OOCL face tariffs more than twice as large as their peers. <h3>Shipping operations drive Q1 result </h3>CMA CGM’s solid first quarter followed the industry trend. Revenue in the first quarter reached $13.3 billion, up 12.1% year over year, and earnings before interest, taxes, depreciation and amortization (EBITDA) increased 29.1% to $3.1 billion. The group’s net profit of $1.1 billion was up 42% compared to the first three months of last year. The earnings were driven by an increase in volume that was up 4.2% in the first quarter at 5.8 million TEUs and supported by average revenue per TEU of $1,498 that was up 7.1% year over year. Consolidated revenue from maritime shipping operations of $8.8 billion in the first quarter increased 11.5%, while the shipping division’s EBITDA of $2.5 billion was 30.0% higher than in first quarter of 2024. The group's logistics activities under CEVA Logistics continued to grow, boosted by the consolidation of Bolloré Logistics in February last year and good momentum in contract logistics, although the finished vehicle logistics and road haulage segments faced market challenges, mostly in Europe. Revenue from logistics of $4.3 billion in the first quarter was up 10% year over year with EBITDA growing 10.5% to $399 million. CMA CGM Air Cargo is grouped in the “other activities” section along with the group’s port terminals and CMA Media. Revenue in this section rose 31% year over year in the first quarter to $899 million with EBITDA was up 91.5% at $157 million, thanks to strong performances in terminals and air cargo. CMA CGM also announced a €100 million ($112 million) investment in a strategic partnership with Mistral AI, a French artificial intelligence startup headquartered in Paris. The partnership aims to develop bespoke artificial intelligence solutions for the maritime, logistics and media sectors by mobilizing Mistral AI teams alongside CMA CGM teams, according to a company statement. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

CMA CGM will arrange its fleet and Ocean Alliance services to ensure it does not have to pay the recently revised Chinese tonnage tax plan that for some carriers could add $1 million per voyage calling at US ports, said CFO Ramon Fernandez. Fernandez told reporters Friday that less than half the CMA CGM fleet of 680 ships were built in China, which enables the carrier to avoid the tonnage tax to be imposed from Oct. 14. “If Chinese built vessels have to pay a fee, we will make sure that this will not happen to us,” he said in a press conference to announce CMA CGM’s first quarter result. Asked if CMA CGM would shoulder the load of US services in the Ocean Alliance, Fernandez only said, “We have plenty of vessels which have not been built in China, so we can make sure that these vessels will be reaching US ports.” The US Trade Representative (USTR) in April 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 . CMA CGM’s Ocean Alliance partners Cosco and OOCL face tariffs more than twice as large as their peers. Shipping operations drive Q1 result CMA CGM’s solid first quarter followed the industry trend. Revenue in the first quarter reached $13.3 billion, up 12.1% year over year, and earnings before interest, taxes, depreciation and amortization (EBITDA) increased 29.1% to $3.1 billion. The group’s net profit of $1.1 billion was up 42% compared to the first three months of last year. The earnings were driven by an increase in volume that was up 4.2% in the first quarter at 5.8 million TEUs and supported by average revenue per TEU of $1,498 that was up 7.1% year over year. Consolidated revenue from maritime shipping operations of $8.8 billion in the first quarter increased 11.5%, while the shipping division’s EBITDA of $2.5 billion was 30.0% higher than in first quarter of 2024. The group's logistics activities under CEVA Logistics continued to grow, boosted by the consolidation of Bolloré Logistics in February last year and good momentum in contract logistics, although the finished vehicle logistics and road haulage segments faced market challenges, mostly in Europe. Revenue from logistics of $4.3 billion in the first quarter was up 10% year over year with EBITDA growing 10.5% to $399 million. CMA CGM Air Cargo is grouped in the “other activities” section along with the group’s port terminals and CMA Media. Revenue in this section rose 31% year over year in the first quarter to $899 million with EBITDA was up 91.5% at $157 million, thanks to strong performances in terminals and air cargo. CMA CGM also announced a €100 million ($112 million) investment in a strategic partnership with Mistral AI, a French artificial intelligence startup headquartered in Paris. The partnership aims to develop bespoke artificial intelligence solutions for the maritime, logistics and media sectors by mobilizing Mistral AI teams alongside CMA CGM teams, according to a company statement. Contact Greg Knowler at greg.knowler@spglobal.com .

Container Shipping News

Container lines

Asia-Europe

Trans-Pacific

Maritime

CMA CGM fleet will not need to pay Chinese tonnage tax: CFO

<div class="phx-topic abstract-wrapper">The Denmark-based carrier has been growing its multipurpose vessel (MPV) fleet since entering the project cargo sector with the acquisition of Thorco Projects in 2023.</div>

The Denmark-based carrier has been growing its multipurpose vessel (MPV) fleet since entering the project cargo sector with the acquisition of Thorco Projects in 2023.

<div class="phx-topic">Norden is further expanding its multipurpose vessel (MPV) fleet after signing lease agreements for two new 17,500-deadweight ton (dwt) ships scheduled for delivery in 2026 and 2027, the company said in a statement Monday. The vessels, in addition to lease deals announced in January for up to four 17,500-dwt MPVs also expected to hit the water in 2026 and 2027, will expand the Denmark-based carrier’s MPV fleet to around 50 ships, a Norden spokesperson told the Journal of Commerce. Under the terms of the deals announced Monday, Norden will have the option to purchase the vessels, which will be biofuel compatible and feature a similar design to the ships it agreed to lease in January. The ships will be deployed in Norden’s projects and parceling division, which generated $90 million in revenue in the first quarter, up from $55 million in the same three-month period last year, according to the firm’s latest financial statements. Norden, which entered the sector in June 2023 with the acquisition of Thorco Projects, said the latest orders reinforce “our commitment to building a core [MPV] fleet and growing our presence in the project cargo market.” The expansion comes amid “a strong projected demand outlook coupled with a rapidly ageing fleet and low order book,” the company added. According to data from shipbroking house Clarksons, there are 197 MPVs with a combined capacity of 4 million dwt on order for delivery through 2028, compared with a global fleet of 3,371 ships (32 million dwt). Shipbroker Toepfer Transport estimates the average age of the MPV fleet is around 18 years with about 35% of vessels in need of replacement over the next five to 10 years. Contact Keith Wallis at <a href="mailto:keithwallis@hotmail.com">keithwallis@hotmail.com</a>. </div>

Norden is further expanding its multipurpose vessel (MPV) fleet after signing lease agreements for two new 17,500-deadweight ton (dwt) ships scheduled for delivery in 2026 and 2027, the company said in a statement Monday. The vessels, in addition to lease deals announced in January for up to four 17,500-dwt MPVs also expected to hit the water in 2026 and 2027, will expand the Denmark-based carrier’s MPV fleet to around 50 ships, a Norden spokesperson told the Journal of Commerce. Under the terms of the deals announced Monday, Norden will have the option to purchase the vessels, which will be biofuel compatible and feature a similar design to the ships it agreed to lease in January. The ships will be deployed in Norden’s projects and parceling division, which generated $90 million in revenue in the first quarter, up from $55 million in the same three-month period last year, according to the firm’s latest financial statements. Norden, which entered the sector in June 2023 with the acquisition of Thorco Projects, said the latest orders reinforce “our commitment to building a core [MPV] fleet and growing our presence in the project cargo market.” The expansion comes amid “a strong projected demand outlook coupled with a rapidly ageing fleet and low order book,” the company added. According to data from shipbroking house Clarksons, there are 197 MPVs with a combined capacity of 4 million dwt on order for delivery through 2028, compared with a global fleet of 3,371 ships (32 million dwt). Shipbroker Toepfer Transport estimates the average age of the MPV fleet is around 18 years with about 35% of vessels in need of replacement over the next five to 10 years. Contact Keith Wallis at keithwallis@hotmail.com .

Breakbulk carriers

Project cargo

Breakbulk News

Norden continues MPV expansion amid ‘strong projected demand’

<div class="phx-topic abstract-wrapper">Caterpillar and Deere are counting the sizeable costs of tariff-related expenses, even with the announced 90-day tariff pause between the US and China. </div>

Caterpillar and Deere are counting the sizeable costs of tariff-related expenses, even with the announced 90-day tariff pause between the US and China.

<div class="phx-topic">Heavy equipment manufacturers Caterpillar and Deere are feeling the sting of global import tariffs, with Deere bracing for a half-billion dollars in tariff expenses in 2025, according to the companies’ latest quarterly earnings results. Although both US-based high-and-heavy manufacturers produce and source much of their equipment domestically, they also rely on imports for goods and components. The companies are considered bellwether roll-on/roll-off (ro/ro) cargo providers and breakbulk shippers. Illinois-based Deere &amp; Company estimates it will incur $500 million in tariff costs for the fiscal year, even after factoring in a 90-day reduction announced by the Trump administration for reciprocal and retaliatory tariffs between the US and China beginning May 14. “This quarter was marked by historic levels of volatility and significant uncertainty across our end markets given the dynamic global trade backdrop,” Deere chairman and CEO John May said in the earnings call. Deere sources over three-fourths of its complete goods and components in the United States, but global imports — mostly from Mexico and Europe — account for the remainder. “The trade environment is certainly fluid, evidenced by trade agreements and adjustments to tariff levels announced in this past week,” Deere investor relations director Josh Beal said in the company’s second-quarter earnings call on May 15. Deere reported $100 million in tariff expenses in the second quarter, while the company adjusted its profit outlook downward for the full fiscal year. Overall net sales and revenues fell 16% to $12.8 billion in the second quarter and dropped 22% to $21.3 billion for the first half of the year. Equipment sales in all of Deere’s sectors continued to slide, with the sharpest declines in construction and forestry (23% to $2.5 billion) and in production and precision agriculture (21% to $5.2 billion). <h3>Caterpillar looks to tariff relief </h3>Tariff reductions for China could soften the $250 million to $350 million blow Texas-based Caterpillar is preparing to endure in the upcoming quarter because of these duties, according to the company’s first-quarter earnings results, released April 30. Half of those costs are expected to cut into the company’s construction equipment segment. Another 25% would affect Deere’s mining equipment business, while energy and transportation equipment would account for the remaining quarter of the tariff expenses. In his remarks in the company’s April 30 earnings call, Caterpillar chief operating officer Joseph Creed said the tariff situation remains in flux but that Caterpillar is closely monitoring developments and evaluating various long-term mitigation strategies. “Many of these actions require more time to implement and are more difficult to reverse, and therefore require more clarity and certainty on the long-term environment around tariffs,” Creed said in the company’s April 30 earnings call. Imports from China would create about half of Caterpillar’s tariff expenses. Speaking ahead of the Trump administration’s announcement to temporarily lower its maximum tariff rate on Chinese imports from 145% to 30%, chief financial officer Andrew Bonfield said easing up on tariffs could bring about a “significant reduction” in its estimated costs. The tariff cost projections came as Caterpillar reported a 10% decline in sales to $14.2 billion in the first quarter, with the company citing changes in dealer inventories. Sales fell across all of Caterpillar’s machinery, energy and transportation segments, with the steepest drop being in construction equipment, which fell 19% to $5.2 billion. The company is projecting that revenues should be flat for the remainder of 2025. Contact Autumn Cafiero Giusti at <a href="mailto:autumn@autumngiusti.com">autumn@autumngiusti.com</a>. </div>

Heavy equipment manufacturers Caterpillar and Deere are feeling the sting of global import tariffs, with Deere bracing for a half-billion dollars in tariff expenses in 2025, according to the companies’ latest quarterly earnings results. Although both US-based high-and-heavy manufacturers produce and source much of their equipment domestically, they also rely on imports for goods and components. The companies are considered bellwether roll-on/roll-off (ro/ro) cargo providers and breakbulk shippers. Illinois-based Deere & Company estimates it will incur $500 million in tariff costs for the fiscal year, even after factoring in a 90-day reduction announced by the Trump administration for reciprocal and retaliatory tariffs between the US and China beginning May 14. “This quarter was marked by historic levels of volatility and significant uncertainty across our end markets given the dynamic global trade backdrop,” Deere chairman and CEO John May said in the earnings call. Deere sources over three-fourths of its complete goods and components in the United States, but global imports — mostly from Mexico and Europe — account for the remainder. “The trade environment is certainly fluid, evidenced by trade agreements and adjustments to tariff levels announced in this past week,” Deere investor relations director Josh Beal said in the company’s second-quarter earnings call on May 15. Deere reported $100 million in tariff expenses in the second quarter, while the company adjusted its profit outlook downward for the full fiscal year. Overall net sales and revenues fell 16% to $12.8 billion in the second quarter and dropped 22% to $21.3 billion for the first half of the year. Equipment sales in all of Deere’s sectors continued to slide, with the sharpest declines in construction and forestry (23% to $2.5 billion) and in production and precision agriculture (21% to $5.2 billion). Caterpillar looks to tariff relief Tariff reductions for China could soften the $250 million to $350 million blow Texas-based Caterpillar is preparing to endure in the upcoming quarter because of these duties, according to the company’s first-quarter earnings results, released April 30. Half of those costs are expected to cut into the company’s construction equipment segment. Another 25% would affect Deere’s mining equipment business, while energy and transportation equipment would account for the remaining quarter of the tariff expenses. In his remarks in the company’s April 30 earnings call, Caterpillar chief operating officer Joseph Creed said the tariff situation remains in flux but that Caterpillar is closely monitoring developments and evaluating various long-term mitigation strategies. “Many of these actions require more time to implement and are more difficult to reverse, and therefore require more clarity and certainty on the long-term environment around tariffs,” Creed said in the company’s April 30 earnings call. Imports from China would create about half of Caterpillar’s tariff expenses. Speaking ahead of the Trump administration’s announcement to temporarily lower its maximum tariff rate on Chinese imports from 145% to 30%, chief financial officer Andrew Bonfield said easing up on tariffs could bring about a “significant reduction” in its estimated costs. The tariff cost projections came as Caterpillar reported a 10% decline in sales to $14.2 billion in the first quarter, with the company citing changes in dealer inventories. Sales fell across all of Caterpillar’s machinery, energy and transportation segments, with the steepest drop being in construction equipment, which fell 19% to $5.2 billion. The company is projecting that revenues should be flat for the remainder of 2025. Contact Autumn Cafiero Giusti at autumn@autumngiusti.com .

Transport, Trade and Regulation News

Supply chain

High-and-heavy shippers sound alarm on rising tariff costs

<div class="phx-topic abstract-wrapper">The purchase of Outgo, founded in 2022, is meant to help DAT gather more transactional data but also to make its freight marketplace more complete for carriers and brokers. </div>

The purchase of Outgo, founded in 2022, is meant to help DAT gather more transactional data but also to make its freight marketplace more complete for carriers and brokers.

<div class="phx-topic">DAT Freight &amp; Analytics has acquired a payments and factoring technology provider that caters to truckload carriers in an attempt to make its freight load board more useful and trustworthy for both carriers and brokers. The acquired company, Outgo, was founded in 2022 by veterans of Uber and now defunct freight broker Convoy. Terms of the deal, announced Thursday, were not disclosed. Outgo will be integrated within DAT One, the company’s carrier-facing platform, with any loads that have been approved for factoring services noted by a blue checkmark. Carriers can use the tool to get paid no longer than four hours after issuing an invoice, even if their payment terms with brokers are 30 days or longer. Freight factoring is a financial service in which carriers sell their unpaid invoices to a third party that advances them the cash they are owed, generally in exchange for a single-digit percentage of the invoice amount. The acquisition helps round out DAT’s offerings, which include a rate benchmarking platform for a large swathe of the truckload market. DAT, the largest load board for truckload freight in North America, has offered factoring services to its carrier customers since 2007 via external partnerships, most recently with OTR Solutions. The move also comes just a few months after Triumph Financial, a large factoring provider, purchased DAT competitor Greenscreens.ai. Describing Outgo as “fintech meets freight,” CEO Jeff Clementz said the acquisition is designed to provide augmented value for carriers beyond just finding available loads to move. Adding integrated factoring services comes as carriers struggle with a persistently low-rate truckload market where cash flow is paramount. “Outgo will be our focus going forward,” Clementz told the Journal of Commerce. Clementz said bringing factoring in-house allows DAT to not only glean data from transactions but also to build trust with carriers and brokers, who would see DAT as a more comprehensive marketplace. “It’s not just being paid, it’s giving you a banking-like platform,” he said. “Our mission is to create the most trusted marketplace in freight.” Outgo automates broker setup, invoicing, factoring and collections without long-term contracts or minimums. It commits to settling approved unpaid invoices within four hours, with many processed in 15 to 90 minutes. Outgo’s technology also lets carriers use what it calls “partial” factoring, where an invoice can be partly factored to cover the costs of running their businesses, rather than taking a discounted payment for an entire invoice. “We felt there was a better way for carriers to manage their cashflow,” Outgo CEO Marcus Womack told the Journal of Commerce. “On a 30-day payable, they have high operating costs with fuel and payroll. They generally have to accept early payment on all of the invoice, where we give them flexibility to fund what they need in a payment cycle.” Womack and all 30 of Outgo’s employees will move to DAT as part of the transaction. The acquisition is DAT’s second in six months, after it acquired Trucker Tools, a load visibility tool for brokers, in December. Clementz called the acquisitions part of a strategy to better leverage DAT’s presence in the market. Responding to issues around system downtime and the increasing threat of freight fraud and theft, DAT has also invested in identity authentication tools for carriers and carrier management tools for brokers. “We’ll have the largest list of factorable brokers in the industry,” Clementz said. “We’ll know who these carriers are and pass that trust onto the broker. Eventually the goal is to make sure every time they connect, they feel more confident that their freight will move successfully.” Contact Eric Johnson at <a href="mailto: eric.johnson@spglobal.com">eric.johnson@spglobal.com</a>. </div>

DAT Freight & Analytics has acquired a payments and factoring technology provider that caters to truckload carriers in an attempt to make its freight load board more useful and trustworthy for both carriers and brokers. The acquired company, Outgo, was founded in 2022 by veterans of Uber and now defunct freight broker Convoy. Terms of the deal, announced Thursday, were not disclosed. Outgo will be integrated within DAT One, the company’s carrier-facing platform, with any loads that have been approved for factoring services noted by a blue checkmark. Carriers can use the tool to get paid no longer than four hours after issuing an invoice, even if their payment terms with brokers are 30 days or longer. Freight factoring is a financial service in which carriers sell their unpaid invoices to a third party that advances them the cash they are owed, generally in exchange for a single-digit percentage of the invoice amount. The acquisition helps round out DAT’s offerings, which include a rate benchmarking platform for a large swathe of the truckload market. DAT, the largest load board for truckload freight in North America, has offered factoring services to its carrier customers since 2007 via external partnerships, most recently with OTR Solutions. The move also comes just a few months after Triumph Financial, a large factoring provider, purchased DAT competitor Greenscreens.ai. Describing Outgo as “fintech meets freight,” CEO Jeff Clementz said the acquisition is designed to provide augmented value for carriers beyond just finding available loads to move. Adding integrated factoring services comes as carriers struggle with a persistently low-rate truckload market where cash flow is paramount. “Outgo will be our focus going forward,” Clementz told the Journal of Commerce. Clementz said bringing factoring in-house allows DAT to not only glean data from transactions but also to build trust with carriers and brokers, who would see DAT as a more comprehensive marketplace. “It’s not just being paid, it’s giving you a banking-like platform,” he said. “Our mission is to create the most trusted marketplace in freight.” Outgo automates broker setup, invoicing, factoring and collections without long-term contracts or minimums. It commits to settling approved unpaid invoices within four hours, with many processed in 15 to 90 minutes. Outgo’s technology also lets carriers use what it calls “partial” factoring, where an invoice can be partly factored to cover the costs of running their businesses, rather than taking a discounted payment for an entire invoice. “We felt there was a better way for carriers to manage their cashflow,” Outgo CEO Marcus Womack told the Journal of Commerce. “On a 30-day payable, they have high operating costs with fuel and payroll. They generally have to accept early payment on all of the invoice, where we give them flexibility to fund what they need in a payment cycle.” Womack and all 30 of Outgo’s employees will move to DAT as part of the transaction. The acquisition is DAT’s second in six months, after it acquired Trucker Tools, a load visibility tool for brokers, in December. Clementz called the acquisitions part of a strategy to better leverage DAT’s presence in the market. Responding to issues around system downtime and the increasing threat of freight fraud and theft, DAT has also invested in identity authentication tools for carriers and carrier management tools for brokers. “We’ll have the largest list of factorable brokers in the industry,” Clementz said. “We’ll know who these carriers are and pass that trust onto the broker. Eventually the goal is to make sure every time they connect, they feel more confident that their freight will move successfully.” Contact Eric Johnson at eric.johnson@spglobal.com .

Logistics Technology News

Truck brokers

Truckload

DAT adds in-house factoring services with latest acquisition

<div class="phx-topic abstract-wrapper">Container lines are looking to capitalize on a ramp-up in Asia-US bookings during the 90-day tariff reduction that followed Monday’s deal between the Trump administration and China.</div>

Container lines are looking to capitalize on a ramp-up in Asia-US bookings during the 90-day tariff reduction that followed Monday’s deal between the Trump administration and China.

<div class="phx-topic">Major container lines are seeking spot rates on service from China to the US West Coast that are more than double the current level as they look to capitalize on an anticipated surge of volume triggered by a 90-day pause in the steepest US tariffs. Container spot rates are already spiking following the Monday announcement, and if carriers are successful in imposing a combination of general rate increases (GRIs) and peak season surcharges (PSSs) set to take effect June 1, pricing would jump to approximately $6,000 per FEU to the West Coast and $7,000 per FEU to the East Coast. GRIs apply to all shippers regardless of size, while PSSs are only imposed on smaller shippers that don’t have agreements with carriers prohibiting their use. Momentum appears to be on the carriers’ side. Hapag-Lloyd said it has seen <a href="https://www.joc.com/article/china-us-ocean-bookings-surge-since-weekend-trade-deal-hapag-lloyd-6004653">a 50% increase in bookings</a> from China to the US this week, while forwarders have reported jumps as high as 100%. Given the short window of the agreement, and the need to ship fall and holiday merchandise before tariffs may increase if the deal falls apart, forwarders report that bookings are soaring. “It’s shades of 2024,” Benton Kauffman, head of trans-Pacific air and sea logistics at forwarder DSV, told the Journal of Commerce, referring to last summer, when container spot rates jumped to upward of $8,000 per FEU to the West Coast during acrimonious dockworker contract negotiations on the East and Gulf coasts. As of Wednesday, average spot rates from Asia to the West Coast rose to $2,567 per FEU, up from $1,600 per FEU at the end of March, while Asia-East Coast pricing rose to $3,567 per FEU from $2,600 per FEU during the same period, according to Platts, a sister product of the Journal of Commerce within S&amp;P Global. Last year, spot rates <a href="https://www.joc.com/article/carriers-to-deploy-extra-loaders-to-los-angeles-long-beach-amid-import-surge-5714861">peaked at $8,133 per FEU to the West Coast</a> and $10,133 per FEU to the East Coast in the week of July 5. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="46178020-96a6-492f-89e0-3e6fc2624113"></dynamic-object></div>Carriers Hapag-Lloyd, Mediterranean Shipping Co., CMA CGM, Ocean Network Express (ONE) and Zim Integrated Shipping have filed spot rates of $6,000 per FEU starting June 1. Another round of increases is poised for June 15, with Hapag-Lloyd, MSC and CMA CGM set to increase rates to $8,000 per FEU, according to rate notices from the carriers. “Of course, these are just their filings,” noted a forwarder who asked not to be identified. “We will see what levels they really pass on once we get to these dates.” <h3>Bookings from China surge </h3>The carrier rate increases appear to be supported by a spike in bookings since the US and China announced an agreement that reduced US tariffs on Chinese goods from 145% to 30% for at least the next 90 days. “There’s definitely been a ramp up in orders during this 90-day window,” said Robert Khachatryan, CEO of forwarder Freight Right Global Logistics. Khachatryan explained that importers appear to be in a rush to get their shipments into the US while the 30% tariff on China is in effect. They are concerned that after 90 days, if a permanent agreement is not reached, the tariffs could shoot back up. “Everyone seems to be concerned with the 90-day window,” Khachatryan said. Revelyst, an importer of outdoor apparel, paused its purchase orders with factories in China in April, said John Pace, senior manager of global logistics. Now, the company is prioritizing those shipments that are ready to move, to be followed by shipments that will depart in the coming weeks as factories ramp up production. A carrier executive who asked not to be identified told the Journal of Commerce that factories in China should be able to quickly increase production as most vendors paused or slowed down production after the 145% duty went into effect in early April, rather than completely shutting down and laying off staff. Similar to Khachatryan, the carrier executive said importers are frontloading as much merchandise as they can. “They have to ship now in case there is another tariff increase in August,” the source said. However, forwarders and importers say the huge increases in spot rates and surcharges that carriers announced over the past few days would put a large dent in the savings they had anticipated from the tariff cuts. “We are being careful,” Pace said. “Shipping rates are certainly a factor in our decisions.” Contact Bill Mongelluzzo at <a href="mailto:bill.mongelluzzo@spglobal.com">bill.mongelluzzo@spglobal.com</a>. Contact Laura Robb at <a href="mailto:laura.robb@spglobal.com">laura.robb@spglobal.com</a>. </div>

Major container lines are seeking spot rates on service from China to the US West Coast that are more than double the current level as they look to capitalize on an anticipated surge of volume triggered by a 90-day pause in the steepest US tariffs. Container spot rates are already spiking following the Monday announcement, and if carriers are successful in imposing a combination of general rate increases (GRIs) and peak season surcharges (PSSs) set to take effect June 1, pricing would jump to approximately $6,000 per FEU to the West Coast and $7,000 per FEU to the East Coast. GRIs apply to all shippers regardless of size, while PSSs are only imposed on smaller shippers that don’t have agreements with carriers prohibiting their use. Momentum appears to be on the carriers’ side. Hapag-Lloyd said it has seen a 50% increase in bookings from China to the US this week, while forwarders have reported jumps as high as 100%. Given the short window of the agreement, and the need to ship fall and holiday merchandise before tariffs may increase if the deal falls apart, forwarders report that bookings are soaring. “It’s shades of 2024,” Benton Kauffman, head of trans-Pacific air and sea logistics at forwarder DSV, told the Journal of Commerce, referring to last summer, when container spot rates jumped to upward of $8,000 per FEU to the West Coast during acrimonious dockworker contract negotiations on the East and Gulf coasts. As of Wednesday, average spot rates from Asia to the West Coast rose to $2,567 per FEU, up from $1,600 per FEU at the end of March, while Asia-East Coast pricing rose to $3,567 per FEU from $2,600 per FEU during the same period, according to Platts, a sister product of the Journal of Commerce within S&P Global. Last year, spot rates peaked at $8,133 per FEU to the West Coast and $10,133 per FEU to the East Coast in the week of July 5. Carriers Hapag-Lloyd, Mediterranean Shipping Co., CMA CGM, Ocean Network Express (ONE) and Zim Integrated Shipping have filed spot rates of $6,000 per FEU starting June 1. Another round of increases is poised for June 15, with Hapag-Lloyd, MSC and CMA CGM set to increase rates to $8,000 per FEU, according to rate notices from the carriers. “Of course, these are just their filings,” noted a forwarder who asked not to be identified. “We will see what levels they really pass on once we get to these dates.” Bookings from China surge The carrier rate increases appear to be supported by a spike in bookings since the US and China announced an agreement that reduced US tariffs on Chinese goods from 145% to 30% for at least the next 90 days. “There’s definitely been a ramp up in orders during this 90-day window,” said Robert Khachatryan, CEO of forwarder Freight Right Global Logistics. Khachatryan explained that importers appear to be in a rush to get their shipments into the US while the 30% tariff on China is in effect. They are concerned that after 90 days, if a permanent agreement is not reached, the tariffs could shoot back up. “Everyone seems to be concerned with the 90-day window,” Khachatryan said. Revelyst, an importer of outdoor apparel, paused its purchase orders with factories in China in April, said John Pace, senior manager of global logistics. Now, the company is prioritizing those shipments that are ready to move, to be followed by shipments that will depart in the coming weeks as factories ramp up production. A carrier executive who asked not to be identified told the Journal of Commerce that factories in China should be able to quickly increase production as most vendors paused or slowed down production after the 145% duty went into effect in early April, rather than completely shutting down and laying off staff. Similar to Khachatryan, the carrier executive said importers are frontloading as much merchandise as they can. “They have to ship now in case there is another tariff increase in August,” the source said. However, forwarders and importers say the huge increases in spot rates and surcharges that carriers announced over the past few days would put a large dent in the savings they had anticipated from the tariff cuts. “We are being careful,” Pace said. “Shipping rates are certainly a factor in our decisions.” Contact Bill Mongelluzzo at bill.mongelluzzo@spglobal.com . Contact Laura Robb at laura.robb@spglobal.com .

Forwarding

Trans-Pacific carriers announce massive June rate hikes

<div class="phx-topic abstract-wrapper">Industry backlash mitigated the costliest components of the US Trade Representative’s proposed fees, but surcharges from some carriers are still likely on the way, writes Executive Editor Mark Szakonyi. </div>

Industry backlash mitigated the costliest components of the US Trade Representative’s proposed fees, but surcharges from some carriers are still likely on the way, writes Executive Editor Mark Szakonyi.

<div class="phx-topic">The revised US plan to tax Chinese tonnage released last month is staggeringly less disruptive to the shipping industry than what was first released in February but still stands to increase shipping costs. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6005401_0.1.jpg"></img></div>Most container lines will be on the hook for approximately $1 million per voyage, a significant climbdown from the <a href="https://www.joc.com/article/us-port-fees-could-hit-chinese-ships-under-trump-trade-proposal-5949409">$1 million to $1.5 million per port call initially outlined</a> when the plan was introduced by the US Trade Representative (USTR) on Feb. 21. That plan would have cost the industry $24 billion, according to maritime analyst Lars Jensen. “It’s definitely a vast improvement over the first version,” said Stuart Sandlin, Hapag-Lloyd’s North America president, adding that the original plan would have cost the carrier nearly $90 million weekly. “That’s a big number and now it’s not. It’s dramatically less than that.” The industry backlash to the original proposal came on multiple fronts. <a href="https://www.joc.com/article/farm-state-house-members-say-ustr-proposal-offers-big-risks-to-us-ag-interests-5977289">Agriculture exporters warned</a> of additional costs that carriers would pass onto them and smaller ports fretted about lost services if fees were assessed at each port call. Central American, Caribbean and niche vessel operators testified to being <a href="https://www.joc.com/article/ustrs-china-tonnage-tax-would-squeeze-smaller-trades-stakeholders-5967638">unable to spread the stiff port fees</a> across their smaller cargo capacity, while major carriers lobbied in the backroom. Federal Maritime Chairman Louis Sola said the agency also helped the USTR understand the implications, with ultimately all of the maritime regulators’ recommendations being implemented in the latest version. “We put our fingers on the scale to minimize some of the impacts on the industry that were not contemplated in the original proposal,” Sola said in a May 8 interview, stressing that it was an industrywide effort. The <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">revised version exempts</a> 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. <h3>Per voyage vs. per call </h3>Carriers will be levied solely on the first US port calls rather than on each US call, and tonnage taxes are capped at five sailings annually. Equally important, carriers will no longer be penalized come October for having Chinese-built vessels in their fleet — only for the Chinese-built vessels they deploy on US trades. The modification to the tonnage tax plan incentivizes carriers to remove China-built ships from US trades and replace them with vessels constructed in South Korea and Japan. “We do have options, and we are evaluating those options as we speak,” Fabio Santucci, president of US operations for Mediterranean Shipping Co., said at the Georgia International Trade Conference in late April. “Implementation is October, so I really think everybody has plenty of time to adjust and plan.” So far, it looks like MSC will not have to undergo too many changes to accommodate the new fees. Based on current schedules, only two of the nine ships in MSC’s Pearl Shikra service to the US West Coast are Chinese-built — the 9,408-TEU MSC Desiree and the 8,496-TEU MSC Benin. The carrier’s two other trans-Pacific West Coast services primarily use South Korean-built vessels, along with a few Japanese ones. Other carriers, though, may have more work to do to mitigate the fees. Five of the 12 ships currently in the Gemini Cooperation’s US2 service to the US East Coast are Chinese built, with those under long-term charter by Gemini partner Hapag-Lloyd. <h3>Bearing a larger brunt </h3>Cosco and OOCL don’t have that ability and face tariffs more than twice as large as their peers. The USTR doesn’t mince words on its goal, saying the aim is “to further disincentivize use of Chinese shipping services.” Cosco and OOCL handle the largest share of the trans-Pacific market, accounting for 17% of US import moves from Asia in March, according to PIERS, a sister company of the Journal of Commerce within PIERS. The cost of drawing the White House’s ire per TEU is steep. Consultancy Bluspark estimates the tonnage taxes rates rising over the next three years will equate to between $550 and $1,600 per TEU for Chinese operators, compared with a $175 to $400 per TEU ramp-up for carriers not domiciled in China. That could spur Cosco and OOCL to lean on their Ocean Alliance partners CMA CGM and Evergreen Line. In such a scenario, Cosco and OOCL would shift their trans-Pacific vessels to other trades while keeping access to the US market through their vessel sharing agreement with Evergreen and CMA CGM. The easing of US and China tariffs on goods and commodities announced Monday also opens the door for deals in which the tonnage tariff is leveraged for something the Trump administration wants. In the meantime, container lines are already eyeing surcharges and considering how to mitigate the imminent increase in operating costs. “There’s going to be a cost increase somewhere for someone and we will have to assume that there will be reverberations outside of the US as well because everything is connected,” Santucci said. Not all carriers are preparing to impose surcharges tied to USTR, with Maersk telling customers May 8 it didn’t foresee a need for new fees nor a change in its service rotation. Just 5% of Maerk’s global volumes come from China. President Donald Trump’s effort to <a href="https://www.joc.com/article/trumps-expansionist-worldview-puts-us-maritime-interests-in-spotlight-5946935">galvanize US shipbuilding</a> and knock China for subsidizing its own industry may change what ships call the United States, but it doesn’t seem to be denting Chinese shipyard production. Of the 93 container ship orders made to Chinese shipyards this year, 62 have been placed since the February release of the original tariff plan, according to an HSBC investor analysis placed on order since May 8. Contact Mark Szakonyi at <a href="mailto:mark.szakonyi@spglobal.com">mark.szakonyi@spglobal.com</a>. Senior Editor Michael Angell contributed to this column. </div>

The revised US plan to tax Chinese tonnage released last month is staggeringly less disruptive to the shipping industry than what was first released in February but still stands to increase shipping costs. Most container lines will be on the hook for approximately $1 million per voyage, a significant climbdown from the $1 million to $1.5 million per port call initially outlined when the plan was introduced by the US Trade Representative (USTR) on Feb. 21. That plan would have cost the industry $24 billion, according to maritime analyst Lars Jensen. “It’s definitely a vast improvement over the first version,” said Stuart Sandlin, Hapag-Lloyd’s North America president, adding that the original plan would have cost the carrier nearly $90 million weekly. “That’s a big number and now it’s not. It’s dramatically less than that.” The industry backlash to the original proposal came on multiple fronts. Agriculture exporters warned of additional costs that carriers would pass onto them and smaller ports fretted about lost services if fees were assessed at each port call. Central American, Caribbean and niche vessel operators testified to being unable to spread the stiff port fees across their smaller cargo capacity, while major carriers lobbied in the backroom. Federal Maritime Chairman Louis Sola said the agency also helped the USTR understand the implications, with ultimately all of the maritime regulators’ recommendations being implemented in the latest version. “We put our fingers on the scale to minimize some of the impacts on the industry that were not contemplated in the original proposal,” Sola said in a May 8 interview, stressing that it was an industrywide effort. The revised version exempts 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. Per voyage vs. per call Carriers will be levied solely on the first US port calls rather than on each US call, and tonnage taxes are capped at five sailings annually. Equally important, carriers will no longer be penalized come October for having Chinese-built vessels in their fleet — only for the Chinese-built vessels they deploy on US trades. The modification to the tonnage tax plan incentivizes carriers to remove China-built ships from US trades and replace them with vessels constructed in South Korea and Japan. “We do have options, and we are evaluating those options as we speak,” Fabio Santucci, president of US operations for Mediterranean Shipping Co., said at the Georgia International Trade Conference in late April. “Implementation is October, so I really think everybody has plenty of time to adjust and plan.” So far, it looks like MSC will not have to undergo too many changes to accommodate the new fees. Based on current schedules, only two of the nine ships in MSC’s Pearl Shikra service to the US West Coast are Chinese-built — the 9,408-TEU MSC Desiree and the 8,496-TEU MSC Benin. The carrier’s two other trans-Pacific West Coast services primarily use South Korean-built vessels, along with a few Japanese ones. Other carriers, though, may have more work to do to mitigate the fees. Five of the 12 ships currently in the Gemini Cooperation’s US2 service to the US East Coast are Chinese built, with those under long-term charter by Gemini partner Hapag-Lloyd. Bearing a larger brunt Cosco and OOCL don’t have that ability and face tariffs more than twice as large as their peers. The USTR doesn’t mince words on its goal, saying the aim is “to further disincentivize use of Chinese shipping services.” Cosco and OOCL handle the largest share of the trans-Pacific market, accounting for 17% of US import moves from Asia in March, according to PIERS, a sister company of the Journal of Commerce within PIERS. The cost of drawing the White House’s ire per TEU is steep. Consultancy Bluspark estimates the tonnage taxes rates rising over the next three years will equate to between $550 and $1,600 per TEU for Chinese operators, compared with a $175 to $400 per TEU ramp-up for carriers not domiciled in China. That could spur Cosco and OOCL to lean on their Ocean Alliance partners CMA CGM and Evergreen Line. In such a scenario, Cosco and OOCL would shift their trans-Pacific vessels to other trades while keeping access to the US market through their vessel sharing agreement with Evergreen and CMA CGM. The easing of US and China tariffs on goods and commodities announced Monday also opens the door for deals in which the tonnage tariff is leveraged for something the Trump administration wants. In the meantime, container lines are already eyeing surcharges and considering how to mitigate the imminent increase in operating costs. “There’s going to be a cost increase somewhere for someone and we will have to assume that there will be reverberations outside of the US as well because everything is connected,” Santucci said. Not all carriers are preparing to impose surcharges tied to USTR, with Maersk telling customers May 8 it didn’t foresee a need for new fees nor a change in its service rotation. Just 5% of Maerk’s global volumes come from China. President Donald Trump’s effort to galvanize US shipbuilding and knock China for subsidizing its own industry may change what ships call the United States, but it doesn’t seem to be denting Chinese shipyard production. Of the 93 container ship orders made to Chinese shipyards this year, 62 have been placed since the February release of the original tariff plan, according to an HSBC investor analysis placed on order since May 8. Contact Mark Szakonyi at mark.szakonyi@spglobal.com . Senior Editor Michael Angell contributed to this column.

Port News

North American ports

Revised China tonnage tax less disruptive, still costly

<div class="phx-topic abstract-wrapper">The Trump administration’s tariff policy is yet another milestone that has shaken the US economy over the past 60 years, writes Ted Prince. </div>

The Trump administration’s tariff policy is yet another milestone that has shaken the US economy over the past 60 years, writes Ted Prince.

<div class="phx-topic">Since the announcement of reciprocal tariffs on so-called “Liberation Day” last month, we have been bombarded by conflicting predictions of the possible benefits and disasters that may befall our country, our economy and our industry. What I find interesting is that the history of the past 60 years seems to have been forgotten. While there are many important dates, I will focus on four. <h3>Yanqui go home! </h3>I would start in April 1965, when President Lyndon Johnson deployed the Marines and 82nd Airborne to the Dominican Republic to quell a civil war that broke out after a military junta. While the intervention was intended to protect US nationals, mission creep led to the deployment of over 22,000 American troops. While the invasion successfully reinstalled a conservative government, it increased distrust of the US. At the same time, companies such as Hewlett Packard were rolling out a continuous pipeline of electronic innovations. Their intention was to near-shore manufacturing in Latin America; however, the prevalence of “Yanqui Go Home!” made them look elsewhere. Japan and then the “Four Tigers” (Singapore, Hong Kong, Taiwan and South Korea) became the factory sites instead. The Vietnam War had become the first containerized war, and plentiful equipment was available to load back to the US. While electronics required factories, much of the manufacturing was cottage industries. For example, importers of blue jeans were buying from hundreds of small vendors. Ocean carrier consolidators would send pickup trucks into the New Territories to pick up loose articles of clothing (some which no doubt had been made in China) for consolidation at their facilities adjacent to the Kwai Tsing container terminals. <h3>Voluntary restraint </h3>In May 1981, with the American auto industry mired in recession, Japanese car makers agreed to “voluntary export restraint,” which limited exports of passenger cars to the US. However, at the same time, they implemented a strategy of “transplants,” whereby cars were assembled in the US. Some might consider this an example of “reshoring;” however, it is not that simple. Initially, the plants were built in Japan, then disassembled, shipped to the US, and reassembled. Most of the parts (CKD: cars knocked down) came from Japan, so actual US content — other than labor — was minimal. Over time, suppliers proliferated along Interstates 65 and 75 to support these plants. However, many of these were also Japanese transplants. Some were joint ventures with US partners, but many were just US subsidiaries of Japanese manufacturers. Barry Bluestone and Bennett Harrison described this phenomenon in their 1982 work, “The Deindustrialization of America: Plant Closings, Community Abandonment, and the Dismantling of Basic Industry.” They pointed out the irony that the Japanese were successfully investing in US industrial sectors that scarcely a decade ago were said to be declining, uncompetitive, and suffering from deindustrialization. <h3>The Plaza Accord </h3>The Plaza Accord in September 1985 effectively devalued the dollar against other major currencies. Initially, the US trade deficit worsened, as imports rose in price with a devalued dollar. However, the devaluation made US exports cheaper for its trading partners to purchase, which grew the market in goods and services — which are unaccounted for in the current administration’s calculation. <h3>China and the WTO </h3>Finally, in 2001, China joined the World Trade Organization (WTO). What followed was a massive dislocation in trade as China built world-class factories and world-class ports to ship goods throughout the world. Some of those factories have since relocated to nations with cheaper labor. However, a whole ecosystem of suppliers has grown up that supports the manufacturing and assembly of sophisticated products. China’s development took over 30 years. It was no shortcut. It was also the result of extensive industrial policy similar to what Japan and the Four Tigers had done previously. Most importantly, these policies did not deviate for decades and supported a long-term strategy whereby investment could be made with confidence. Our current politics are such that it is impossible to invest in today’s doctrine because it may no longer be applicable by the time the factory opens in three to eight years. In the past 30 years, trade has increased dramatically as a share of gross domestic product (GDP). However, while most economists believe that this has been good for the economy, the general public’s outlook is less sanguine. In large part, this is because trade’s impacts can vary widely: localized changes in jobs (both gains and losses) and reduced prices of goods and services. Freight is inextricably linked to trade. It has transformed our industry. We will no doubt have a ringside seat to the policy that is evolving. Contact Ted Prince at <a href="mailto:ted@tricitiesintermodal.com">ted@tricitiesintermodal.com</a>. </div>

Since the announcement of reciprocal tariffs on so-called “Liberation Day” last month, we have been bombarded by conflicting predictions of the possible benefits and disasters that may befall our country, our economy and our industry. What I find interesting is that the history of the past 60 years seems to have been forgotten. While there are many important dates, I will focus on four. Yanqui go home! I would start in April 1965, when President Lyndon Johnson deployed the Marines and 82nd Airborne to the Dominican Republic to quell a civil war that broke out after a military junta. While the intervention was intended to protect US nationals, mission creep led to the deployment of over 22,000 American troops. While the invasion successfully reinstalled a conservative government, it increased distrust of the US. At the same time, companies such as Hewlett Packard were rolling out a continuous pipeline of electronic innovations. Their intention was to near-shore manufacturing in Latin America; however, the prevalence of “Yanqui Go Home!” made them look elsewhere. Japan and then the “Four Tigers” (Singapore, Hong Kong, Taiwan and South Korea) became the factory sites instead. The Vietnam War had become the first containerized war, and plentiful equipment was available to load back to the US. While electronics required factories, much of the manufacturing was cottage industries. For example, importers of blue jeans were buying from hundreds of small vendors. Ocean carrier consolidators would send pickup trucks into the New Territories to pick up loose articles of clothing (some which no doubt had been made in China) for consolidation at their facilities adjacent to the Kwai Tsing container terminals. Voluntary restraint In May 1981, with the American auto industry mired in recession, Japanese car makers agreed to “voluntary export restraint,” which limited exports of passenger cars to the US. However, at the same time, they implemented a strategy of “transplants,” whereby cars were assembled in the US. Some might consider this an example of “reshoring;” however, it is not that simple. Initially, the plants were built in Japan, then disassembled, shipped to the US, and reassembled. Most of the parts (CKD: cars knocked down) came from Japan, so actual US content — other than labor — was minimal. Over time, suppliers proliferated along Interstates 65 and 75 to support these plants. However, many of these were also Japanese transplants. Some were joint ventures with US partners, but many were just US subsidiaries of Japanese manufacturers. Barry Bluestone and Bennett Harrison described this phenomenon in their 1982 work, “The Deindustrialization of America: Plant Closings, Community Abandonment, and the Dismantling of Basic Industry.” They pointed out the irony that the Japanese were successfully investing in US industrial sectors that scarcely a decade ago were said to be declining, uncompetitive, and suffering from deindustrialization. The Plaza Accord The Plaza Accord in September 1985 effectively devalued the dollar against other major currencies. Initially, the US trade deficit worsened, as imports rose in price with a devalued dollar. However, the devaluation made US exports cheaper for its trading partners to purchase, which grew the market in goods and services — which are unaccounted for in the current administration’s calculation. China and the WTO Finally, in 2001, China joined the World Trade Organization (WTO). What followed was a massive dislocation in trade as China built world-class factories and world-class ports to ship goods throughout the world. Some of those factories have since relocated to nations with cheaper labor. However, a whole ecosystem of suppliers has grown up that supports the manufacturing and assembly of sophisticated products. China’s development took over 30 years. It was no shortcut. It was also the result of extensive industrial policy similar to what Japan and the Four Tigers had done previously. Most importantly, these policies did not deviate for decades and supported a long-term strategy whereby investment could be made with confidence. Our current politics are such that it is impossible to invest in today’s doctrine because it may no longer be applicable by the time the factory opens in three to eight years. In the past 30 years, trade has increased dramatically as a share of gross domestic product (GDP). However, while most economists believe that this has been good for the economy, the general public’s outlook is less sanguine. In large part, this is because trade’s impacts can vary widely: localized changes in jobs (both gains and losses) and reduced prices of goods and services. Freight is inextricably linked to trade. It has transformed our industry. We will no doubt have a ringside seat to the policy that is evolving. Contact Ted Prince at ted@tricitiesintermodal.com .

A history lesson while we watch current US trade policy unfold

<div class="phx-topic abstract-wrapper">The new global trade environment has significantly increased supply chain challenges, notably the arbitrary nature of the implementation of US tariffs.</div>

The new global trade environment has significantly increased supply chain challenges, notably the arbitrary nature of the implementation of US tariffs.

<div class="phx-topic">This commentary is not specifically about tariffs, or about capacity shortages or surpluses or what to expect if your shipment happens to be transferred to a Chinese vessel or service — whatever that means today. Instead, it considers a related question: How do supply chain practitioners balance demand and supply planning in the current environment of uncertainty? To start, let’s assume you are a medium-size importer into the US from any Asian country subject to tariffs nominally above 20%. At this stage, you have called on the more recent lessons from the first term of Donald Trump and from the COVID-19 pandemic. These will include, but are not limited to, some form of cost-sharing of the increase, somewhere between you absorbing it all to the supplier wearing the whole lot. If you are buying in US dollars, then your supplier is already suffering and will have less room to maneuver. To counter this, a temporary option could be to switch to buying in your supplier’s local currency. This will have some appeal to your supplier as they are possibly overweight in the dollar and have actual costs in local currency. A lot will depend on your view of the trajectory of the dollar. However, two notes of caution: You will still have transaction costs when converting from the US dollar to the local currency, and depending on the country you source from, you may face capital controls if you need to get money back. Furthermore, changing back and forth in currencies has administrative risks with potential payment delays and errors. No doubt there will be a suggestion of suppliers providing lower-than-correct value invoices and some form of offline reconciliation. But doing the right thing in the face of malevolence has its longer-term reward. And besides, the penalties do not merit the risk. <h3>‘Roulette game’ </h3>You will have reduced your destination-side inventory to the degree of ensuring safety stocks. If you managed to get ahead of the tariff increases, you will be sitting on volume that requires warehousing. But as you have avoided tariffs to some degree, this will maintain your competitiveness — despite the increased warehousing and inventory working capital cost — assuming your competitors source from outside the US However, the new environment has significantly increased challenges. First, the rate at which tariff levels are changing makes supply planning a roulette game. This is primarily due to the arbitrary nature of their implementation, unlike previous changes that gave some degree of leeway for orders already in process and/or on the water. Equally challenging is the rollercoaster nature of the degree of tariff moves both up and down. Finally, the tactical response <a href="https://www.joc.com/article/scaled-back-ustr-port-tariff-to-hit-chinese-carriers-hardest-5987549">to avoid Chinese-built, -owned, and -operated ships</a> will be a nightmare for all logisticians. This is particularly important because carrier and vessel choice is largely transactional at an operational level based on guidance from sourcing, so the likelihood of an error costing thousands is high. Where does that leave beneficial cargo owners (BCOs) in deciding which tactics to adopt? Frankly, for the foreseeable future, you will need to choose your poison. The somewhat binary options of manufacturing and storing at origin have appeal, particularly if the <a href="https://www.joc.com/article/air-cargo-volumes-fall-on-trans-pacific-as-us-de-minimis-changes-loom-5993599">removal of de minimis</a> has a projected impact of freeing up air freight space, allowing cheaper (but not cheap) delivery for urgent orders. Alternatively, having the right stocks in place at the right time will do much for customer relations and, intuitively, result in less likelihood of discounting. The downside will be increased costs that will depend on the cost of the tariff versus your sale price. This will mean you either absorb the increase, thus reducing margins and profitability, or try to pass it on to consumers. The final kicker to this issue is consumer demand. With quite consistent indicators from many sources — Goldman Sachs, the International Monetary Fund, the University of Michigan and others— indicating at best a slowdown in all economies, the likelihood of stagflation emerging in the US, or at best/worst the return of inflation, is actually your greatest risk. Because if consumers truly defer consumption expecting lower prices through price reduction and/or discounting to stimulate demand (stagflation), or cannot afford to spend or increase credit card debt (inflation), then these two factors will cause greater headaches than your deliberations on supply planning. John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at <a href="mailto:john-mccauley1@outlook.com">john-mccauley1@outlook.com</a>.</div>

This commentary is not specifically about tariffs, or about capacity shortages or surpluses or what to expect if your shipment happens to be transferred to a Chinese vessel or service — whatever that means today. Instead, it considers a related question: How do supply chain practitioners balance demand and supply planning in the current environment of uncertainty? To start, let’s assume you are a medium-size importer into the US from any Asian country subject to tariffs nominally above 20%. At this stage, you have called on the more recent lessons from the first term of Donald Trump and from the COVID-19 pandemic. These will include, but are not limited to, some form of cost-sharing of the increase, somewhere between you absorbing it all to the supplier wearing the whole lot. If you are buying in US dollars, then your supplier is already suffering and will have less room to maneuver. To counter this, a temporary option could be to switch to buying in your supplier’s local currency. This will have some appeal to your supplier as they are possibly overweight in the dollar and have actual costs in local currency. A lot will depend on your view of the trajectory of the dollar. However, two notes of caution: You will still have transaction costs when converting from the US dollar to the local currency, and depending on the country you source from, you may face capital controls if you need to get money back. Furthermore, changing back and forth in currencies has administrative risks with potential payment delays and errors. No doubt there will be a suggestion of suppliers providing lower-than-correct value invoices and some form of offline reconciliation. But doing the right thing in the face of malevolence has its longer-term reward. And besides, the penalties do not merit the risk. ‘Roulette game’ You will have reduced your destination-side inventory to the degree of ensuring safety stocks. If you managed to get ahead of the tariff increases, you will be sitting on volume that requires warehousing. But as you have avoided tariffs to some degree, this will maintain your competitiveness — despite the increased warehousing and inventory working capital cost — assuming your competitors source from outside the US However, the new environment has significantly increased challenges. First, the rate at which tariff levels are changing makes supply planning a roulette game. This is primarily due to the arbitrary nature of their implementation, unlike previous changes that gave some degree of leeway for orders already in process and/or on the water. Equally challenging is the rollercoaster nature of the degree of tariff moves both up and down. Finally, the tactical response to avoid Chinese-built, -owned, and -operated ships will be a nightmare for all logisticians. This is particularly important because carrier and vessel choice is largely transactional at an operational level based on guidance from sourcing, so the likelihood of an error costing thousands is high. Where does that leave beneficial cargo owners (BCOs) in deciding which tactics to adopt? Frankly, for the foreseeable future, you will need to choose your poison. The somewhat binary options of manufacturing and storing at origin have appeal, particularly if the removal of de minimis has a projected impact of freeing up air freight space, allowing cheaper (but not cheap) delivery for urgent orders. Alternatively, having the right stocks in place at the right time will do much for customer relations and, intuitively, result in less likelihood of discounting. The downside will be increased costs that will depend on the cost of the tariff versus your sale price. This will mean you either absorb the increase, thus reducing margins and profitability, or try to pass it on to consumers. The final kicker to this issue is consumer demand. With quite consistent indicators from many sources — Goldman Sachs, the International Monetary Fund, the University of Michigan and others— indicating at best a slowdown in all economies, the likelihood of stagflation emerging in the US, or at best/worst the return of inflation, is actually your greatest risk. Because if consumers truly defer consumption expecting lower prices through price reduction and/or discounting to stimulate demand (stagflation), or cannot afford to spend or increase credit card debt (inflation), then these two factors will cause greater headaches than your deliberations on supply planning. John McCauley, formerly a long-standing vice president of transportation and logistics at Cargill, now consults for shippers. Contact him at john-mccauley1@outlook.com .

Navigating the current supply chain is a matter of choosing your poison

Local container dwell time

Rail container dwell time

The Pacific Merchant Shipping Association (PMSA) calculates local-delivery container dwell times at the ports of Los Angeles and Long Beach using the number of inbound loaded containers out-gated at each marine terminal by truck during the month as well as the average dwell time in days for those out-gated containers. It calculates average rail container dwell based on the time a container sits on the marine terminal at the ports after it is discharged from the vessel and before it is loaded. [PMSA](https://pmsaship.com)

Los Angeles-Long Beach truck and rail dwell times (PMSA)

Los Angeles-Long Beach terminal and rail dwell times (PMSA) Gateway

<div class="phx-topic abstract-wrapper">The trans-Pacific air cargo sector is trying to assess the demand implications of the preliminary trade deal between Washington and Beijing, which included a reduction in the tariff on parcels from China. </div>

The trans-Pacific air cargo sector is trying to assess the demand implications of the preliminary trade deal between Washington and Beijing, which included a reduction in the tariff on parcels from China.

<div class="phx-topic">While the reduction in “de minimis” tariffs on Chinese exports to the US is unlikely to spark a surge in demand for air cargo on the trans-Pacific, any increase in demand could tighten capacity and push rates higher given the large numbers of freighter aircraft that have been shifted to other trade lanes. Following weekend trade talks in Geneva between the world’s two largest economies, part of the deal <a href="https://www.whitehouse.gov/presidential-actions/2025/05/modifying-reciprocal-tariff-rates-to-reflect-discussions-with-the-peoples-republic-of-china/">included a reduction of the 120% duty imposed from May 2</a> on any parcel from China, including Hong Kong, to 54%. An additional per-parcel fee of $100 will still go into effect May 14 but will not be increased to $200 in June as planned. The trans-Pacific market saw a mass exodus of freighter capacity as e-commerce bookings dried up ahead of the <a href="https://www.joc.com/article/air-cargo-volumes-fall-on-trans-pacific-as-us-de-minimis-changes-loom-5993599">Trump administration’s May 2 elimination of the duty-free exemption for low-value shipments</a>, with many aircraft being switched to Latin American routes. Data from air freight analyst Rotate shows daily average freighter capacity on the China-US corridor has declined 39% since May 2. The tariff impact on demand has been dramatic. Asia-North America air cargo volume is down 20% since the last week of April, at 73,037 tons, while volume on the Asia-Latin America corridor, a much smaller market, grew 23% to 855 tons over the same period, according to Rotate. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="d9092521-9dbe-4569-bade-b3802c73bc98"></dynamic-object></div>Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said the cut in tariffs would be positive for the air cargo business, but warned that finding space could be difficult in the days ahead. “After the last week of April, a lot of orders have been on hold in China for the US market due to the uncertainty,” Liu told the Journal of Commerce. “With this new announcement, a certain percentage of the orders will be released gradually. I believe we will see volume increase for air from China to the US from now on.” <h3>Demand decline pulls down rates </h3>The drop in demand over the past two weeks has dragged down air cargo rates on China-US routes, with the average rate falling 8.8% since late April, according to the Baltic Air Index. Data from rate benchmarking platform Xeneta showed prices have fallen 9% since the May 2 tariffs were imposed. “Approximately 50% of air cargo shipments on the China-US route is low-value e-commerce ... the oxygen was suddenly and dramatically removed from this demand on May 2, and it has shaken the market to its core,” said Niall van de Wouw, chief air freight officer at Xeneta. Rotate’s analysts are expecting “some demand” to return to the China-US air corridor, but it was not clear how strong the demand would be following frontloading ahead of May 2 and the prevailing uncertainty around tariff levels as the US continues negotiations with its trade partners. “Since May 2, some freighters have been parked and some were shifted to other trade lanes,” a Rotate spokesperson told the Journal of Commerce Tuesday. “If demand is there, we will probably see most freighter capacity return to the trans-Pacific.” Ocean carriers are expecting the preliminary China-US trade deal <a href="https://www.joc.com/article/capacity-crunch-beckons-on-eastbound-trans-pacific-after-us-china-deal-6002956">to unleash pent-up demand</a> that has built over the past month, with imports from China quickly filling all available container shipping capacity. In times of severe space constraints in ocean, there is a spillover to air, but considering cost-conscious US importers paused shipments in the first place because of high tariffs, forwarding sources told the Journal of Commerce it was unlikely they would be willing to pay air freight prices. Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

While the reduction in “de minimis” tariffs on Chinese exports to the US is unlikely to spark a surge in demand for air cargo on the trans-Pacific, any increase in demand could tighten capacity and push rates higher given the large numbers of freighter aircraft that have been shifted to other trade lanes. Following weekend trade talks in Geneva between the world’s two largest economies, part of the deal included a reduction of the 120% duty imposed from May 2 on any parcel from China, including Hong Kong, to 54%. An additional per-parcel fee of $100 will still go into effect May 14 but will not be increased to $200 in June as planned. The trans-Pacific market saw a mass exodus of freighter capacity as e-commerce bookings dried up ahead of the Trump administration’s May 2 elimination of the duty-free exemption for low-value shipments , with many aircraft being switched to Latin American routes. Data from air freight analyst Rotate shows daily average freighter capacity on the China-US corridor has declined 39% since May 2. The tariff impact on demand has been dramatic. Asia-North America air cargo volume is down 20% since the last week of April, at 73,037 tons, while volume on the Asia-Latin America corridor, a much smaller market, grew 23% to 855 tons over the same period, according to Rotate. Kathy Liu, vice president of global sales and marketing at Taiwan-based forwarder Dimerco Express Group, said the cut in tariffs would be positive for the air cargo business, but warned that finding space could be difficult in the days ahead. “After the last week of April, a lot of orders have been on hold in China for the US market due to the uncertainty,” Liu told the Journal of Commerce. “With this new announcement, a certain percentage of the orders will be released gradually. I believe we will see volume increase for air from China to the US from now on.” Demand decline pulls down rates The drop in demand over the past two weeks has dragged down air cargo rates on China-US routes, with the average rate falling 8.8% since late April, according to the Baltic Air Index. Data from rate benchmarking platform Xeneta showed prices have fallen 9% since the May 2 tariffs were imposed. “Approximately 50% of air cargo shipments on the China-US route is low-value e-commerce ... the oxygen was suddenly and dramatically removed from this demand on May 2, and it has shaken the market to its core,” said Niall van de Wouw, chief air freight officer at Xeneta. Rotate’s analysts are expecting “some demand” to return to the China-US air corridor, but it was not clear how strong the demand would be following frontloading ahead of May 2 and the prevailing uncertainty around tariff levels as the US continues negotiations with its trade partners. “Since May 2, some freighters have been parked and some were shifted to other trade lanes,” a Rotate spokesperson told the Journal of Commerce Tuesday. “If demand is there, we will probably see most freighter capacity return to the trans-Pacific.” Ocean carriers are expecting the preliminary China-US trade deal to unleash pent-up demand that has built over the past month, with imports from China quickly filling all available container shipping capacity. In times of severe space constraints in ocean, there is a spillover to air, but considering cost-conscious US importers paused shipments in the first place because of high tariffs, forwarding sources told the Journal of Commerce it was unlikely they would be willing to pay air freight prices. Contact Greg Knowler at greg.knowler@spglobal.com .

Air Cargo Forwarder News

Air Cargo Carriers News

Air Cargo

Freighter exodus leaves trans-Pacific air cargo on edge after China-US trade deal

<div class="phx-topic abstract-wrapper">Much of the volume that has been locked up over the past month will come flooding back into the market after Washington and Beijing agreed to significantly slash their respective tariffs for 90 days. </div>

Much of the volume that has been locked up over the past month will come flooding back into the market after Washington and Beijing agreed to significantly slash their respective tariffs for 90 days.

<div class="phx-topic">The eastbound trans-Pacific will likely face insufficient ocean capacity to handle a surge of unlocked shipments from China to the US following the preliminary trade deal announced Monday, resulting in higher spot rates, surcharges and shortages of vessel space and equipment in the coming weeks, forwarders warned. “It’s clear it will be a mad rush to get capacity,” Jason Cook, managing director at Ardent Global Logistics, said. “Customers were already prebooking Friday and [early Monday]. Every day will count this week towards getting the booking plan and anticipated allocations with carriers.” Nerijus Poskus, Flexport’s head of ocean procurement, said: “I think we’re going to have a very significant peak season.” With just over a month having elapsed since the Trump administration slapped 145% tariffs on Beijing, a significant backlog of goods has built up in China, reflected in volumes dropping about 30% in recent weeks, according to Hapag-Lloyd and others. “For the first three weeks of May, 34% of capacity in the trans-Pacific has been taken out through blank sailings and service removals,” Poskus said. Now, much of that volume will come flooding back into the market with the US and China agreeing during weekend talks in Geneva to slash their respective tariffs for 90 days while negotiations continue. The 145% US tariffs will be cut to 30%, while China’s reciprocal 125% tariff on US goods will be lowered to 10%. Those levels are clearly low enough to unleash much of the pent-up demand building over the past month. Indeed, container bookings for imports from China appear to have been strengthening even before the tariff announcement. Bookings jumped 29% last week compared with the week prior, according to maritime visibility provider Vizion and data and analytics company Dun &amp; Bradstreet. “Currently, ships are sailing 85% to 90% full, yet there is a huge backlog and that backlog at some point needs to be shipped,” Poskus said. “So if demand increases more than 10% — and it will — and if carriers put back 10% of capacity, we are at 100%. In other words, full. No space. And carriers have to add capacity such as extra loaders in order for importers to have space.” A space crunch will rapidly develop on the trans-Pacific, as the ships needed to replenish capacity aren’t immediately available, Poskus said. “The issue is a lot of these ships have been deployed on other trade lanes — intra-Asia, Asia to Latin America, etc. They are not just sitting and waiting, so shifting back capacity to the [trans-Pacific] will be not as easy as it seems and will take time,” he said. “There is maybe a ship or two that can be deployed back right away but as for the market as a whole, it will take more than four weeks for any meaningful capacity to be injected back into the TP [trans-Pacific].” Ocean rapidly withdrew capacity and redeployed it to multiple other trade lanes including Asia-Europe, DHL Global Forwarding told customers in its most recent Ocean Freight Market Update. The forwarder warned of “significant equipment and capacity constraints that could lead to increasing rates” in the aftermath of a deal between the US and China. Patrick Fay, CEO and co-founder of forwarder BOC International, said China bookings began surging on Sunday when the US signaled that a deal had been reached even before the specifics on tariff cuts were disclosed. “It is going to take a while to get these blank sailings canceled,” he said. “It will be very tight the next three weeks.” <h3>Port capacity could be overwhelmed </h3>Even before Monday’s announcement, others agreed that a volume surge would develop quickly after any trade deal reached between China and the US. “If a de-escalation was to happen, it is not unlikely that there would be a catch-up effect where, at some point, the situation resolves itself, and then you see a much stronger demand coming out of China,” Maersk CEO Vincent Clerc said on the company’s May 8 earning call. And any surge will potentially overwhelm US port capacity given that, as carrier executives told the recent Georgia Foreign Trade Conference, the system has no greater ability to absorb surge volumes than it did back in 2020. “Right now ... volumes are down [30%-40%] and if that goes up, the sheer surge will test the system and disruption cannot be avoided,” said Charles van der Steene, president of Maersk North America. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div>Other issues will further complicate the post-deal market, empty containers among them, Poskus said. “Carriers have repositioned a lot of empty containers to SE Asia, dropping the empties in Vietnam versus China or not taking them back at all yet,” he said. “That means for at least some carriers in some locations, not the whole market, but ... certain places will start to face empty equipment shortages. “As carriers cancel or reduce capacity, that means empties are not able to be returned to Asia at the same pace as when they were brought into the US a few months earlier,” Poskus added. The result will likely be a classic squeeze lasting several weeks, reminiscent of the aftermath of the post-financial crisis restocking surge the market experienced in early 2010. Spot rates, which currently are hovering near $2,400 to the US West Coast, could surge to multiple times that, while peak season surcharges (PSSs) will be likely be quickly imposed on fixed rate contracts. “If space gets very tight, premium products will be the easiest way to secure additional capacity,” Poskus said. “If your volume is 20 containers a week and you need 25, for the five extra you may need to pay spot market prices plus, possibly, a premium.” Contact Peter Tirschwell at <a href="mailto:peter.tirschwell@spglobal.com">peter.tirschwell@spglobal.com</a>. </div>

The eastbound trans-Pacific will likely face insufficient ocean capacity to handle a surge of unlocked shipments from China to the US following the preliminary trade deal announced Monday, resulting in higher spot rates, surcharges and shortages of vessel space and equipment in the coming weeks, forwarders warned. “It’s clear it will be a mad rush to get capacity,” Jason Cook, managing director at Ardent Global Logistics, said. “Customers were already prebooking Friday and [early Monday]. Every day will count this week towards getting the booking plan and anticipated allocations with carriers.” Nerijus Poskus, Flexport’s head of ocean procurement, said: “I think we’re going to have a very significant peak season.” With just over a month having elapsed since the Trump administration slapped 145% tariffs on Beijing, a significant backlog of goods has built up in China, reflected in volumes dropping about 30% in recent weeks, according to Hapag-Lloyd and others. “For the first three weeks of May, 34% of capacity in the trans-Pacific has been taken out through blank sailings and service removals,” Poskus said. Now, much of that volume will come flooding back into the market with the US and China agreeing during weekend talks in Geneva to slash their respective tariffs for 90 days while negotiations continue. The 145% US tariffs will be cut to 30%, while China’s reciprocal 125% tariff on US goods will be lowered to 10%. Those levels are clearly low enough to unleash much of the pent-up demand building over the past month. Indeed, container bookings for imports from China appear to have been strengthening even before the tariff announcement. Bookings jumped 29% last week compared with the week prior, according to maritime visibility provider Vizion and data and analytics company Dun & Bradstreet. “Currently, ships are sailing 85% to 90% full, yet there is a huge backlog and that backlog at some point needs to be shipped,” Poskus said. “So if demand increases more than 10% — and it will — and if carriers put back 10% of capacity, we are at 100%. In other words, full. No space. And carriers have to add capacity such as extra loaders in order for importers to have space.” A space crunch will rapidly develop on the trans-Pacific, as the ships needed to replenish capacity aren’t immediately available, Poskus said. “The issue is a lot of these ships have been deployed on other trade lanes — intra-Asia, Asia to Latin America, etc. They are not just sitting and waiting, so shifting back capacity to the [trans-Pacific] will be not as easy as it seems and will take time,” he said. “There is maybe a ship or two that can be deployed back right away but as for the market as a whole, it will take more than four weeks for any meaningful capacity to be injected back into the TP [trans-Pacific].” Ocean rapidly withdrew capacity and redeployed it to multiple other trade lanes including Asia-Europe, DHL Global Forwarding told customers in its most recent Ocean Freight Market Update. The forwarder warned of “significant equipment and capacity constraints that could lead to increasing rates” in the aftermath of a deal between the US and China. Patrick Fay, CEO and co-founder of forwarder BOC International, said China bookings began surging on Sunday when the US signaled that a deal had been reached even before the specifics on tariff cuts were disclosed. “It is going to take a while to get these blank sailings canceled,” he said. “It will be very tight the next three weeks.” Port capacity could be overwhelmed Even before Monday’s announcement, others agreed that a volume surge would develop quickly after any trade deal reached between China and the US. “If a de-escalation was to happen, it is not unlikely that there would be a catch-up effect where, at some point, the situation resolves itself, and then you see a much stronger demand coming out of China,” Maersk CEO Vincent Clerc said on the company’s May 8 earning call. And any surge will potentially overwhelm US port capacity given that, as carrier executives told the recent Georgia Foreign Trade Conference, the system has no greater ability to absorb surge volumes than it did back in 2020. “Right now ... volumes are down [30%-40%] and if that goes up, the sheer surge will test the system and disruption cannot be avoided,” said Charles van der Steene, president of Maersk North America. Other issues will further complicate the post-deal market, empty containers among them, Poskus said. “Carriers have repositioned a lot of empty containers to SE Asia, dropping the empties in Vietnam versus China or not taking them back at all yet,” he said. “That means for at least some carriers in some locations, not the whole market, but ... certain places will start to face empty equipment shortages. “As carriers cancel or reduce capacity, that means empties are not able to be returned to Asia at the same pace as when they were brought into the US a few months earlier,” Poskus added. The result will likely be a classic squeeze lasting several weeks, reminiscent of the aftermath of the post-financial crisis restocking surge the market experienced in early 2010. Spot rates, which currently are hovering near $2,400 to the US West Coast, could surge to multiple times that, while peak season surcharges (PSSs) will be likely be quickly imposed on fixed rate contracts. “If space gets very tight, premium products will be the easiest way to secure additional capacity,” Poskus said. “If your volume is 20 containers a week and you need 25, for the five extra you may need to pay spot market prices plus, possibly, a premium.” Contact Peter Tirschwell at peter.tirschwell@spglobal.com .

Capacity crunch beckons on eastbound trans-Pacific after US-China deal

<div class="phx-topic abstract-wrapper">The National Retail Federation also warned the negative growth will accelerate, with imports through the summer expected to be at least 20% lower than the corresponding month last year. </div>

The National Retail Federation also warned the negative growth will accelerate, with imports through the summer expected to be at least 20% lower than the corresponding month last year. 

<div class="phx-topic">US imports this month will see their first year-over-year decline in more than a year and a half as the “true impact” of the Trump administration’s tariffs come to fruition, a major retail group said Friday. The National Retail Federation (NRF) also warned the negative growth will accelerate, with imports from June through September expected to be at least 20% lower than the corresponding month last year.  “We are starting to see the true impact of President Trump’s tariffs on the supply chain,” Jonathan Gold, NRF’s vice president for Supply Chain and Customs Policy, said in the group’s newly released Global Port Tracker (GPT) published with Hackett Associates. Gold said the US tariffs will result in “higher costs for businesses as well as reduced cargo volumes.”  “In the end, these tariffs will affect consumers in the form of higher prices and less availability on store shelves,” he said.  That less availability will begin in May, with projected imports of 1.81 million TEUs down almost 13% from May 2024 and the first year-over-year drop in imports in 19 months, according to the GPT. Imports for June through September are projected to see year-over-year declines of 20.2%, 23.4%, 21.5% and 21.2%, respectively. Expected June imports of 1.71 million TEUs would be the lowest for any month since March 2023, the GPT said. Tariff impacts Tariffs implemented by President Donald Trump in April “come at the most important time in the buying process” for retailers, said Gold, adding that many retailers are being forced to delay or cancel orders — with small retailers being especially impacted. With a pre-tariff rush of imports that appears to have largely ended in January, the ratio of US retail inventories to sales, a barometer of inventory balance, was unchanged in February, at 1.31, according to US Census Bureau data. Amid US importers increasingly canceling or suspending orders, ocean carriers are making capacity adjustments in the form of <a href="https://www.joc.com/article/msc-suspends-two-us-services-rejigs-others-as-tariffs-hit-chinese-imports-6000649">suspended services</a> and blanked sailings. “Container carriers are indeed dropping voyages and consolidating cargo and service to ensure that their vessels are as full as possible and to maintain economies of scale as demand declines,” said Ben Hackett, founder of Hackett Associates.  While carriers have begun to suspend services on the trans-Pacific, Hackett added that reports of a “broken” supply chain and ships “making U-turns in mid-voyage” because of the tariffs are “very far from the truth and the reality on the ground.” The GPT expects 12.13 million TEUs in US imports for the first half of 2025, up just 0.3% on the year and a significant downgrade from the 5.7% growth that was forecast before tariffs were implemented. The GPT is published monthly using import data collected from 13 ports on the US East, West and Gulf coasts. Contact Laura Robb at <a href="">Laura.Robb@spglobal.com</a>.  </div>

US imports this month will see their first year-over-year decline in more than a year and a half as the “true impact” of the Trump administration’s tariffs come to fruition, a major retail group said Friday. The National Retail Federation (NRF) also warned the negative growth will accelerate, with imports from June through September expected to be at least 20% lower than the corresponding month last year.  “We are starting to see the true impact of President Trump’s tariffs on the supply chain,” Jonathan Gold, NRF’s vice president for Supply Chain and Customs Policy, said in the group’s newly released Global Port Tracker (GPT) published with Hackett Associates. Gold said the US tariffs will result in “higher costs for businesses as well as reduced cargo volumes.”  “In the end, these tariffs will affect consumers in the form of higher prices and less availability on store shelves,” he said.  That less availability will begin in May, with projected imports of 1.81 million TEUs down almost 13% from May 2024 and the first year-over-year drop in imports in 19 months, according to the GPT. Imports for June through September are projected to see year-over-year declines of 20.2%, 23.4%, 21.5% and 21.2%, respectively. Expected June imports of 1.71 million TEUs would be the lowest for any month since March 2023, the GPT said. Tariff impacts Tariffs implemented by President Donald Trump in April “come at the most important time in the buying process” for retailers, said Gold, adding that many retailers are being forced to delay or cancel orders — with small retailers being especially impacted. With a pre-tariff rush of imports that appears to have largely ended in January, the ratio of US retail inventories to sales, a barometer of inventory balance, was unchanged in February, at 1.31, according to US Census Bureau data. Amid US importers increasingly canceling or suspending orders, ocean carriers are making capacity adjustments in the form of suspended services and blanked sailings. “Container carriers are indeed dropping voyages and consolidating cargo and service to ensure that their vessels are as full as possible and to maintain economies of scale as demand declines,” said Ben Hackett, founder of Hackett Associates.  While carriers have begun to suspend services on the trans-Pacific, Hackett added that reports of a “broken” supply chain and ships “making U-turns in mid-voyage” because of the tariffs are “very far from the truth and the reality on the ground.” The GPT expects 12.13 million TEUs in US imports for the first half of 2025, up just 0.3% on the year and a significant downgrade from the 5.7% growth that was forecast before tariffs were implemented. The GPT is published monthly using import data collected from 13 ports on the US East, West and Gulf coasts. Contact Laura Robb at Laura.Robb@spglobal.com . 

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US retailers project first year-over-year import cut in 19 months as tariffs bite

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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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<div class="phx-topic abstract-wrapper">A request for industry comment on trucking regulations that could be modified or ended generated 896 responses in one month, with electronic logging devices and hours of service rules at the top of the list.</div>

A request for industry comment on trucking regulations that could be modified or ended generated 896 responses in one month, with electronic logging devices and hours of service rules at the top of the list.

<div class="phx-topic">If the Trump administration wants to deregulate trucking, it will find no lack of suggestions where to start. Comments on a Department of Transportation (DOT) request for information on rules that could or should be modified or replaced drew 896 comments in one month from industry organizations, state transportation officials, businesses and individuals. The comment period closed this week, and the list of regulations the respondents want amended or eliminated is long. Many of those responding were independent truckers. In particular, they targeted proposed mandates that would require speed limiting devices on truck engines and automatic emergency brakes (AEB) in heavy trucks, truck driver hours of service (HOS) rules, the electronic logging device (ELD) mandate and more. Those proposals and rules have been controversial since their inception. The current HOS rules and the ELD mandate were issued during the first Trump administration. It may be easier for regulators to drop or postpone pending regulations, such as a proposed requirement that trucks be equipped with speed limiters, than to rewrite existing rules such as the ELD mandate and HOS regulations. Many of the requests regarding those rules echo debates with prior administrations. Proposals that would mandate speed limiters were issued in 2016 under the Obama administration and then under the Biden White House in 2022. That last proposal remains active but has not advanced to a final rulemaking. The ELD mandate, implemented in late 2017, reshaped trucking, making it much more difficult to evade HOS limits. Many comments from truck drivers simply suggested some variant of ending the use of electronic logs and going back to paper logs. The request for information and the flood of responses are part of the Trump administration’s effort to identify and cut rules it considers unconstitutional, unlawful, unauthorized and unnecessarily burdensome. But respondents also called for new regulation that would help deter cargo crime and fraud. The National Association of Small Trucking Companies (NASTC) called for a permanent freight fraud enforcement task force with the DOT Office of the Inspector General. “This task force should be solely tasked with enforcing laws against fraud in transportation by investigating incidents and developing cases to bring to the Department of Justice,” the NASTC said in its comments. The organization also wants the Federal Motor Carrier Safety Administration to “diligently maintain” its National Consumer Complaint Database to fight fraud cases. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>.</div>

If the Trump administration wants to deregulate trucking, it will find no lack of suggestions where to start. Comments on a Department of Transportation (DOT) request for information on rules that could or should be modified or replaced drew 896 comments in one month from industry organizations, state transportation officials, businesses and individuals. The comment period closed this week, and the list of regulations the respondents want amended or eliminated is long. Many of those responding were independent truckers. In particular, they targeted proposed mandates that would require speed limiting devices on truck engines and automatic emergency brakes (AEB) in heavy trucks, truck driver hours of service (HOS) rules, the electronic logging device (ELD) mandate and more. Those proposals and rules have been controversial since their inception. The current HOS rules and the ELD mandate were issued during the first Trump administration. It may be easier for regulators to drop or postpone pending regulations, such as a proposed requirement that trucks be equipped with speed limiters, than to rewrite existing rules such as the ELD mandate and HOS regulations. Many of the requests regarding those rules echo debates with prior administrations. Proposals that would mandate speed limiters were issued in 2016 under the Obama administration and then under the Biden White House in 2022. That last proposal remains active but has not advanced to a final rulemaking. The ELD mandate, implemented in late 2017, reshaped trucking, making it much more difficult to evade HOS limits. Many comments from truck drivers simply suggested some variant of ending the use of electronic logs and going back to paper logs. The request for information and the flood of responses are part of the Trump administration’s effort to identify and cut rules it considers unconstitutional, unlawful, unauthorized and unnecessarily burdensome. But respondents also called for new regulation that would help deter cargo crime and fraud. The National Association of Small Trucking Companies (NASTC) called for a permanent freight fraud enforcement task force with the DOT Office of the Inspector General. “This task force should be solely tasked with enforcing laws against fraud in transportation by investigating incidents and developing cases to bring to the Department of Justice,” the NASTC said in its comments. The organization also wants the Federal Motor Carrier Safety Administration to “diligently maintain” its National Consumer Complaint Database to fight fraud cases. Contact William B. Cassidy at bill.cassidy@spglobal.com .

Trucking News

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Truckers send Trump administration long list of rules to rewrite or kill

<div class="phx-topic abstract-wrapper">With a “reintroduced” ground freight shipping option, UPS hopes to tempt LTL shippers seeking alternatives to LTL rates that are up 12% on average from mid-2023. </div>

With a “reintroduced” ground freight shipping option, UPS hopes to tempt LTL shippers seeking alternatives to LTL rates that are up 12% on average from mid-2023.

<div class="phx-topic">UPS no longer owns a less-than-truckload (LTL) subsidiary, but that doesn’t mean it’s lost all interest in LTL freight. The largest US package carrier has “reintroduced” UPS Ground with Freight Pricing, a service option that targets shipments weighing more than 150 pounds typically hauled by LTL carriers as part of a palletized shipment. “This positions us to be the only small package carrier that offers parcel-like pricing for less-than-truckload shipments, which is a true differentiator,” Carol B. Tomé, UPS CEO, said in a first-quarter earnings call last Tuesday. UPS’ major small package competitor, FedEx, owns its own LTL carrier, although it plans to spin off FedEx Freight in 2026. The service is being revived by UPS at a time when LTL shipping costs are rising, with the US long-distance LTL producer price index (PPI) up 5.5% year over year in March and 6% on average in the first quarter. Overall, the selling prices the PPI represents have climbed 12.1% since Yellow, once one of the largest LTL carriers, collapsed in July 2023. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="397d0614-9019-449a-8ca0-64a882efbfbf"></dynamic-object></div>As LTL prices rise, shippers show more interest in alternative modes and shipping options. “We see customers choosing other options in certain instances when we’re taking rate increases,” Matthew J. Batteh, CFO of LTL carrier Saia, said in an earnings call last week. “Customers always challenge the pricing increases that we propose.” With excess truckload capacity available and truckload rates still climbing out of the trough they entered in 2023, some shippers have tried to consolidate LTL shipments into truckloads. But parcel and package shippers have long vied for LTL freight through hundredweight programs and other options similar to ground freight pricing. “They’re bringing back LPL or less-than-pallet load, which they used to have before they bought the LTL business [UPS Freight, sold in 2021],” said Satish Jindel, president of research firm SJ Consulting Group, which covers both LTL and parcel business. “They’re looking for shipments that are higher revenue per parcel.” UPS believes it can move those shipments at a better rate for shippers than an LTL carrier. Boxes, shrink-wrapped together on a pallet, are at the core of LTL volumes, Jindel said. “Shipments under 250 pounds represent 25% of total LTL volumes, and under 500 pounds 45% of the total. Those shipments could be sitting ducks for UPS, depending on how they go after them. They don’t want the pallets, just the nice brown boxes.” UPS sold UPS Freight, now TForce Freight, to <a href="https://www.joc.com/article/ups-freight-sold-to-canadas-tfi-for-800-million-5250895">TFI International for $800 million</a>. Under the 2021 sale agreement, TFI agreed to continue to utilize UPS’ domestic package network to fulfill shipments for five years. <h3>UPS, Amazon shifting freight </h3>UPS is also looking to bolster US domestic package volume, which fell 3.5% year over year in the first quarter. Ground package volume dropped 2.5% in the quarter, while volumes moving through its deferred service fell 17.3% from a year ago. That countered a 7.1% increase in international package volume, pulling UPS’ total volume down 1.9%. Some of the decline came from UPS’ reduced reliance on Amazon, which UPS calls a “glide-down” in volume. The company said it would close 73 facilities and <a href="https://www.reuters.com/markets/us/ups-reports-fall-first-quarter-revenue-2025-04-29/">cut 20,000 jobs</a> as part of that reduction. UPS plans to reduce its Amazon volume by 50% by 2026, largely by dropping unprofitable shipments from Amazon fulfillment centers. “The Amazon volume we plan to keep is profitable and it is healthy volume,” Tomé said. UPS first announced the revival of the ground freight pricing offering in early April, alongside UPS Ground Saver, a business-to-consumer shipping option that offers a slower, economy version of UPS ground package service for less urgent packages. Coincidentally, the announcement came the same day Amazon launched its foray <a href="https://www.joc.com/article/amazon-ltl-offering-is-no-threat-to-standalone-carriers-odfl-5990215">into the LTL business</a>. Contact William B. Cassidy at <a href="mailto:bill.cassidy@spglobal.com">bill.cassidy@spglobal.com</a>. Journal of Commerce Research Analyst Cathy Morrow Roberson contributed to this report. </div>

UPS no longer owns a less-than-truckload (LTL) subsidiary, but that doesn’t mean it’s lost all interest in LTL freight. The largest US package carrier has “reintroduced” UPS Ground with Freight Pricing, a service option that targets shipments weighing more than 150 pounds typically hauled by LTL carriers as part of a palletized shipment. “This positions us to be the only small package carrier that offers parcel-like pricing for less-than-truckload shipments, which is a true differentiator,” Carol B. Tomé, UPS CEO, said in a first-quarter earnings call last Tuesday. UPS’ major small package competitor, FedEx, owns its own LTL carrier, although it plans to spin off FedEx Freight in 2026. The service is being revived by UPS at a time when LTL shipping costs are rising, with the US long-distance LTL producer price index (PPI) up 5.5% year over year in March and 6% on average in the first quarter. Overall, the selling prices the PPI represents have climbed 12.1% since Yellow, once one of the largest LTL carriers, collapsed in July 2023. As LTL prices rise, shippers show more interest in alternative modes and shipping options. “We see customers choosing other options in certain instances when we’re taking rate increases,” Matthew J. Batteh, CFO of LTL carrier Saia, said in an earnings call last week. “Customers always challenge the pricing increases that we propose.” With excess truckload capacity available and truckload rates still climbing out of the trough they entered in 2023, some shippers have tried to consolidate LTL shipments into truckloads. But parcel and package shippers have long vied for LTL freight through hundredweight programs and other options similar to ground freight pricing. “They’re bringing back LPL or less-than-pallet load, which they used to have before they bought the LTL business [UPS Freight, sold in 2021],” said Satish Jindel, president of research firm SJ Consulting Group, which covers both LTL and parcel business. “They’re looking for shipments that are higher revenue per parcel.” UPS believes it can move those shipments at a better rate for shippers than an LTL carrier. Boxes, shrink-wrapped together on a pallet, are at the core of LTL volumes, Jindel said. “Shipments under 250 pounds represent 25% of total LTL volumes, and under 500 pounds 45% of the total. Those shipments could be sitting ducks for UPS, depending on how they go after them. They don’t want the pallets, just the nice brown boxes.” UPS sold UPS Freight, now TForce Freight, to TFI International for $800 million . Under the 2021 sale agreement, TFI agreed to continue to utilize UPS’ domestic package network to fulfill shipments for five years. UPS, Amazon shifting freight UPS is also looking to bolster US domestic package volume, which fell 3.5% year over year in the first quarter. Ground package volume dropped 2.5% in the quarter, while volumes moving through its deferred service fell 17.3% from a year ago. That countered a 7.1% increase in international package volume, pulling UPS’ total volume down 1.9%. Some of the decline came from UPS’ reduced reliance on Amazon, which UPS calls a “glide-down” in volume. The company said it would close 73 facilities and cut 20,000 jobs as part of that reduction. UPS plans to reduce its Amazon volume by 50% by 2026, largely by dropping unprofitable shipments from Amazon fulfillment centers. “The Amazon volume we plan to keep is profitable and it is healthy volume,” Tomé said. UPS first announced the revival of the ground freight pricing offering in early April, alongside UPS Ground Saver, a business-to-consumer shipping option that offers a slower, economy version of UPS ground package service for less urgent packages. Coincidentally, the announcement came the same day Amazon launched its foray into the LTL business . Contact William B. Cassidy at bill.cassidy@spglobal.com . Journal of Commerce Research Analyst Cathy Morrow Roberson contributed to this report.

UPS seeks reentry into LTL space as LTL costs climb higher

<div class="phx-topic abstract-wrapper">Rates are climbing quickly amid fresh Chinese volumes headed to the US, with an expected crunch in vessel capacity and the potential for port congestion driving the gains.  </div>

Rates are climbing quickly amid fresh Chinese volumes headed to the US, with an expected crunch in vessel capacity and the potential for port congestion driving the gains. 

<div class="phx-topic">Spot rates in the eastbound trans-Pacific are on a rapid rise as stakeholders on the trade lane expect a significant increase in cargo on the water in the wake of the <a href="https://www.joc.com/article/capacity-crunch-beckons-on-eastbound-trans-pacific-after-us-china-deal-6002956">preliminary tariff deal agreed to last weekend between the US and China</a>.  While various pricing indexes have yet to reflect the post-deal jump in rates, forwarder sources say they are seeing May 15 general rate increases (GRIs) of about $1,000 for both the US West and East coasts, with an expected <a href="https://www.joc.com/article/capacity-crunch-beckons-on-eastbound-trans-pacific-after-us-china-deal-6002956">crunch in vessel capacity</a> and the potential for port congestion driving the gains.  “We know that a lot of capacity has come out and there’s going to be a tremendous amount of volume that has to move,” said Rachel Shames, vice president of procurement and pricing at CV International. “No one knows how much, but we know it’s going to strain the system. The question is: How high will rates go?” In addition to the $1,000 GRIs carriers are due to implement this week, sources say an additional hike of $1,000 to $3,000 per FEU could be on tap for June 1. And several forwarders who spoke to the Journal of Commerce said shippers already need to book at $6,000 per FEU or above to guarantee space. In a research note Wednesday, analysts at Jefferies said Asia-West Coast spot rates are now being quoted at $3,000 per FEU, with East Coast rates at $4,000/FEU. Just how far rates could rise depends in large part on volumes, as not all observers are ready to categorize the coming flush of imports as a sustained surge. “It is too early to gauge whether this week’s volume surge is a simple return of normal volumes, a pull forward of demand, or an early start to peak season,” Jefferies said. “As of now though, spot rates are likely to continue gaining given limited vessel capacity near term.” Platts, a sister company of the Journal of Commerce within S&amp;P Global, shows North Asia to West Coast rates at $2,500 per FEU as of Wednesday, up $700 from a month ago. East Coast rates were at $3,500/FEU, up $500 month over month. But in the early days of a rapidly moving market, pricing indexes have yet to catch up to actual rate levels. A source at a non-vessel-operating common carrier (NVO) said he is rescinding quotes made to clients in April, unable to honor the initial offers in the new market environment. That same source saw bookings increase by about 200% this week. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="e7a65aab-9aac-4f07-9b74-1793746c01ef"></dynamic-object></div><h3>Carrier moves </h3>An unbalanced supply and demand dynamic is fostering a hospitable environment for the rate hikes after carriers reduced capacity on the trans-Pacific in response to canceled bookings out of China in April in the aftermath of the US tariffs slapped on Beijing. On Wednesday, <a href="https://www.joc.com/article/china-us-ocean-bookings-surge-since-weekend-trade-deal-hapag-lloyd-6004653">Hapag-Lloyd reported an increase of more than 50%</a> in China-US bookings since the preliminary trade deal was signed over the weekend, also noting double-digit increases compared with pre-tariff cargo volumes — likely exacerbated by cargo held in China since early April. CEO Rolf Habben Jensen said the carrier expects “a surge in volume in the upcoming 60 or 90 days.” “But beyond that it is very difficult to predict and will depend on what kind of [trade] agreements will be closed between the US and other countries,” he said. Hapag-Lloyd and Gemini Cooperation partner Maersk each said they had swapped out large vessels for smaller ships on the eastbound trans-Pacific due to the decreased volumes but will reinstate the larger vessels now that demand has rebounded. “Over the next 90 days, there’s clearly going to be pent up supply that sits in China that needs to be reintroduced to the supply chain and [be brought to the US],” Charles van der Steene, president of Maersk North America, <a href="https://www.cnbc.com/video/2025/05/14/were-ready-to-reintroduce-capacity-on-the-trade-out-of-china-says-maersks-charles-van-der-steene.html">told CNBC</a>. “To bring capacity back in for vessels that have been redeployed elsewhere will be more difficult.” While the most prominent carriers operating on the trade lane are working to undo capacity reductions, several forwarder and shipper sources expect opportunistic behavior from some of the more agile carriers. “Big carriers, which reasonably anticipated continued import reductions and announced repositions [and] service suspensions ... will need to reverse course to take advantage of the coming import demand,” Peter Friedmann, executive director of the Agriculture Transportation Coalition, told the Journal of Commerce. “Some of the smaller, nimble carriers that jumped in during the COVID crisis will jump in now.” <h3>Added concerns </h3>As bookings climb and the market faces an increasingly significant capacity imbalance, stakeholders are concerned about the longer-term impacts of the changes, such as port congestion, equipment availability and manufacturing delays. Forwarder sources say West Coast ports will be particularly appealing for shippers due to the lower transit times from Asia and the uncertainty around what will happen after the 90-day cooling off period between Washington and Beijing ends. “It’s all about when you can clear customs, and obviously that is much faster on the West Coast because the ships arrive much earlier,” said Stephen Nothdurft, vice president of North American sales at forwarder MOL Consolidation Service. “You can get three ships cleared [if you ship to the] West Coast before one even gets to the East Coast. I don’t know that people are abandoning the East Coast loaders, per se, but having cargo on the shortest transit possible [is important to importers].” And while orders are increasing, manufacturing delays as some factories in China ramp back up to full speed could slow some US importers down, causing concerns within the 90-day deadline to take advantage of the reduced tariffs. Several importers reported factory closures in China as demand waned, and manufacturers will likely need some runway to reach traditional output levels. Forwarder and shipper sources are reporting some manufacturing delays of several weeks to a month. Meanwhile, fresh data from PIERS, a sister product of the Journal of Commerce within S&amp;P Global, shows that US imports from Asia and China specifically rose in April, likely reflecting the last rush of boats on the water ahead of the April 9 implementation of new tariffs. <div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="4ed96169-fa34-4b46-81e8-b67860854e39"></dynamic-object></div>US imports from Asia last month rose to 1.59 million TEUs, up 3.9% from 1.53 million TEUs in March and up 14.5% from April 2024. US imports from China were at 849,390 TEUs, up 5.8% from 802,570 TEUs in March and 12.3% higher than a year ago. Contact Laura Robb at <a href="mailto:Laura.Robb@spglobal.com">laura.robb@spglobal.com</a>.  Senior Editor Bill Mongelluzzo contributed to this report.</div>

Spot rates in the eastbound trans-Pacific are on a rapid rise as stakeholders on the trade lane expect a significant increase in cargo on the water in the wake of the preliminary tariff deal agreed to last weekend between the US and China .  While various pricing indexes have yet to reflect the post-deal jump in rates, forwarder sources say they are seeing May 15 general rate increases (GRIs) of about $1,000 for both the US West and East coasts, with an expected crunch in vessel capacity and the potential for port congestion driving the gains.  “We know that a lot of capacity has come out and there’s going to be a tremendous amount of volume that has to move,” said Rachel Shames, vice president of procurement and pricing at CV International. “No one knows how much, but we know it’s going to strain the system. The question is: How high will rates go?” In addition to the $1,000 GRIs carriers are due to implement this week, sources say an additional hike of $1,000 to $3,000 per FEU could be on tap for June 1. And several forwarders who spoke to the Journal of Commerce said shippers already need to book at $6,000 per FEU or above to guarantee space. In a research note Wednesday, analysts at Jefferies said Asia-West Coast spot rates are now being quoted at $3,000 per FEU, with East Coast rates at $4,000/FEU. Just how far rates could rise depends in large part on volumes, as not all observers are ready to categorize the coming flush of imports as a sustained surge. “It is too early to gauge whether this week’s volume surge is a simple return of normal volumes, a pull forward of demand, or an early start to peak season,” Jefferies said. “As of now though, spot rates are likely to continue gaining given limited vessel capacity near term.” Platts, a sister company of the Journal of Commerce within S&P Global, shows North Asia to West Coast rates at $2,500 per FEU as of Wednesday, up $700 from a month ago. East Coast rates were at $3,500/FEU, up $500 month over month. But in the early days of a rapidly moving market, pricing indexes have yet to catch up to actual rate levels. A source at a non-vessel-operating common carrier (NVO) said he is rescinding quotes made to clients in April, unable to honor the initial offers in the new market environment. That same source saw bookings increase by about 200% this week. Carrier moves An unbalanced supply and demand dynamic is fostering a hospitable environment for the rate hikes after carriers reduced capacity on the trans-Pacific in response to canceled bookings out of China in April in the aftermath of the US tariffs slapped on Beijing. On Wednesday, Hapag-Lloyd reported an increase of more than 50% in China-US bookings since the preliminary trade deal was signed over the weekend, also noting double-digit increases compared with pre-tariff cargo volumes — likely exacerbated by cargo held in China since early April. CEO Rolf Habben Jensen said the carrier expects “a surge in volume in the upcoming 60 or 90 days.” “But beyond that it is very difficult to predict and will depend on what kind of [trade] agreements will be closed between the US and other countries,” he said. Hapag-Lloyd and Gemini Cooperation partner Maersk each said they had swapped out large vessels for smaller ships on the eastbound trans-Pacific due to the decreased volumes but will reinstate the larger vessels now that demand has rebounded. “Over the next 90 days, there’s clearly going to be pent up supply that sits in China that needs to be reintroduced to the supply chain and [be brought to the US],” Charles van der Steene, president of Maersk North America, told CNBC . “To bring capacity back in for vessels that have been redeployed elsewhere will be more difficult.” While the most prominent carriers operating on the trade lane are working to undo capacity reductions, several forwarder and shipper sources expect opportunistic behavior from some of the more agile carriers. “Big carriers, which reasonably anticipated continued import reductions and announced repositions [and] service suspensions ... will need to reverse course to take advantage of the coming import demand,” Peter Friedmann, executive director of the Agriculture Transportation Coalition, told the Journal of Commerce. “Some of the smaller, nimble carriers that jumped in during the COVID crisis will jump in now.” Added concerns As bookings climb and the market faces an increasingly significant capacity imbalance, stakeholders are concerned about the longer-term impacts of the changes, such as port congestion, equipment availability and manufacturing delays. Forwarder sources say West Coast ports will be particularly appealing for shippers due to the lower transit times from Asia and the uncertainty around what will happen after the 90-day cooling off period between Washington and Beijing ends. “It’s all about when you can clear customs, and obviously that is much faster on the West Coast because the ships arrive much earlier,” said Stephen Nothdurft, vice president of North American sales at forwarder MOL Consolidation Service. “You can get three ships cleared [if you ship to the] West Coast before one even gets to the East Coast. I don’t know that people are abandoning the East Coast loaders, per se, but having cargo on the shortest transit possible [is important to importers].” And while orders are increasing, manufacturing delays as some factories in China ramp back up to full speed could slow some US importers down, causing concerns within the 90-day deadline to take advantage of the reduced tariffs. Several importers reported factory closures in China as demand waned, and manufacturers will likely need some runway to reach traditional output levels. Forwarder and shipper sources are reporting some manufacturing delays of several weeks to a month. Meanwhile, fresh data from PIERS, a sister product of the Journal of Commerce within S&P Global, shows that US imports from Asia and China specifically rose in April, likely reflecting the last rush of boats on the water ahead of the April 9 implementation of new tariffs. US imports from Asia last month rose to 1.59 million TEUs, up 3.9% from 1.53 million TEUs in March and up 14.5% from April 2024. US imports from China were at 849,390 TEUs, up 5.8% from 802,570 TEUs in March and 12.3% higher than a year ago. Contact Laura Robb at laura.robb@spglobal.com .  Senior Editor Bill Mongelluzzo contributed to this report.