Uncertainty from US tariffs causes a slight rise in Asia-North America ocean rates (West Coast +10% to $2465/FEU). China-US bookings fall as shippers seek alternatives, fearing higher duties. Blank sailings increase.
Ocean container rates on key Asia-to-North-America trade lanes have experienced a notable uptick in the past week, as the ramifications of the Trump administration’s tariff-driven trade strategy ripple through global markets, according to a report from Freightos. This development coincides with emerging signs of a slowdown in ocean cargo bookings originating from China, fuelled by the prevailing trade uncertainty.
Specifically, rates from Asia to the U.S. West Coast surged by 10% week over week, reaching $2,465 per forty-foot equivalent unit (FEU), as indicated in Freightos’ market update on April 16th. Simultaneously, rates to the U.S. East Coast also saw an increase, climbing by 3% to $3,647 per FEU.
Freightos analysts suggest that as shippers navigate the complexities of the evolving trade landscape, the observed pullback in China-to-U.S. cargo volumes, coupled with a strengthening demand on other Asia trade routes, could be indicative of “diverging rates on the port-pair level.”
Dive Insight: Industry data reveals that U.S. importers have been proactively frontloading goods since November in an attempt to outpace anticipated tariffs. The administration’s announcement on April 9th regarding the implementation of country-specific reciprocal tariffs triggered another surge in cargo movement prior to the potential imposition of new duties.
Trade tensions escalated further last week following the U.S.’s decision to significantly hike reciprocal tariffs on goods from China to 125%. This increase effectively means that many imports from China will now face cumulative duties of up to 245% when factoring in all active levies, as outlined in a White House fact sheet.
While the reciprocal tariffs on most other countries are currently under a 90-day pause, Freightos reports that “many of those sourcing from other Asian countries have already started increasing their orders again in an effort to get ahead of possible tariff resumptions in July.”
Gene Seroka, Executive Director of the Port of Los Angeles, confirmed that this early inventory build-up has indeed contributed to robust volumes at the port. In the last quarter, the port handled over 2.5 million total twenty-foot equivalent units (TEUs), marking a 5.2% increase year over year. However, Seroka projects a potential 10% decline in port volumes starting as early as May and continuing through the end of the year.
Adding to the complexity, shipments originating from China are witnessing a rise in blank or voided sailings due to diminished demand, according to Clint Dvorak, Senior Director of Ocean Operations and Customs Brokerage at SEKO Logistics. SEKO, for instance, has already reported 11 cancelled sailings that were originally scheduled for May.
“We are seeing cancelled bookings as well as increased requests for bonded warehouse solutions to hold cargo upon arrival,” Dvorak noted. “There is a concern we may see some abandoned cargo as well, with importers unable or not wanting to pay the increased tariff obligation.”
These shifts in ocean booking patterns are unfolding during the traditional contract negotiation period for Asia-to-U.S. ocean freight contracts, further exacerbating market uncertainty and potentially leading to shipment delays, particularly for cargo originating from China, Dvorak cautioned.
Source: Supply Chain Dive
