The international freight market has been adjusting since the April 2nd US reciprocal tariff announcement and subsequent tariff changes. Initially, bookings from most impacted origins dropped significantly. Since the ninety-day postponement of tariff increases for non-China origins was implemented on April 9th, bookings from those origins have largely resumed. Volumes from China are the weakest and most uncertain now; many shippers with sufficient inventory on hand are holding bookings or arranging to pull back.
Uncertainty across trade lanes is making it very difficult for shippers and carriers to plan for the year ahead. In the absence of stability, shippers cannot accurately forecast volumes, and carriers cannot efficiently plan services and capacity. Shippers moving cargo from non-China origins may plan to pull forward volume for the second half of the year and ship it prior to July, which, as of this writing, is the end of the ninety-day reprieve. This could create an early peak season on certain services. Conversely, volumes from China are expected to remain very low while the current high tariffs are in place on most commodities. Ocean carriers will try to balance supply as well as possible, likely omitting China ports, ramping up blank sailings, and perhaps even combining services while the trade war plays out.
Ocean freight contracting season is still underway despite the uncertainty. Carriers are mostly still holding firm on rate increases over last year’s contract rates. Shippers need to be planning and booking May volumes now, and many contracts are likely to be executed in the coming weeks.
A new executive order signed by President Trump, the Maritime Action Plan, aims to prioritize US shipbuilding and generally increase the US presence in international maritime activities. The order also calls for US imports transiting Mexico or Canada ports to be subject to the same 0.125 percent Harbor Maintenance Fee that imports shipping via US ports incur, plus an additional ten percent processing fee.
The USTR proposal to levy hefty fees on Chinese vessels calling US ports is still in play, though the USTR last week acknowledged that adjustments will need to be made to the proposal to protect US exporters from negative competitive impacts.
Industry News
To keep current on the latest market and industry news, please subscribe to our client alerts, or follow us on LinkedIn.
Your CVI team is here to assist you through these current market challenges. Ocean freight, air freight, domestic road/rail, and Customs Compliance – count on our dedicated professionals to care for you and your supply chain. Call us and let us show you what we can do!
Rachel Shames
VP, Pricing & Procurement
CV International, Inc.