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Rates of sea freight between Asia and the US are set to continue declining amid tariff chaos

Experts predict that the rates of sea freight between Asia and the United States will continue to fall in 2025, as shipping capacity exceeds demand, and trade routes change due to geopolitical tensions and tariffs. However, rerouting vessels is expected to mitigate some losses.

Shipping analytics firm Xeneta says that the average spot rates of containers shipped from Asia to U.S. east and west coasts has fallen by 46% and 58%, respectively, since 1 June.

Unresolved negotiations between the U.S.A. and China have added to the uncertainty. Last week, officials from the two largest economies in the world agreed to extend their 90-day truce on tariffs. Container ship operators continue to make the most money on the China-U.S. trade route.

Sea freight rates rose briefly in late May and June, as shippers took full advantage of a 90 day pause on tariffs imposed by U.S. president Donald Trump. However, they quickly dropped as demand outweighed supply, according to Xeneta's data.

Erik Devetak is Xeneta’s Chief Technology and Data Officer. He said, "There's a significant overcapacity worldwide and that will continue to shape market."

Devetek stated that "China-to U.S. Trade is dampened, and the EU Economy is not exactly hot. Blanked sailings and cancelations will become a common theme as carriers try desperately to keep freight prices up."

When a voyage or port call is cancelled, it's called a blanketed sailing.

DHL, a logistics major, noted that spot rates have reversed since the summer rush of traffic from Asia into North America.

Niki Frank is the CEO of DHL Global Forwarding Asia Pacific. She said, "Carriers have rushed to increase capacity in the transpacific region to chase initial gains. But as momentum fades, the oversupply becomes apparent."

Jarl Milford is a maritime analyst with Veson Nautical. He expects that rates will continue to fall in the second half of the year as more vessels enter the market.

Milford stated that "ongoing uncertainty, such as tariff policy and a slowing of global demand, adds to the pressure."

Ocean Network Express, a joint venture between Japan's Kawasaki Kisen Kaisha, Mitsui O.S.K. Lines and Nippon Yusen said last week that recent trade uncertainty further complicates visibility for the second half of the fiscal.

The Rerouting Provides Floor

Rerouting vessels away from their traditional routes is a key factor in helping to absorb some of the excess.

Some carriers are avoiding U.S. port to avoid tariffs and others are diverting away from the Red Sea after attacks by Yemeni Houthis. Analysts said that these longer voyages absorb more ships, and help to provide a price floor.

Analysts at Jefferies wrote: "These diversions continue absorbing in excess of 10 percent of containership supply. This leads to capacity utilization reaching a healthy range of 86-87%."

While China's exports have declined to the U.S., other countries have seen a rise in shipments.

According to Jefferies analyst, spot bookings in the U.S. over the past few weeks indicate that July volumes will likely be lower, pushing transpacific rates down to their lowest levels this year. However, rates for markets like Europe and Latin America are still high.

(source: Reuters)