Market turmoil in the wake of the Washington tariff merry-go-round has seen one surprise followed by another this week and rate expectations are no exception, as carriers receive a welcome uptick in rates.
Uncertainty generated by the rapid on-off tariff regime in the US had analysts expecting the falling trend in rates to continue, particularly on the Pacific, instead Drewry’s composite WCI showed a 3% boost, driven, by the Pacific headhaul trade, according to Drewry analyst Simon Heaney.
“Carriers are doing what they can to bolster rates,” including introducing a GRI and blanking sailings, said Heaney, adding that the uptick was small compared to recent declines, “but at least the lines have stopped haemorrhaging money, it’s a little bit of forward momentum.”
Heaney then ran through the possible economic obstacles to stronger rates and concluded that the 3% uptick on the Pacific would be “short-lived”.
Adding the major tariff additions in the US will have an effect on Chinese imports, even if other countries have seen the highest import taxes paused for 90 days, with the expectation that they will be reintroduced just as the peak season is about to start.
“We are hearing that shippers in China are cancelling orders, but to what extent that is happening is uncertain,” explained Heaney.
A US Trade Representative (USTR) investigation into China’s apparent manipulation of the shipbuilding market is expected to report next week, and could see Washington row back a little from the threat of charging $1.5m per ship per port call. Although Heaney says there are signs that this ruling will be softened, the impact will be felt.
“In the long-term tariffs, the vessel charge and a falling dollar will act as a drag on demand,” said Heaney.
European rates have also seen a mini-revival with Drewry’s WCI up 4% on the week and rates out of Rotterdam to New York showing an incremental increase of 1%.
Analyst Darron Wadey, at Dynamar in the Netherlands, was surprised: “That is indeed counter-intuitive, especially in combination with wider economic indicators up to the first half of this week. I think we would have needed many more blanked sailings for them to have had such a sudden impact on these rates.”
According to Wadey, congestion in North European ports may have played a part, though he wanted to see a more sustained elevation in rates.
“Next week’s figures will make interesting reading to see whether this is an anomaly or signs of an upturn, however unexpected or short-term that may turn out to be,” he said.
Braemar’s Container Quarterly this week gave carriers little hope for the remainder of the year, with new capacity also expected to add to the drag on rates.
“In 2025 challenges are mounting,” writes Braemar research Jonathan Roach, “Our base case estimate projects oversupply rising from 12% in 2024 to 18% in 2025 (not accounting for continued Cape of Good Hope transits). If CGH transits remain in place for all of 2025, oversupply could be limited to 8%.”
Source: Sea Trade Maritime