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US Tariffs and Global Disruptions: What’s Driving the Surge in Freight Rates?

Maggie Johnson

By Maggie Johnson

December 8, 2024

Image Credit: “No One Knows What Will Happen with the ILA Port Disruption-Universal Cargo,” available at Yahoo Images (12/08/2024).


Analysts are predicting a surge in freight rates on the Pacific, although the expected increase in rates to the US is not likely to materialize as anticipated. With volumes already at high levels and the market remaining tight, the surge in freight to the US may not occur. However, higher rates are expected over the next two to three months due to anticipated disruptions on the East Coast and rising costs. Drewry Shipping Consultant’s Simon Heaney pointed out that current rate levels are lower than six months ago, despite the expectation of rising rates. Drewry’s WCI composite index showed a 6% week-on-week rise in global rates, signaling that an increase in freight may be coming.

Surprisingly, the surge in rates has not manifested in the anticipated US regions. Rates from Asia to the West Coast saw an unexpected 12% decline, while trade from Asia to the East Coast remained stagnant. In a twist, rates to North Europe skyrocketed by 19%, and Mediterranean-bound freight experienced an even more astonishing 22% surge. Drewry foresees a rise in rates for the Transpacific trade in the upcoming week, attributed to the impending ILA port strike in January 2025. This strike is expected to trigger a rush to ship goods before operations are disrupted.

Xeneta’s chief analyst, Peter Sand, discerns a shift in trade patterns as disruptions on the US East Coast loom, coupled with the uncertainty surrounding the US tariff regime. According to Sand, the Container Trades Statistics already show a reasonably bullish outlook, suggesting that volumes are unlikely to rise much higher, and the market is already tight. Sand has also observed a significant shift in the trade patterns between Northern and Southern Europe, caused by the longer shipping routes to the Mediterranean due to the Red Sea diversions.

The trading patterns from Asia to North Europe and the Mediterranean have changed significantly due to the detour around the African Cape, leading to higher rates to the Mediterranean than to North Europe, due to the increased cost of reaching Mediterranean destinations. Sand explained that rates to the Mediterranean started to increase in mid-2024, then decreased, but since the beginning of November, they have been rising once again. The gap between North European and Mediterranean rates is now about $700 per forty-foot equivalent unit (feu) in favor of the Mediterranean, a significant shift from prior trends where Mediterranean rates were lower. Sand expects this trend to extend to long-term rates as well, reflecting the ongoing changes in the market.

On the Pacific, Heaney pointed out that US tariffs have already shifted trading patterns, with Chinese exports to the US dropping and Southeast Asian imports rising sharply, as noted by Huatai Securities. As the new US tariff regime threatens further import duties, Taiwanese freight forwarder Dimerco forecasts a short, sharp surge in container imports into the US as shippers rush to beat the new tariffs. This surge will lead to longer lead times, tighter capacity, congestion, and higher rates. Drewry believes that Pacific trading will experience significant rate increases starting in the coming week, driven by these market shifts and the looming tariff changes.

These changes reflect broader adjustments in global trading routes and the impact of external factors like port disruptions, tariffs, and altered shipping patterns. As the market continues to change, these shifts in trading patterns are expected to result in higher rates and increased market volatility in the coming months.



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