The Merchant · n°149 · June 5, 2025

Shippers’ tariff hopes now rest with U.S. courts

🚢 Persistent tension
🇺🇸 New tariff uncertainties
✈️ The path to survival

Figure of the week

487 This is the number of points gained by the SCFI (Shanghai Containerized Freight Index) index on May 30, 2025. Driven by a surge in trans-Pacific freight, it is the second-largest weekly increase ever recorded, after the jump of 505 points observed in December 2023 at the outbreak of the Red Sea crisis.

Quote of the week

“Seriously violated.” According to the Chinese Ministry of Commerce, the United States “seriously violated” the truce concluded in Geneva last month. After similar statements by Donald Trump last Friday, the tone is rising again between the two powers.

Carriers seeking tonnage

Since the end of May 2025, maritime freight rates have been experiencing a spectacular surge. On Asia–United States routes, spot rates toward the West Coast have almost doubled in a month. With the SCFI index having risen 487 points as of May 30, it is the largest increase since the beginning of the Red Sea crisis. As the tariff moratorium decided by the Americans and the Chinese is under threat, the trans-Pacific rush is not expected to ease anytime soon. As Peter Sand, chief analyst at Xeneta, sums up: “Fear and uncertainty are powerful forces in the global supply chain.”

This dynamic is also exerting growing pressure on Asia–Europe routes. Capacity is decreasing with the reassignment of ships toward trans-Pacific connections. According to HSBC, available volumes should be reduced by 17% as early as mid-June, which has the consequence of driving up prices on these axes. On June 1, spot rates had risen 23% toward Northern Europe and 24% toward the Mediterranean, according to Xeneta. The general rate increases decided by the major carriers also weigh in the balance. One meager relief remains for professionals: Lars Jensen notes that “the only downward trend remains the price of marine fuel, in a lasting decline around $570/tonne.”

In any case, this surge in rates translates into extreme tension in the tonnage market. Carriers are seeking to charter additional ships to meet the exceptional demand. As Linerlytica points out, “the surge in trans-Pacific freight has spread to the charter market, where vessel availability is now very low.” Many carriers are seeking available tonnage to support demand. As it stands, and despite the significant injections of capacity, the lack of ships available in the short term prevents any real easing of the market.

A bad omen for the coming weeks in terms of tariff tensions.

A TACO story?

Tariff uncertainty remains acute. Despite the 90-day reprieve in the application of tariffs — nicknamed TACO (“Trump Always Chickens Out”) by some analysts — the situation remains unclear.

The instability is first of all legal. On May 29, the New York Court of International Trade ruled that Donald Trump did not have the legal authority to impose the surcharges decided during “Liberation Day.” The very next day, however, a federal appeals court suspended this decision, after an appeal by the Department of Justice. In parallel, a federal judge also declared the tariffs illegal, temporarily blocking their collection from two plaintiffs. This injunction could set a precedent. In short, everything could change very quickly… one way or the other.

These judicial uncertainties come as tensions between Washington and Beijing have flared up again. Despite last month’s Geneva agreement, Donald Trump accuses China of having slowed the issuance of export licenses for rare earths and strategic components. In response, the United States is considering reimposing or extending massive tariffs via the Trade Act of 1974. As for China, it will not be pushed around. He Lifeng, vice-premier and pillar of Beijing’s trade strategy, has a direct mandate from Xi Jinping to act firmly.

This new American offensive does not stop there. On May 30, Trump announced in Pittsburgh a doubling of tariffs on steel and aluminum, from 25% to 50%, effective Wednesday, June 4. Officially intended to protect the national steel industry and to support the partial takeover of U.S. Steel by Japan’s Nippon Steel, this measure could derail the ongoing talks with the European Union.

These successive reversals cost dearly, to the United States’ partners, of course, but also to American companies. They struggle to plan their supply. Deere & Co., for example, has already absorbed $100 million in tariff-related costs in the last quarter… Part of the price increases will be passed on to consumers, which could hamper American growth, already weakened… by an indigestion of TACOs?

Air freight facing the shocks of geopolitics

Air freight too must contend with unprecedented instability. Between the United States and China, trans-Pacific trade experienced a brutal collapse of 40% in early May 2025, before a rebound of 27% after the Geneva truce. In this context, the oldest — and most fuel-consuming — aircraft are the first to be grounded, such as the 747-400Fs. Other sensitive zones further complicate air routes: this is for example the case of the airspace between India and Pakistan. These zones of conflict (or tension) can lengthen certain trips by more than an hour.

Faced with these upheavals, the air freight industry must opt for a strategy of adaptation rather than retreat. “This is not the time for panicked reactions,” says Alexis Boutet, vice-president of Flexport. Indeed, the companies that fare best, such as Cathay Cargo or Lufthansa Cargo, are able to diversify their markets (toward India or Vietnam) and use their fleet with agility — which The Merchant has been pointing out for several weeks. Lufthansa Cargo thus touts its responsive network, supported by a fleet of modern, low-carbon B777Fs. Strong difficulties nonetheless persist. Orders for new aircraft — such as the 777-8Fs, or the A350Fs produced by Airbus — are piling up, but deliveries are slow. This further complicates carriers’ adaptation in an ever more strained context.

👋 See you next week, The Merchant team

Sources

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