SHIPPING: Asia-US container rates surge on frontloading during tariff pause

HOUSTON (ICIS)–Asia-US container rates surged this week as trade between the US and China is expected to surge amid the 90-pause on reciprocal tariffs between the two nations.

Rates from online freight shipping marketplace and platform provider Freightos showed minimal increases in the low-single digits, but rates from supply chain advisors Drewry showed significant increases of 19% from Shanghai to New York and 16% from Shanghai to Los Angeles, as shown in the following chart.

Following the latest US–China trade developments, Drewry expects an increase in Transpacific spot rates in the coming week due to shortage in capacity.

Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said the 90-day pause is expected to lead to a surge of activity, where spot rates will peak and then flatten as carriers redeploy capacity to match demand over the next two to four weeks.

“The US-China announcement on the temporary lowering of tariffs fired the starting gun for shippers to rush as many imports as they can during the 90-day window of opportunity,” Sand said. “There is no time to waste for these shippers and the rush of cargo will put upward pressure on spot rates on Transpacific trades.”

But Sand said that a deeper dive into data shows shippers paying prices towards the market mid-high for rates agreed post the US-China announcement, while legacy agreements struck before 12 May will continue to keep a lid on the bubbling market averages for a short time.

The following chart shows Xeneta’s rates from North China to the US Gulf.

Judah Levine, head of research at Freightos, also expects to see a surge in imports.

“We are likely to see a significant demand rebound in the near term as shippers replenish inventories that may have started to run down in the past month and as many Chinese manufacturers have high levels of finished goods already ready to ship,” Levine said.

With an August deadline for the possible return of higher tariff levels, it is also likely that the near-term ocean demand rebound will mark the start of more frontloading, Levine said.

“If so, it would also mark the early start of this year’s peak season, which could end earlier than usual as well for the same reasons,” Levine said.

TANKER RATES STABLE TO LOWER
US chemical tanker freight rates assessed by ICIS were stable to lower this week with rates for parcels from the US Gulf (USG) to Asia dropping once again.

Rates from the USG to Asia ticked lower both for smaller parcels and larger parcels. Overall, market activity is weaker for most destinations to Asian ports, prompting owners to reposition tonnage to bridge the gap between southeast Asia and northern destinations.

Overall, along this route there is very little quoted, aside from the usual contract of affreightment (COA) volumes there has not been much activity, besides the usual methanol and monoethylene glycol (MEG) cargoes.

From the USG to Brazil, the market COA volumes remain steady as there were some inquiries and much less space is available for May for part cargoes, as COA nominations appear completed for the month.

According to one ship broker, “owners are reporting very limited parcel space available”.

The usual mix of caustic soda and methanol seems to be most visibly seen quoted in the market.

For the USG to Rotterdam, there are some bits of cargo space still available for May.

Most of the outsider vessels that were on berth have already sailed, and only the regulars remain at this time as they push tonnage availability which is all but full.

However, there were steadier quotes styrene, methanol and caustic seen in the market this week for June loadings.

Freight rates are now expected to remain steady for the time being.

With additional reporting by Kevin Callahan

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