New geopolitical stormclouds gather for shippers

Figure of the week

18% The new tariff on Indian imports to the US, after a trade deal was reached between the two countries was 18%. Previous tariffs had risen to 50%.

Quote of the week

“Shippers are faced with the greatest challenges out there right now. They’re at the bottom of the operational decision funnel, which leaves them more vulnerable to shocks or setbacks than any other stakeholder.” Destine Ozuygur, senior market analyst at Xeneta, outlines the uncertainties surrounding Red Sea routings. However, many shippers will feel those words currently apply in many areas.

New geopolitical stormclouds gather for shippers

With US forces gathering in the Gulf, the Houthis have warned that they will resume attacks on global shipping in the case of any strike on Iran. The Houthis’ latest threat, reported by Associated Press , means that any prospect of a rapid return to Suez Canal routings is rapidly receding. To underline the threat, the Houthis have test-fired several missiles in the Red Sea in recent days. The group, closely aligned with Iran, says that any US attack would mean all US ships and interests in the region are “legitimate targets.” The warnings underscore the extent to which rapid geopolitical shifts are making it difficult for shippers to engage in forward planning . Only two weeks ago, it looked like the momentum was in favor of a return to Suez voyages, with Maersk having just announced a Middle East–US East Coast service to be routed through the Red Sea. But days later, tensions began to rise between the US and Iran. CMA CGM, one of the prime Red Sea users over the last two years, said it planned to cut Asia–Europe westbound services through the Suez Canal. Retailers will be thankful this week, however, that the Trump administration’s tariff focus has slightly shifted. News of a trade deal between the US and India will be music to shippers’ ears. The deal will see Washington cut tariffs on Indian goods from 50% to 18%. Meanwhile, the latest country to receive tariff threats from Washington is South Korea. President Donald Trump, accusing Seoul of “not living up to” last year’s trade deal, and threatened 15% tariffs on products including automobiles, pharmaceuticals and lumber. South Korea is seeking urgent talks to avert the levies. There has, however, been little more talk of potential tariffs on China or Canada. Likewise, similar threats on European countries that opposed US plans to seize Greenland also appear to have been dropped. For US shippers, the prospect of tariffs on South Korean goods is sufficiently specific that most retailers will be left unaffected. Likewise, should events in Iran escalate and the Houthis make good their threats, European shippers will be more impacted than their US counterparts. This week’s events underline to US shippers how quickly events can disrupt supply chains - though given recent events, shippers’ will wonder if it represents the calm in the eye of the tariff storm.

Storm eases but knock-on effects likely for air freight

US supply chains are still recovering from the most disruptive winter storm in years, with air cargo among the modes most affected . Winter Storm Fern proved to be the most extreme weather event to hit the transportation market since 2021. Among multiple air cargo hubs facing delays and potential ground stops due to the storm were Atlanta, Dallas–Fort Worth, New York JFK, Newark and Chicago O’Hare. Storm Fern’s impact particularly affected the southern plains, mid-south, mid-Atlantic and northeast. By the beginning of this week, the snowstorm was no longer directly impacting operations; however, staff were clearing a backlog. This is likely to cause both delays and higher rates until the end of February. However, the limited pre-Chinese New Year uplift is beginning to ease, which in turn will exert a downward effect on rates. E-commerce volumes, relatively slow since January, are likely to continue in the same vein in February. On the other hand, strong intra-Asia demand is absorbing a certain amount of capacity within the market. The trucking market was also strongly affected by the storm, leading to higher rates of tender rejections and increased trucking spot rates. 2026 represents the third consecutive year in which winter storms have caused large-scale transportation disruption. Early analysis indicates that Winter Storm Fern could have been the most disruptive weather event since the 2021 storm that caused sweeping power cuts in Texas. Shippers should prepare for delays, budget for higher rates for the rest of the month and be prepared for further weather-related supply chain risk this winter .

Carriers withdraw capacity in face of uncertainty

The last week may have been relatively quiet on the tariff front compared to previous weeks, but the White House’s trade policies are exerting a strong effect on ocean freight markets . Container spot rates on the major eastbound route from Asia to the United States were flat last week. Judah Levine, research chief for Freightos, said in a client note: “Open quotes rates starting to slide a little earlier than usual. This suggests carriers are working to capture volumes that may be proving weaker than expected.” Levine said “retailers are exercising caution In ordering decisions, given the trade war-driven uncertainty. However, the fact that rates were flat rather than falling, as in previous weeks, is significant. This provides an indication that carriers have begun to withdraw capacity after adding it to capitalize on the pre-Lunar New Year spike. Reports from Europe indicate that carriers have been sufficiently successful in propping up spot rates that recently agreed long-term contract rates were higher than expected. As spring approaches, shippers will start to see if the same holds true for the US, though this appears to be unlikely. Aside from tariffs, geopolitical events and weather risk, there appears to be little reason why shippers will not be seeing softer spot rates in coming weeks and even months . Volumes will continue to be weak as importers hold out for greater certainty around the long-term tariff picture.

🤔 Did you know ?

Maersk will take over two ports on the Panama Canal on a temporary basis. The move comes after a court ruled that contracts given to a Hong Kong company CK Hutchison, were unconstitutional. The development will come as a victory for President Donald Trump, who has been seeking to reduce what he terms “Chinese control” of the canal.

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👋 See you next week, The Merchant team

Sources

• https://www.bbc.com/news/articles/cwyw3ynwe37o https://theloadstar.com/air-cargo-demand-eases-on-approach-to-cny/ https://theloadstar.com/the-smaller-the-trade-the-longer-the-lead-time/ https://www.freightwaves.com/news/winter-storm-fern-was-the-most-disruptive-in-years https://theloadstar.com/market-turning-in-favour-of-shippers-as-ocean-spots-soften/ https://www.freightwaves.com/news/trans-pacific-container-rates-becalmed-in-eye-of-trade-storm