Container demand could look a lot different shortly as country-specific tariffs levied by President Donald Trump are set to go into effect on Wednesday.
Out on the ocean, experts are expecting demand to drop over the next few months now that many American companies have already brought in excess inventory ahead of the tariffs.
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“On the Shanghai to L.A. and Shanghai to N.Y. routes, there are several things happening in the context of the tariffs drama,” said Philip Damas, head of Drewry Supply Chain Advisors. “U.S. importers had front-loaded a lot of volume ahead of the imposition of tariffs and will now slow down or even pause shipments while they work out what to do and who will absorb the extra costs. Volumes had been very strong but we expect a decline in volumes and in rates in the next few months.”
Import and export bookings, which can be used to measure current container demand, have both already seen dramatic changes in the wake of Trump’s “Liberation Day” announcement.
U.S. import bookings collapsed 67 percent week over week to 169,000 20-foot equivalent units (TEUs), according to data from supply chain visibility provider Vizion. Imports from China are down 63 percent to 54,000.
For all U.S. exports, bookings decreased 40 percent on a weekly basis to 83,000 TEUs. Exports destinated to China fell slightly further to 4,400 containers.
In a weekly update Tuesday, Freightos head of research Judah Levine said he expected a “significant” drop in container demand due to the combination of the uncertainty from the tariff negotiations and the volumes brought in since November.
The National Retail Federation’s Global Port Tracker projects 10.8 percent growth for inbound cargo volume in March, before that percentage is expected to halve to about 5.7 percent growth the next month.
“These factors will likely mean a subdued [trans-Pacific] peak season at least, with some fearing a recession—combined with growing overcapacity in the container market—could lead to a demand decrease and rate collapse like those that followed the 2008 financial crisis,” Levine said.
Ocean carriers are already cancelling a high number of trans-Pacific sailings, which should temporarily limit what would otherwise be a crash in spot rates, Damas told Sourcing Journal. Carriers will often cut certain port calls when there is excess container supply in a way to ensure rates don’t plummet.
In March, Mediterranean Shipping Company (MSC) scrapped a full trans-Pacific service line due to the weakening overall demand on the route.
The number of individual canceled sailings in March and April on the trans-Pacific, trans-Atlantic and Asia-to-North Europe and -Mediterranean routes rose to 198, according to Drewry, well ahead of the 135 blank sailings tallied in the two-month period during 2024.
With the increase in blank sailings on top of the tariff adjustment, “expect a lot more volatility” in spot rates across the board in the coming months, Damas said.
The recent sailing cancellations helped boost weekly container prices from Shanghai to Los Angeles by 10 percent, and fostered an 8 percent jump from the Chinese port city to New York, according to the Drewry World Container Index (WCI).
The 10 percent baseline tariffs that went into effect Saturday haven’t had any immediate impacts on short-term rates yet, said Robert Khachatryan, CEO of freight forwarder Freight Right Global Logistics.
“The planned general rate increase [by ocean carriers] that went into effect on April 1 is likely to be canceled,” Khachatryan told Sourcing Journal. “Unless there is a significant reduction in tariffs or rollback of the policy, I can’t see rates increasing significantly.”
Overall, the U.S. routes have buoyed overall container prices, with WCI’s composite across all eight trade lanes it tracks increasing 2 percent to $2,208 per 40-foot container.
However, cargo leaving Asia headed for both European regions has remained in freefall since the start of the year, with no upturns in freight rates since the last week of November 2024. Shanghai-to-Rotterdam shipments declined 3 percent week over week as of Thursday, while Shanghai-to-Genoa prices decreased 4 percent from the prior period.
The decline in spot freight rates on the route from Shanghai to Rotterdam and Genoa is mainly due to the growing excess supply in the market, said Damas.
According to Damas, the supply “is not mirrored by strong demand.”
Overcapacity had been a concern for many in the industry as vessel orders swelled up in 2024, but the potential problem had been mitigated throughout the year since so many ships were able to be used for goods diverted away from the Red Sea. As more ships come online, it will get tougher to align supply with demand if the latter doesn’t pick back up.
With rates expected to keep declining on the Asia-to-Europe routes, carriers are hoping that worsening congestion at major Chinese, northern European and Mediterranean ports could provide support for another attempt to hike rates, according to analysis from Linerlytica.
