Freight rates stable for now, but long-term ocean and air cargo impact likely, as per Peter Sand, Chief Analyst at Xeneta
The newly announced reciprocal tariffs by former US President Donald Trump on ‘Liberation Day’ have introduced uncertainty for shippers, but analysts believe they will not cause an immediate spike in freight rates. However, long-term disruptions in ocean supply chains and upward pressure on rates remain a possibility.
Peter Sand, chief analyst at Xeneta, highlighted that the timing is particularly difficult for US shippers, who are finalising long-term ocean freight contracts set to take effect on May 1. “Many are now unsure where they will be importing goods from in the next 12 months and which carriers to choose,” he said.
While tariffs will raise the landed cost of imports, ocean container spot rates have been on a downward trend since January 1, and Sand expects this to continue in the short term. Although Far East-to-US spot rates saw an 8% rise for the East Coast and a 15% increase for the West Coast on April 1, they remain 43% and 49% lower than January levels, respectively.
Similarly, air cargo rates are not expected to see immediate hikes. Niall van de Wouw, Chief Airfreight Officer at Xeneta, noted that while rates from China and Europe to the US increased in late March, they remain below peak levels. He warned that tariffs could ultimately reduce demand for US exports if anti-US sentiment grows in affected regions.
A more significant risk, van de Wouw added, comes from proposed fees on Chinese ships and carriers entering US ports. “If congestion in ocean freight forces more goods into air cargo, we could see major implications, as was the case during Covid-19 and the Red Sea crisis.”
With the summer airline schedules set to increase cargo capacity, downward pressure on rates could continue unless trade disruptions force a shift from ocean to air transport.
Source: Exim News
