Transpacific contract rates rise on Trump’s fickle policies
Shippers exasperated with the constant flip-flops in the Trump administration’s trade policy have agreed to transpacific shipping contracts at slightly higher rates than last year.
Linerlytica’s report this week stated that the contract rates were $200/40-foot unit higher than last year.
The contracts include provisions for surcharges should the US Trade Representative’s office succeed in imposing hefty port fees for Chinese-built ships and operators with such vessels in their fleet. This is despite the uncertain outlook for cargo volumes.
Market sources told that any port fees could only be implemented by about November, as the implementation will take six months, given the need to study findings from the public hearings last week.
However, ship owners and operators are covering themselves first by making provisions. Tonnage providers are adjusting their contracts to make it clear that any port fees must be borne by the charterers.
On Friday, the Shanghai Containerised Freight Index showed that Shanghai-US West Coast rose 16% from 21 March, to $2,177/40-foot unit, and the Shanghai-US East Coast rates gained 11%, to $3,194/40-foot unit.
The halt in the sliding rates was attributed to liner operators implementing GRIs on 1 April, and MSC blanking several transpacific sailings.
Linerlytica said: “Weariness over constant changes in US trade policy have pushed shippers to conclude the new transpacific contracts with a small increase over last year’s contracts including provisions for surcharges to cover the proposed levies on Chinese-built ships calling at US ports.
“However, the outlook remains uncertain with cargo demand in March failing behind last year’s level as the weakness is expected to persist for the rest of this year.”
Management at Taiwanese operators Wan Hai Lines and Yang Ming have already stated that they were certain of securing higher transpacific contract rates, citing the unsteady Israel-Hamas ceasefire that would ensure continuous vessel detours round the Cape of Good Hope.
While transpacific rates could rise further, cargo volumes remain uncertain, as hopes of a post-Chinese New Year uptick have faded.
Current projections suggest full-year container volumes will drop by 1.1% in 2025, as the muted cargo demand is expected to last through the usual third-quarter peak season.
The demand outlook for the rest of this year remains uncertain, especially when US president Donald Trump will unleash additional undisclosed tariffs today.
