Asia-US Ocean Rates Trend Lower, Yet Trump Tariff Threats Cast a Shadow
Trans-Pacific container rates have experienced a noticeable decline in recent weeks as Chinese manufacturing and logistics industries took a pause for the Lunar New Year holiday, which commenced this past Wednesday.
According to the Freightos Baltic Dry Index, rates for the Asia-U.S. West Coast fell by 7%, bringing the cost to $4,938 per forty-foot equivalent unit (FEU) by the week ending January 24. Similarly, Asia-U.S. East Coast prices saw a 1% reduction, now standing at $6,656 per FEU.
The traditional closure of Asian factories and their associated logistics services for the 15-day Lunar New Year period has been a significant factor in these shifts. However, as noted by Judah Levine, head of research for Freightos, current rates remain more than double their 2019 levels despite a 17% dip in Trans-Pacific rates to the West Coast and a 25% decrease in Asia-Europe prices since mid-January. "The continued diversion in the Red Sea is absorbing capacity across the market," Levine commented.
Impact of Tariff Threats
Further complicating the trade landscape are the looming tariff threats from President Donald Trump. Shippers are anticipated to front-load goods, thus maintaining higher ocean volumes and rates through the first quarter of the year and possibly extending into the second quarter. Levine suggests that after these tariffs are introduced, there could be a subsequent decline in volumes and rates.
Current geopolitical tensions remain uncertain, with France's CMA CGM being the only major liner operator continuing regular service via the Suez Canal route. Additional tariff threats, such as those concerning Canada and Mexico, are expected to cause further instability, as potential retaliatory measures from Canada and the European Union could impact U.S. exports.
Upcoming Changes in Ocean Carrier Alliances
February will also see the rollout of new ocean carrier alliances, like Maersk’s and Hapag-Lloyd’s Gemini, which promises a hub-and-spoke model with 90% schedule reliability. Nevertheless, Sea-Intelligence reports global schedule reliability had fallen to 53.8% last December, with delays decreasing but still presenting challenges for carriers.
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