Key insights:
1. China-US trade talks are underway in Madrid, with progress on a Tik Tok deal possibly a good sign for broader trade discussions.
2. The NRF projects US ocean imports to fall sharply for the rest of the year, though the 30% China tariff extension may be keeping September volumes stronger than expected before the extension.
3. Transpacific container rates to the West Coast increased slightly last week to $2,309/FEU, and are 34% higher than prices at the end of August. Prices climbed on early month General Rate Increases helped by some pre-Golden Week demand and blanked sailings – and maybe by the 30% China tariff extension too.
4. There’s some speculation that China-US negotiations could mean USTR port call fees won’t materialize. But carriers are shifting vessels to minimize exposure anyway. And these moves may also be putting temporary upward pressure on US rates.
5. Carriers will try mid-month transpac increases too, though demand trends suggest rates are more likely to ease.
6. Asia-Europe ocean rates climbed 2% last week to $2,585/FEU, with Mediterranean prices down 4% to $2,833/FEU. Rates have fallen about $200/FEU for both lanes so far this week, signalling the end of peak season. Despite year on year volume increases though, rates were $3k/FEU higher last year, reflecting the effects of growing capacity.
7. US tariffs on India are leading to falling India-US air cargo demand. Freightos Air Index South Asia – N. America rates have fallen 13% since July to $4.18/kg while prices to Europe have dipped only 2% to $2.92/kg.
8. Ex-China rates were stable overall last week with prices to the US easing 1% to $5.24/kg, and rates to Europe ticking up 3% to $3.64/kg.
Ocean rates – Freightos Baltic Index:
• Asia-US West Coast prices (FBX01 Weekly) increased 7% to $2,309/FEU.
• Asia-US East Coast prices (FBX03 Weekly) increased 4% to $3,368/FEU.
• Asia-N. Europe prices (FBX11 Weekly) increased 2% to $2,585/FEU.
• Asia-Mediterranean prices (FBX13 Weekly) fell 4% to $2,833/FEU.
Analysis
The latest round of China-US trade talks got underway in Madrid this week, with progress on a Tik Tok deal possibly a good sign for broader trade discussions.
The Trump administration extended 30% baseline tariffs on all imports from China for another 90-days a month ago in order to encourage further negotiations. And though the move has not led to a significant surge of transpacific container volumes since, it may have slowed the rate of declining demand.
Frontloaded volumes that arrived ahead of tariff deadlines set for April and again for July and August have come at the expense of the typical strength of H2 US container imports relative to the first half of the year most years. The latest National Retail Federation US ocean import volume report estimates that H2 volumes will be down 10% year on year, with October imports 13% lower than a year ago and November and December volumes 20% lower.
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Source: Ajot
