February 18, 2025 Update
The Freightos Weekly Update helps you stay on top of the latest developments in international freight by giving you the rundown on the latest economic data, ocean and air demand trends, rate data – and anything else impacting the market.
Ocean rates – Freightos Baltic Index:
Asia-US West Coast prices (FBX01 Weekly) fell 3% to $4,763/FEU.
Asia-US East Coast prices (FBX03 Weekly) fell 4% to $6,398/FEU.
Asia-N. Europe prices (FBX11 Weekly) fell 7% to $3,162/FEU.
Asia-Mediterranean prices (FBX13 Weekly) fell 2% to $4,448/FEU.
Air rates – Freightos Air index
China – N. America weekly prices fell 7% to $4.92/kg.
China – N. Europe weekly prices fell 13% to $3.14/kg.
N. Europe – N. America weekly prices fell 1% to $2.35/kg.
Analysis
Many importers, exporters and other businesses in the US are breathing another, though possibly temporary, tariff-related sigh of relief after learning that President Trump’s planned reciprocal tariffs won’t be introduced this week.
On Thursday, President Trump signed a memorandum instructing federal agencies to research and develop a comprehensive plan for reciprocal tariffs on countries with duties on US exports or other barriers to American businesses and trade.
But the memo specifies that those investigations commence only after these agencies submit their findings on the state of American trade that the president requested in his wide-ranging inauguration day America First Trade Policy memo. With those trade reports – which could include support for President Trump’s proposed 60% tariff on all Chinese goods – due on April 1st, reciprocal tariff actions can only come after that. Some experts are hopeful that this runway will provide time for US trading partners to lower their tariffs and avoid US reciprocation.
But the threat of these tariff increases continues to impact global trade both by accelerating the shift of US sourcing away from targeted countries like China, and by pushing shippers to pull forward orders from those that could face tariff hikes soon, including Mexico.
For US ocean freight this frontloading remains apparent both in import container volume levels since the election and projections for the coming months, and in ocean rates that remain elevated – at about $5,000/FEU to the West Coast and $6,000/FEU to the East Coast – even as we enter the typical slow season for the transpacific container market.
In the absence of these tariff considerations, Asia – Europe and Mediterranean container rates are falling more significantly than on the transpacific post-Lunar New Year as demand eases.
Asia – Europe rates have fallen nearly 45% since early January to about $3,000/FEU, its lowest level since the start of the Red Sea crisis, and daily rates to the Mediterranean are nearing the $4,000/FEU level. Carriers are increasing blanked sailings and have announced March 1st GRIs of about $1,000/FEU to attempt and push rates back up on these lanes, though there is skepticism that the increases will succeed.
Changes to trade policy are shaking up the air cargo market as well. President Trump suspended and then quickly reinstated de minimis eligibility for Chinese e-commerce imports to the US early this month. Chinese e-commerce giants like Temu and Shein largely rely on the savings and speed they realize by using the de minimis exemption to export low value goods by air cargo directly from China to US consumers.
The looming cancellation of de minimis eligibility for Chinese imports is expected to significantly reduce the surge of e-commerce goods arriving in the US by air that have kept planes full and air cargo rates highly elevated since late 2023, and to increase delivery times and push price tags up by as much as 50% for items that continue to ship by air.
Temu and Shein had already begun preparations for a shift away from reliance on de minimis and air cargo, with more than a third of Temu’s US orders reportedly already fulfilled from sellers with US-based inventory. Nonetheless, these platforms are scrambling to adjust to the coming policy change by raising prices, pushing sellers to build up US inventories and incentivizing manufacturing shifts to Vietnam and other China alternatives.
The temporary reprieve of the de minimis suspension for Chinese goods was aimed to allow US Customs and Border Protection to prepare for an anticipated surge of formal entry parcels, but it may also allow time for air cargo e-commerce import volumes to decrease to a more manageable level.
There are already reports of e-commerce companies canceling freighter flights. And though China – US air cargo rates have yet to collapse, Freightos Air Index data shows they have decreased below the $5.00/kg mark for the first time since August of last year, and are 7% lower than a week prior though prices typically increase just after Lunar New Year. This trend may suggest that air rates could decline gradually up until de minimis is canceled and then more sharply once the change goes into effect.
Original article Image source: freightos.com