No surcharges on the horizon

⛴️ Carriers left without cards as GRIs fail

Figure of the week

$2000 Some Japanese eBay sellers are increasing the shipping cost of items to the US to extravagant levels to dissuade American customers and avoid having to deal with us tariffs, according to 404media. One Japanese retailer of camera equipment had placed a $2,000 shipping cost for US buyers on a $319 Olympus camera lens.

Quote of the week

“A lot of carriers are really struggling with this and […] charging […] an administrative fee […] to help cover the cost of having to collect this tariff.” Kyle J Anderson, an economist with Indiana University’s Kelley School of Business, was responding to reports that UPS and DHL are, in some cases, requiring customers to pay tariff and brokerage fees online before delivery.

Shippers hope to dodge port fee bullet

US port fees coming into force in mid-October had looked like creating one more supply chain headache for shippers, but it appears they will not need to reach for the painkillers after all. Industry insiders are widely reporting that the bulk of ocean carriers are on schedule to reduce exposure to the USTR fees due to come into force on October 15. Reassurances from the major carriers that they will not impose surcharges related to the fees are further calming shippers’ nerves. Having had several months to adjust their schedules, most carriers have been able to reallocate vessels to ensure that they will not face any fees on China-built vessels. The exceptions are likely to be Cosco and OOCL. Given that the fees directly penalize China-owned carriers, these liners have no levers to avoid the new policies. Nevertheless, both companies have lined up alongside their competitors to indicate they are not planning on imposing any surcharges as a result of the fees. “It’s been a tall order for the carriers to shuffle ships around due to place of build restrictions in the USTR legislation,” said Peter Sand, Xeneta chief analyst. Whilst eight of the largest ocean carriers still have a combined 566,000 TEUs of China-built ship capacity deployed to the US at the time of writing, this could be rapidly replaced by the October deadline, said Sand. Early indications are that the Trump administration’s policies have led to a slackening of orders at Chinese shipbuilders, according to S&P Global Ratings. A recent report said new build orders at Chinese shipyards in 1H25 were set to drop 54% year on year. It is still too early, however, for the Trump administration to claim victory for its policy, as early indications are that orders have since rebounded. S&P Global Ratings currently estimates that only about 9% of total US port calls in 2024 will be affected by the fees. It’s one less thing for shippers to worry about at a time of continued uncertainty.

Fragmented air cargo market promises surprises

Shippers trying to read and predict air cargo patterns to aid their planning are likely to be disappointed. According to Ti, multiple fragmented trends are currently driving the market instead of a single, dominant thread, making local shocks more likely. The bigger picture, of course, is a general softening in demand. But it’s likely that fragmentation will be central to the air freight market moving forward. “There isn’t really a single dominant driving trend that’s driving the market. Instead, we’re seeing a collection of conflicting forces at play,” said Ti. “In general, demand is softening. As it stands. Q4 won’t see a dramatic rebound for composite rates.” There are, however, localized conditions that could cause rates to temporarily rebound. Part of the problem, as some industry insiders have noted, is that dramatic changes in US trade policy effectively make predictions on a historical basis impossible. What will happen, for example, to China plus one strategies? Will Vietnam continue its rapid growth? What about Thailand? The unpredictability of supply chain shifts could be reflected in limited tightening on some Trans Pacific routes, particularly for consumer electronics and fast fashion as holiday shopping gathers pace. Against this is the backdrop of expanding air cargo capacity – due to rise by up to 3% across Q3 and Q4. Importers are likely to consolidate shipments into bulk consignments to reduce the number of small parcels coming from Asia. The advice to shippers from Ti is “ remain flexible, traditional planning cycles seem less relevant in the current environment, and to that end, real-time decision making and diversified routing are vital tools for managing risk and disruption .”

Carriers left without cards as GRIs fail to stick

Ocean carriers on the Trans Pacific trade appear to have no more cards to play for now, after the market shrugged off GRIs and blankings . Container spot rates continued their downward trajectory for the 14th consecutive week. The fall from Shanghai to New York was 5% and 4% from Shanghai to Los Angeles. “The momentum from GRIs and blank sailings has now faded, which led to the reduction in rates,” said Drewry. The forecast for H225 is more of the same. Drewry expects increased blank sailings ahead of China’s Golden Week holidays beginning October 1. The supply-demand balance will weaken again in 2H25, which will cause spot rates to contract, it said. Given the falls in container imports being reported by the NRF, the softening market is hardly surprising. Jonathan Gold, NRF, Vice President for supply chain and customs policy, said continued trade policy uncertainty was making long-term planning impossible. The NRF’s fears are echoed in a recent survey by Freightos of 336 small to mid-sized US companies. Almost half the respondents said their costs had climbed by 20% or more since the trade war started. About the same number said they had reduced shipment volumes because of these rising costs. About 60% of respondents believed the administration’s policies had weakened the US’s standing as a trading partner, compared to 6% who thought it had been strengthened. Yet while the outlook points to a longer-term slump in rates, the market may strengthen slightly in mid-October. Analysts believe an (albeit muted) peak season rush could combine with US businesses returning from vacation to drive demand. Shippers, however, will bear in mind that many predictions over recent weeks that the market may temporarily strengthen have come to little or nothing. Importers have their work cut out dealing with tariff uncertainty, but it is unlikely that rates will provide more worries over the coming weeks .

🤔 Did you know ?

An unintended consequence of the Trump administration’s tariffs may be to hasten the adoption of AI procurement software. Developers are reporting increased interest in their products among buyers looking to evaluate tariff costs for multiple suppliers across different locations. Adoption of procurement tools has generally been slow among smaller businesses because of the technical challenges and costs involved. And vendors have a financial interest in talking up their software. But could this be the moment digital procurement makes a big leap?

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