Rate Related Update and Market Conditions
Market Conditions
- TPEB (Trans-Pacific Eastbound):Short-term rates have been reduced on both coasts as carriers aim to boost bookings ahead of the Lunar New Year. FAK (Freight All Kinds) rates remain above NAC (Named Account Contract) rates, with peak season surcharges still applied. Additional adjustments to PSSs are anticipated by mid-February.
- FEWB (Far East Westbound):The Lunar New Year holiday and ongoing alliance restructuring are creating opportunities for carriers to optimize capacity. The market remains oversupplied, and competition for market share is expected to resume after the holiday. While freight rates remain stable, a gradual downward trend may continue unless there is a significant increase in cargo volumes.
- TAWB (Trans-Atlantic Westbound):Capacity is gradually opening up following the tentative labor agreement between the ILA and USMX, providing more options for shipments from North Europe to the U.S. East Coast. However, space from South Europe remains limited. Blank sailings and service restructuring are still influencing availability.
Operational Updates
- TPEB:Equipment availability remains stable at origin, with no major disruptions reported.
- FEWB:No significant changes in equipment availability have been noted, but carriers are monitoring post-Lunar New Year activity to adjust resources as needed.
- TAWB:Equipment shortages persist in Central Europe, particularly in Austria, Switzerland, Hungary, Slovakia, the Czech Republic, and South Germany.
Capacity Management
- TPEB:Pre-Lunar New Year rush continues to constrain space, particularly on fixed allocations. However, some capacity remains available to the U.S. West Coast and, to a lesser degree, the East Coast. Carriers are planning blank sailings to align capacity with reduced demand post-CNY, with significant capacity expected to return by late February.
- FEWB:Capacity adjustments for new shipping alliances have been seamless, and the market remains oversupplied. Regional trade observations suggest a potential increase in export demand to Europe due to U.S. tariff changes, but this is unlikely to significantly impact freight rates in the short term.
- TAWB:While capacity from North Europe has improved, space from South Europe remains tight. Blank sailings and the implementation of new services are ongoing as carriers restructure networks.
Trump Plans New Tariff Hikes on China, Canada, and Mexico by February
President Donald Trump announced plans to impose a 10% tariff on Chinese imports by February 1, citing concerns over fentanyl distribution through China, Mexico, and Canada. He also proposed a 25% tariff on imports from Canada and Mexico. This aligns with his previous campaign promises to leverage tariffs as a negotiating tool. Experts warn of potential retaliatory actions from targeted nations, with broader implications for U.S. consumer spending, domestic businesses, and global trade dynamics.
California Ports Brace for Federal Environmental Policy Changes
The ports of Los Angeles and Long Beach have reaffirmed their commitment to longstanding green initiatives despite President Trump’s actions to begin withdrawing the U.S. from the Paris Agreement hours after taking office. The ports, which have been cutting emissions for two decades while managing record container volumes, plan to continue implementing their environmental programs. Officials emphasized their readiness to defend these initiatives against any potential federal rollbacks under the new administration.
Spot Rates Plummet Amid Lunar New Year and Suez Reopening
Container spot rates dropped sharply as the Lunar New Year celebrations coincided with the resumption of shipping through the Suez Canal. Rates on the Shanghai-Los Angeles route fell 8% to $4,813 per 40ft, while Asia-Europe trades saw even steeper declines, with Shanghai-Rotterdam rates dropping 19%. Analysts predict further rate reductions due to overcapacity as carriers shift back to shorter Suez routes following ceasefires in the Middle East. Port congestion in Europe may temporarily stabilize rates before long-term declines resume.
Trump’s Return Sparks Uncertainty in Container Shipping
President Donald Trump’s inauguration for a second term on January 20 has introduced new volatility into the shipping industry. In his speech, Trump accused China of controlling the Panama Canal and hinted at potential actions against it. Although he refrained from imposing higher tariffs on Chinese goods immediately, Trump pledged their implementation soon, possibly up to 100% if no resolution is reached over Chinese-owned TikTok. The labor contract negotiations and these trade policies are expected to create further uncertainty in the shipping sector.