The US-China standoff continues to keep container market sentiment poor with US tariff concessions far from sufficient to restore Transpacific volumes with cargo bookings in the next 3 weeks reported to be down by 30-60% in China and by 10-20% in the rest of Asia. The Labour Day holidays will further dampen cargo demand in May, and could force carriers to cancel additional sailings over the coming weeks in order to stop further freight rate erosion.
Only 3 Transpacific services have been withdrawn so far, with the MSC Mustang and Premier Alliance PN4 both withdrawn even before they were launched while TS Line’s AWC2 deployed small 1,700 teu ships on irregular schedules. These tentative capacity cuts have done little to restore market balance with further turbulence ahead. The gap between charter rates and freight rates remain too wide and has claimed its first casualty with Singapore-based Vasi Shipping initiating insolvency proceedings last week.
Johnson Leung
US tariff concessions insufficient to restore transpacific volumes
The US has announced various exclusions from the high tariffs it announced on 2 April including a 90-days reduction to 10% tariffs on all countries except China, followed by the exclusion for 20 product categories from the 145% tariffs on China and the 10% baseline tariffs from other countries that included smartphones, computers and various electronic devices. Despite these moves to de-escalate the tariff war, an estimated 30% to 40% of transpacific container imports are still effectively halted by the tariffs that remain in place principally affecting carriers with the largest exposure to Chinese transpacific exports to the US. Hede (100%), Matson (90%), SeaLead (82%), TS Lines (80%) and COSCO (71%) are most at risk from the immediate fallout and are still evaluating their responses.
Register Free Trial
Weekly/Monthly Market Pulse: US$1,500/US$1,800 per year