Mainline operators are pushing for higher transpacific rates in May, betting on a trade deal that could trigger a return of mass Chinese export volumes to the US.
While rates face downward pressure, carriers announced price rises for next month, driving marginal gains to transpacific rates last week.
On Friday, the Shanghai Containerised Freight Index showed the Shanghai-US west coast rate rose 2% from the previous week, to $2,141 per 40ft, while the Shanghai-US east coast rate went up by just $6, to $3,257 per 40ft.
Linerlytica says in its report today: “The reduction in the cargo flow to the US will start to impact arrivals in May, raising the likelihood of an imminent sino-US trade deal that could trigger a sharp rebound in Chinese cargo bookings to the US. This has helped carriers’ bid to hike transpacific rates in May, and they have also secured agreements with shippers for new transpacifc service contracts at marginally higher rates than last year.”
The general managers of Taiwan carriers Evergreen and Wan Hai Lines said days ago shippers were generally receptive to signing year-long transpacific shipping contracts at rates 30%-40% higher than last year.
And as tariffs have started reducing cargo flows to the US, media reported how US retailers Walmart, Home Depot, and Target were reported to have asked Chinese suppliers to resume shipments.
Wary of empty shelves, the retailers are, reportedly, agreeing to bear extra costs resulting from tariffs imposed on Chinese imports. President Trump has implemented additional tariffs of 145% on imports from China, bringing the effective tariff to about 156%.
Forwarders said that to manage the tariffs, Chinese exporters are proposing free-on-board terms, meaning the US buyers are responsible for shipping costs and tariffs upon cargo arrival.
Chinese containerised exports volumes are now half those of a year ago, forcing carriers to cut transpacific capacity by over 20%, but capacity utilisation on the remaining services is down by more than 5%.
Although South-east Asian shippers are rushing to transport goods during the 90-day grace period on additional tariffs on the region’s exports, these volumes won’t compensate for the lost Chinese exports.
