As 2025 approaches, uncertainty continues to build around global trade, particularly with President-elect Donald Trump’s expected tariff hikes. Trump recently announced plans for a 10% tariff increase on Chinese goods and a 25% tariff on imports from Mexico and Canada, fueling concerns about a potential trade war. For shippers and freight forwarders, this means preparing for an unpredictable market and mitigating the impact of these potential tariff hikes.
Mixed Signals in the Shipping Market
Despite fears of escalating tariffs, recent data shows mixed signals regarding how shippers are reacting. Some reports indicate an uptick in stockpiling ahead of Trump’s inauguration on January 20, 2025, while others suggest that this surge in demand has not yet been reflected in freight rates. Linerlytica reports that carriers have attempted to implement rate hikes in November and December, improving their bargaining position for the upcoming 2025 contract negotiations.
However, while markets such as Asia-Europe and Intra-Asia routes have shown slight rate increases, Transpacific and Oceania routes have remained weak.
Drewry Shipping Consultants’ latest WCI rate index revealed a 2% decline in its composite index, with significant decreases in rates on the Shanghai-Rotterdam and Pacific Eastbound routes. While U.S. retailers are stocking up ahead of the Lunar New Year and potential labor disruptions, shippers are still navigating rate uncertainty and the complex trade landscape.
Impact of Tariff Increases on Global Supply Chains
For shippers, the pressing question is: When will the impact of tariff increases be felt? Taiwanese freight forwarder Dimerco notes that tariff hikes could exacerbate existing supply chain tensions, increase production costs, and reignite inflationary pressures in the months ahead. With Chinese exports to the U.S. already declining by 7% since 2018, Dimerco predicts that U.S. import dynamics will shift, accelerating trends like nearshoring and boosting exports from Southeast Asia. These shifts are already being observed, as ASEAN exports to the U.S. have surged by 107%.
In the short term, Dimerco reports that U.S. retailers are responding to potential disruptions by boosting inventories ahead of the Lunar New Year and the expected dock workers’ strike in January 2025. As a result, the Global Port Tracker has raised its full-year 2024 U.S. import forecast to 25.3 million TEUs, reflecting a 13.6% increase over 2023.
Freight Rate Increases and Capacity Constraints
Freight rates are continuing to fluctuate in response to these developments. Spot rates in intra-Asia markets have surged, with rate hikes of up to $1,000 per TEU expected across most lanes. However, these elevated rates are also creating space constraints, especially in long-haul markets. In addition, carriers are ramping up their order books for new tonnage, indicating confidence in future demand. Linerlytica reports that the order book-to-fleet ratio has risen to 27%, up from 20% in June.
What Shippers Can Do to Prepare
The uncertainty surrounding Trump’s tariffs and potential disruptions to global supply chains presents a challenge for shippers. Xeneta analyst Emily Stausbøll warns that shippers must stay agile and be ready to move quickly in response to sudden tariff changes and supply chain disruptions.
How ASLG Can Help: Tailored Solutions for Shippers
At ASLG (Airsupply), we understand the complexities of navigating these uncertain times. Our comprehensive supply chain management solutions are designed to help you stay ahead of rate fluctuations, understand shifting market dynamics, and maintain full visibility over your shipments.
With ASLG, you can benefit from:
- Comprehensive Market Insights: Stay informed with up-to-date information on market trends, rate fluctuations, and tariff changes.
- Real-Time Shipment Visibility: Track your shipments in real-time, ensuring timely delivery and identifying potential disruptions before they impact your business.
- Customized Solutions: Tailor your strategy to manage the impact of tariffs, optimize your supply chain, and reduce operational costs.
As global tensions continue to shape the future of international trade, partnering with ASLG allows you to navigate these challenges with confidence. Let us help you prepare for whatever the future holds, providing the support and insight needed to keep your supply chain running smoothly.
