OVRSEA
Subscribe
← The Merchant

The Merchant · n°176 · January 22, 2026

More uncertainty rocks Asia-US air freight market

Figure of the week

145% Deborah Elms, head of trade policy at the Hinrich Foundation, warned that the Trump administration’s threats of a 25% tariff rate increase on China related to Iran would likely be perceived by Beijing a as “a massive escalation”. “The last time we played this game, we ended up with tariff levels at 145%,” she said.

Quote of the week

“I think this is the year the ocean carriers will see a reckoning… 2026 will be a really critical year, and one that could put a lot of pressure on some of the less resilient lines, bringing its own problems of possible further mergers or even business failures” James Hookham, director of the Global Shippers Forum, believes overcapacity is finally likely to catch up with carriers this year and could ultimately affect the quality of services.

”Ominous silence” from Supreme Court judges

Hopes that on Tuesday the Supreme Court would announce its decision on the legality of many US tariffs have been dashed. A scheduled announcement by the court came and went with no mention of tariffs. It is not clear when the court plans to release its decision, though it is anticipated to do so before the end of January. Many shippers will be less concerned about the delay and more about whether the court will rule against the tariffs. At the end of 2025, several justices raised hope that the court would side with shipper organizations by questioning the legality of the tariffs. However, that also looks increasingly questionable. Many analysts believe that the longer the court takes to reach its decision, the more likely it is to side with the Trump administration . It is also becoming increasingly apparent that Washington has many other tools at its disposal to continue its policies. Treasury Secretary Scott Bessent said he believed it was unlikely the court would overturn the policy. President Donald Trump has said that if it did, he would immediately impose new measures to continue the policy. Shippers would in that case be unlikely to see any tariff relief though organizations prepared to fight in the courts for refunds on tariffs paid could see success. Meanwhile, President Donald Trump’s announcement of a 10% tariff on several European countries unless they support his bid to acquire Greenland came hot on the heels of an announcement last week of a 25% tariff on China and other countries that do business with Iran. The European countries under threat include the UK, Sweden, Norway, Denmark, France and Germany. In terms of the administration’s latest tariff threats, what will most worry shippers is the potential collapse of the US-China trade deal. European countries are showing every sign that despite words of protest they will ultimately comply with Trump’s ultimatum. China, however, appears on past performance more likely to retaliate, though this could take some time. Any sense of optimism among shippers that the courts could come to the rescue is evaporating. If any shippers were under the illusion that 2026 was going to be a quiet year on the tariff front after a tumultuous 2025, that hope has probably evaporated over the last two weeks. A collapse of any China deal and the subsequent likely rise in tariffs on Chinese goods is likely to push many importers to push the ensuing costs onto consumers.

More uncertainty rocks Asia-US air freight market

One of the key pillars of the Trans-Pacific air freight market, semiconductors, is under threat from new White House tariffs . The Trump administration has gone ahead with its plan to place tariffs on select computing chips. The 25% levy on certain advanced chips is considerably lower than the 100% initially mooted by Washington. The big question for shippers is how this will affect air freight markets. In theory, it could lead to a new wave of capacity, driving down rates. There are several reasons why this might not happen. Firstly, the tariffs apply only to a “very narrow category” of semiconductors. Second, the US, which is looking to support the development of its own tech supply chain, will not place tariffs on chips that support its domestic technology sector. Chips used for data centers, startups, non-data-center consumer applications and public-sector uses, among others, will not see tariffs. It is therefore hard to gauge the precise impact on air freight. What is certain is that airlines have found semiconductor shipments from Asia, especially Taiwan, to the US to be a particularly useful source of income after the boom in e-commerce shipments from China ended last year. Technology shipments, along with residual e-commerce demand, have helped air freight volumes remain relatively resilient despite the removal of the de minimis exemption. However, the White House has not ruled out imposing a broader range of tariffs on semiconductor imports and derivative products. In the meantime, shippers can expect upward pressure on rates due to the latest tariff spree. New threats against certain European countries are likely to lead to front-loading of cargo from Europe to the US. Rates are likely to stay high on this trade until the end of February, in any case, due to lower capacity. Shippers should be prepared for an intensifying capacity crunch in the run-up to the Chinese New Year, which starts on Feb. 17.

Spot rates fall but shippers face frustration

Ocean carriers are planning an aggressive program of GRIs and blank sailings on the Trans-Pacific after Asia-North America container spot freight rates declined . The Shanghai-to-New York leg saw the largest drop recorded in this week’s Drewry WCI, down 10% week on week. The Shanghai-to-Los Angeles route saw a 7% week-on-week fall. A GRI on Jan. 15 failed to make much difference. “Carriers were unable to sustain rates because of weak demand, despite upward pressure on spot rates due to the expected Chinese New Year factory shutdowns in mid-February,” said Drewry. Anecdotal evidence indicates the situation is even worse for ocean carriers than index data suggests, industry insiders said, with reports of real rates falling below WCI levels. In response, carriers have lined up another GRI for late January, and Drewry added that these increases are “expected to face rapid erosion.” The main reason given for market weakness is low volumes, largely due to tariff uncertainty. As mentioned in our first story, this uncertainty only looks set to worsen in 2026. News this week that many carriers are cooling on the idea of a return to Suez Canal transits is unlikely to make much difference to shippers. What would make a difference is tariff stability, and there is no sign of that arriving anytime soon .

🤔 Did you know ?

Shippers will recall the disruption to West and East Coast longshore contract negotiations caused by resistance to port automation. Now, longshore workers in Washington state are supporting a bill that would permanently block state money from funding this technology. Ironically, the move comes just as Egypt has announced plans to boost automation at Suez Canal terminals to take advantage of a potential return to Red Sea routings.

💌 Receive your weekly freight update!

👋 See you next week, The Merchant team

Sources

← The Merchant Subscribe to The Merchant