- Tariff Uncertainty Drives Volatility in Global Shipping Markets.
- Shipping Industry Faces Realignment as Trade Policies Tighten.
- Container and Bulk Freight Rates Slide as Markets React to New Tariffs.
Global shipping rates are falling across several segments as revived trade tensions and threatened tariff adjustments between the United States and China redefine worldwide trade flows. Shipping data and industry analysts suggest the current market is causing strategic realignments in cargo movement, vessel deployment, and freight rates, reports S&P Global.
Trade Measures Affect Shipping Demand
In the wake of the recent tariff increases between Washington and Beijing, the United States has imposed duties on most Chinese imports at 145%. As a reaction, China has applied additional tariffs of up to 125% on US imports. These policy changes are affecting shipping choices in all major vessel categories, with demand for container shipments expected to decline once pre-tariff stocking activities ease.
Agricultural and Tanker Trade Flows Undergo Realignment
In the farm sector, Chinese consumers are likely to cut back on US sourcing and turn to alternative suppliers such as Brazil, especially for major commodities like soybeans. Likewise, the tanker market is undergoing seasonal and structural shifts. Refined fuel flows are being diverted from Europe to West Africa, while the US Atlantic Coast experiences declining volumes.
China continues to be one of the most prominent outlets for US exports of propane and ethane at 17.5% and 46%, respectively, during 2024. Such trends, though, might change with new dynamics. Some 4 million metric tons of gasoline will arrive in West Africa on or about April 27—a record two-year level—while exports to the US Atlantic Coast remain at levels usual for this season. China is also seeking alternative outlets to deal with its long-term liquefied natural gas (LNG) supply, such as more than 4 million metric tons per annum in US deals that might have to be resold or swapped by 2025.
Dry Bulk Trade Patterns Evolve
Dry bulk shipping is witnessing significant changes in trade trends. Though US-bound exports of finished aluminium goods continue to remain at 16%, total aluminium exports by China have grown 52% from 2017 to 2024. Other markets like Mexico and Canada are assuming greater importance, with Mexico’s market share growing from 3.8% to 10% and Canada’s from 2.3% to 4%. Several Asian nations like Vietnam, Thailand, and South Korea have also increased their market share.
In the soybean market, Chinese buyers are still arranging purchases from Brazil for May and June, propelled by concerns to diversify supplies in the face of tariff threats.
Container Markets Face Short-Term Rush, Long-Term Caution
Container lines are seeing a rush of pre-tariff import activity into the US, but analysts predict a guarded inventory policy will follow. A.P. Moller-Maersk observed that importers are rushing cargo movement to bypass higher tariffs, while being prudent about upcoming shipments until more policy certainty exists.
In the petrochemical industry, the US is confronted with diminishing demand from major customers such as China. In 2024, there were about 2.7 million metric tons of primary polymer resin shipped by the US to China, yet future shipments may be threatened due to supply chain changes and the rise of emerging alternatives in Asia and Europe.
Freight Rates Reflect Softening Demand
Shipping prices in various segments have fallen due to shifting demand and trade flows. As of April 16, Platts estimated the following:
- The price to transport 66,000 mt of grains on a Panamax ship from Louisiana to Qingdao was $38.50/mt, a 10% drop since the start of April.
- The box rate from North Asia to the US East Coast dropped 11% to $3,100 per forty-foot equivalent unit (FEU).
- The Platts Dry Bulk Index (non-scrubber, TCE basis) fell 28% to $11,986/day.
- The Platts Container Index fell 6% to $2,273/FEU.
- The VLCC Crude Tanker TCE Index fell 6% to $34,677/day.
Infrastructure and Supply Chain Adjustments Underway
Changes in the direction of international trade flows are triggering large-scale infrastructure and supply chain reorientations. The financial effects on US agriculture are estimated to be large, with soybean futures declines reflecting nearly $300 million in value lost for the 2024 crop and potential losses of up to $1.4 billion for the 2025 crop.
In 2023 and 2024, the US received more than 40 million TEUs of containerised exports, over half of which came from China. This highlights the possible threat that changing trade flows pose to US ports and distribution channels. In Europe, surplus petrochemicals production capacity, especially in polyethene, puts the EU in a position to replace US exports, further cutting into US market share.
Proposed Measures on Chinese Maritime Access to US Ports
A recent United States Trade Representative proposal involves docking fees of up to $1 million for Chinese-operated vessels and up to $1.5 million for Chinese-built ships. The fees would be determined by the operator’s fleet mix and future shipbuilding plans with Chinese shipyards. If adopted, these measures would have the potential to affect carrier fleet deployment choices and port call strategies.
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Source: S&P Global
