The market from Asia to the US remains slow following the Lunar New Year holiday. This season is typically weak after factories close for an extended period, but the impact is more pronounced this year. Ocean carriers have not controlled capacity by blanking sailings as aggressively as they otherwise would. This can be mostly attributed to a desire to have a smooth rollout of the new alliances and service strings, as well as an effort for the new alliances to maintain market share.
Increasing tariffs and uncertainty are certainly a factor in the slower market. Spot rates on Transpacific Eastbound lanes have fallen to levels not seen since early in the Red Sea crisis. Outlooks are murky. Blank sailings are increasing for April, but whether it will be enough to drive rates up is unclear.
Ocean freight contracting season is also underway. Large BCOs are still negotiating contracts; mid-size and small shippers, along with NVOCCs, typically follow. With the spot market weak, there is less momentum to sign contracts by early April, which is usually a target deadline to have contracts and allocations finalized for a May 1 contract start date.
In addition to tariff changes, the proposed USTR 301 fees on vessels built and operated by China are a significant concern. If implemented, these fees would drive up freight costs and congestion for all US ocean services, import and export. They would also likely lead to carriers dropping smaller US port calls to minimize exposure to the per-port call fees. Major pressures on terminal and inland infrastructure would follow, very likely eclipsing the congestion of the pandemic period. USTR is accepting public comments on the proposal until March 24, 2025, when a hearing is scheduled.
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CV International, Inc.