Topic of the week: US-China Trade Tensions Impact Shipping Industry
The ongoing trade tensions between the US and China are having a significant impact on the shipping industry. Hapag-Lloyd, a German container shipping giant, has reported a 30% cancellation in shipments from China to the US, with customers becoming increasingly cautious due to the intensifying trade conflict. As a result, the company is delaying services between China and the US.
The US National Retail Federation (NRF) has voiced opposition to the tariffs, citing concerns about consumer confidence, financial markets, and rising prices. The NRF has called on its members to write to Congress, highlighting the negative impact of the tariffs on American businesses and consumers. The tariffs, imposed by former US President Donald Trump, have triggered a tit-for-tat escalation, with American duties on Chinese goods reaching up to 145% and Chinese duties on US products climbing to 125%.
The market implications of the trade tensions are evident in the performance of shipping stocks. Shares of US-flag container carrier Matson Inc. have dropped nearly 30% from a 52-week high, due to its heavy exposure to domestic trade and uncertainty surrounding US trade policy. In contrast, global peers such as Maersk, OOIL, and Hapag-Lloyd have seen more modest declines, as they operate more diversified global routes.
There are indications that the US may consider a policy pivot on tariffs, with reports suggesting that tariffs on Chinese goods could be cut to 50-60%. However, uncertainty remains high, and decisions appear to be made on an ad hoc basis. Matson Inc. is set to report its Q1 2025 results on May 5, which are expected to provide insight into the performance of its services involving China under current trade conditions.
Overall, the ongoing trade tensions between the US and China are creating uncertainty and volatility in the shipping industry, with carriers and investors closely watching for any signs of a policy pivot. The situation remains fluid, and market participants are advised to stay informed about any developments that may impact trade policies and shipping operations.
Sea:
- Over the last two weeks China/East Asia to North America West Coast spot rates have increased by 4.27% from $2,246/FEU to $2,342/FEU according to Freightos data.
- China/East Asia to North America East Coast spot rates have fallen over the last two weeks, decreasing by 2.1% to $3,466/FEU.
- Global container spot prices have risen over the last two weeks, and are now sitting at $2,031/FEU, a 0.19% increase over the last two weeks and a 14.6% decrease from spot rates this time in 2024 according to the Freightos Baltic Index (FBX)
Air:
- Global Air Freight spot rates currently sit at $2.27, as rates continue to fluctuate according to the Freightos Air Freight Index (FAX)
- Europe to Northern America spot rates currently sit at $2.11 (100-3000kg), says FAX, decreasing by 5.8%
- Europe to Asia, Greater China spot rates currently sit at $1.2 (100-3000kg), says FAX, increasing by 1.69%
That’s all for this week’s update…
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