The Merchant · n°136 · February 27, 2025

Shipper pressure obtains results !

🚢 Little visibility on rates
🇺🇸 No truce with China
✈️ Air pockets in the Pacific

Figure of the week

$1,500,000 This is the amount the Office of the US Trade Representative is considering imposing per port call for every containership built in China.

Quote of the week

“Avoiding a painful period.” Maroš Šefčovič, European Commissioner for Trade, opens the door to tariff negotiations with the United States, in order to avoid a war that would be pointless and damaging for all parties.

Rates still in the fog

The decline in rates that began a month ago is confirmed as activity struggles to pick up again after the Chinese New Year. The spot index of the Shanghai Containerized Freight Index (SCFI) has recorded a 36% drop compared with the pre-Chinese New Year peak. At the same time, rates on the transpacific and Asia-Europe routes have posted declines of around 18%.

Faced with this phenomenon, it is still too early to say whether the recent rate increases decided by the carriers will hold: the coming weeks will be decisive in this respect! The fact remains that the volatility of rates and the significant disparities between regions limit the effectiveness of these measures. Uncertainty over freight volumes, particularly on the transpacific routes, is also weighing on the sector’s outlook. In short, we are sailing by sight…

Finally, the recent forecasts from the International Monetary Fund reinforce doubts about a robust economic recovery after the CNY. The IMF’s estimates for world trade growth were revised downward in a report published last week: trade growth in advanced economies is now expected to reach only 2.1% for 2025 - a decline of 0.5 point compared with previous forecasts. These adjustments reflect a cautious economic environment, notably due to the gradual slowdown of growth in China and the uncertainties fueled by the Trump administration.

A new front opens between China and the United States

“I am speechless.” That is how Lars Jensen, founder of Vespucci Maritime, reacts to the latest proposals from the Office of the US Trade Representative. On Friday, it announced that it could apply fees of up to $1.5 million per port call for ships built in China, and up to $1 million for carriers whose fleet includes a significant proportion of Chinese ships - or of orders in progress at Chinese shipyards. The clear aim is to penalize Chinese dominance in shipbuilding (nearly 66% of the world orderbook for ships, compared with only 1% for the United States).

To understand the gravity of this decision, Sam Chambers gives a telling example in Splash 247: a 10,000 TEU containership could be hit with an additional cost of $150 per TEU! As for American exporters, they will have to gradually increase their use of American ships: from 1% of exports right now up to 15% within seven years. Is war declared? Yes, no doubt in the mind of the Trump administration. But it is likely that the collateral victims will above all be American. As Lars Jensen writes (him again!): “If the goal is to make US exports uncompetitive, this proposal will do the job.”

Who will benefit from this new episode of the endless Sino-American trade war? Taiwanese and Korean operators, which have largely non-Chinese fleets, could enjoy a significant competitive advantage. Furthermore, Canadian ports such as Vancouver and Prince Rupert, already strategic hubs, could see their traffic increase by capturing cargo diverted from the United States. So many signs that the conflict could spread?

Air pockets on the transpacific route

At sea and in the air… the post-CNY recovery in air freight remains particularly laborious. In China, the recovery is surprisingly slow: the number of flights between Asia and the United States remains 13% lower than in the pre-CNY period. Despite everything, the TAC Index shows that average prices remain relatively stable, the drop in demand being offset by the reduction in the number of flights.

The situation nevertheless remains difficult to read. The new American measures - the introduction of tariffs on Chinese imports and the removal of the “de minimis” rule - are complicating the situation. Lifting this exemption requires systematic customs checks on low-value parcels, which leads to delays and additional costs for shippers. These developments are not without consequences. The reduction in flights on the transpacific routes affects the competitiveness of logistics hubs in Asia. Markets such as Vietnam, Thailand and India are benefiting from the adjustment of Chinese capacity and from the introduction of new air routes.

In short, while it is difficult to make any prediction in such an uncertain geopolitical and economic context, the recovery in demand in March coupled with reduced freight capacity should keep rates at their current level, or even push them up slightly.

Valencia at the forefront of the transition

The Port of Valencia has announced that it has taken an important step toward carbon neutrality. It now produces 18% of its energy from solar, thanks to two complementary installations: one, on the vehicle silo of the Terminal Europa, supplies 15% of daily needs and the other, located at the Muelle Príncipe Felipe, provides 3%. This project, valued at 13.27 million euros, is part of the broader strategy of the Valencia Port Authority, which aims to transform the port into a 100% green, emissions-neutral zone.

👋 See you next week, The Merchant team

Sources

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