Transpacific contract negotiations appear to be held in a holding pattern, with few to no agreements having been inked and sources claiming all sides are ‘playing for time’.
Given contracts typically run 1 May-30 April, that so few have been agreed is indicative of the impact of the Trump-generated uncertainty swirling around the market, said Transport Intelligence chief executive John Manners-Bell, who also questioned the merit of any claims of strategy.
“I am not sure anyone will have worked out a coherent strategy for this; you’ll want to keep things as flexible as possible for up to a year,” Mr Manners-Bell said.
“Neither forwarder nor shipper is going to want to be locked into a contract they cannot escape in a moment when they cannot see which way the wind is blowing. Flexibility is the only way I can imagine companies dealing with this.”
Forwarders have said all sides were playing for time as the focus increasingly turns to the US and its short-term economic prospects.
Mr Manners-Bell said that, should the world’s largest economy skirt recession and President Trump’s planned tax cuts spark the hoped-for surge in consumer spending, there could be “a huge peak season coming”, but if this fails to materialise, he added, ‘Liberation Day’ could backfire.
“There was huge volume of goods moved to the US to get ahead of ‘Liberation Day’ tariffs, leading to a pretty good first quarter for carriers and forwarders,” he said. “But all these inventories now need to be drawn down and I think we may see a pause before shipments ramp up ahead of the peak.
“No one really knows how this will play out, because if the US goes into recession, there may be no peak, and inventories will stay high for longer.”
One forwarder said there was a lack of faith in the Trump administration to avoid recession, and they were not ready to bet on any peak materialising.
Compounding the situation is the deep distrust and associated instability created between carriers and forwarders, said one forwarder, noting that this tension exists in a moment of instability when what both sides need most is partnership.
And Mr Manners-Bell also stressed that there were disturbances unique to each tradelane.
He added: “How contract negotiations fare, and how rates play out, depends entirely on the tradelane you are operating in. Those in the Middle East will be dealing with a whole range of issues that differ from those being faced on the transpacific.”
