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As of February 3, 2025, US shippers are bracing for a significant impact on their operations due to the impending 10% tariff hike on imports from China, in addition to massive increases in ocean container freight rates caused by the conflict in the Red Sea.
According to Xeneta, the ocean and air freight intelligence platform, average spot rates from China to the US West Coast have surged 196% to USD 4,816 per FEU (40ft container), while rates to the US East Coast have increased 157% to USD 6,264 per FEU. These rates are expected to continue to rise as the conflict in the Red Sea persists.
Peter Sand, Xeneta's Chief Analyst, warns that US shippers are facing a perfect storm of disruption and spiralling costs, making it challenging for businesses to absorb these costs without increasing prices for end consumers. With over 40% of total containerised imports into the US coming directly from China, this could have a significant impact on many businesses and consumers.
The delay in tariffs on Mexico imports provides some relief, but it does little to alleviate concerns over the potential reigniting of the US-China trade war, which poses a significant risk to the market.
Shippers have limited options to mitigate the tariff threat, and those who haven't taken action yet may struggle to adapt. The possibility of shifting supply chains out of China to nations like India or South East Asia may take time, financial investment, and market data intelligence.
The ceasefire between Israel and Hamas had raised hopes for a better year for shippers in 2025, but Trump's latest move has dented those hopes. Any gains made through lower freight rates will be offset by the 10% increase in tariffs, making the situation even more challenging for US importers.
Sea:
- Over the last two weeks China/East Asia to North America West Coast spot rates have decreased by 17.2% from $5,924/FEU to $4,904/FEU according to Freightos data.
- China/East Asia to North America East Coast spot rates have stayed the same over the last two weeks, at $6,655/FEU.
- Global container spot prices have fallen over the last two weeks, and are now sitting at $3,435/FEU, a 6% decrease over the last two weeks and a 0.35% increase from spot rates this time in 2024 according to the Freightos Baltic Index (FBX)
Air:
- Global Air Freight spot rates currently sit at $2.31, as rates continue to fluctuate according to the Freightos Air Freight Index (FAX)
- Europe to Northern America spot rates currently sit at $2.23 (100-3000kg), says FAX, increasing by 6.7%
- Europe to Asia, Greater China spot rates currently sit at $1.13 (100-3000kg), says FAX, increasing by 5.3%
That’s all for this week’s update…
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