-
Ripples cast by US President Donald Trump’s sweeping tariffs on China and the rest of the world are further shaking the already turbulent waters of ocean container shipping with no sign of abating, according to a Xeneta blog
-
Trump’s ‘Liberation Day’ tariffs caused ocean container shipping demand from China to the US to plummet and carriers responded by shifting capacity off these trades in favor of North Europe and South America East Coast
-
This cargo rush saw a spike in average spot rates between May 31 and June 1 of 75% into the US West Coast and 58% into the US East coast
Ripples cast by US President Donald Trump’s sweeping tariffs on China and the rest of the world are further shaking the already turbulent waters of ocean container shipping with no sign of abating, according to a Xeneta blog.
Trump’s “Liberation Day” tariffs announced in April caused ocean container shipping demand from China to the US to plummet and carriers responded by shifting capacity off these trades in favor of North Europe and South America East Coast.
In mid-May, the US and China agreed to lower tariffs. Shippers rushed to take advantage of the 90-day window of opportunity by importing as many goods as possible.
This cargo rush saw a spike in average spot rates between May 31 and June 1 of 75% into the US West Coast and 58% into the US East coast.
Carriers responded to the rush by shifting capacity back onto the US trades as quickly as possible.
With the pendulum having swung back again, capacity is outweighing demand and average spot rates are plummeting, down 58% into the West Coast and 35% into the East Coast since June 30.
Shifting capacity between trades takes time. What is significant is that carriers prioritized rushing cargo back to the US West Coast trades rather than the US East Coast following the 90-day lowering of tariffs, said Xeneta.
A faster return of capacity into the US West Coast means spot rates began to soften sooner than into the US East Coast. This has distorted the delta ordinarily expected to be seen between rates on the US fronthauls.
Average spot rates from the Far East into the US West Coast have historically been around $1,000 per FEU (40ft container) lower than into the US East Coast. This was the case as recently as May 31 when average spot rates were $3,124 per FEU and $4,180 per FEU.
The steeper declines into the US West Coast since then have seen the spread increase to $2,015 per FEU.
The spread between average spot rates will likely return to a more recognizable $1,000 per FEU once the worst of the trade war volatility passes.
For shippers, it will likely be due to harder declines into the US East Coast rather than an uplift into the US West Coast, says Xeneta.
The ripple effects are expected to spread far beyond the Transpacific fronthauls.
For example, average spot rates from Far East to South America East Coast rose from $1,890 per FEU on May 1 to $6,945 per FEU on July 16, an increase of more than 260%.
As carriers rushed capacity back to the US-bound trades following the lowering of tariffs, “this came at the expense of the Far East to South America East Coast trade, sending spot rates spiraling,” said Xeneta.
Meanwhile, demand from the Far East to South America East Coast hit all-time-record levels in May, just as capacity was being cut.
Now spot rates are plummeting into the US, carriers are sending capacity back to the South America East Coast to benefit from the higher freight rates.
“This should bring an end to the spiralling spot rates and is a clear demonstration of the ebb and flow of capacity across the world’s ocean supply chains.”
In North Europe, the tariff ripple effects spread, another trade that bucked the global trend of declining spot rates in July.
Average spot rates from Far East to North Europe are up 18% since the end of June and 78% since the end of May to stand at $3,410 per FEU.
This is driven primarily due to congestion at North European ports.
Xeneta said there must be sympathy for anyone attempting to set ocean freight budgets for 2026 against this backdrop of volatility.
Shippers must understand the drivers of these rate developments at a global, regional and port level, because not all trades will behave in the same way.
The volatility in fronthaul trades into the US has seen spot rates rise and fall in 2025, but the longer term trajectory is downward.
The spike in rates following the lowering of US tariffs was only ever going to be short-lived because shippers cannot frontload forever.
For both US and South America East Coast, rates are only heading downwards for the remainder of 2025 – unless carriers can manage capacity enough to keep rates up or there is another as-yet-unknown market shock.
It is a different story for North Europe shippers.
The port congestion will stick around for the remainder of 2025. This is a key point of difference with the US-bound Far East fronthauls where the long term contract markets have been left relatively unscathed by tariffs and spiking spot rates.
The ripple effect of tariffs will continue to spread and the wider the circles become, the more difficult it will be for shippers to understand their origin and impact.
One way for shippers to ensure supply chain and financial resilience across volatile and unpredictable trades is index-linked contracts, which ensure freight rates remain aligned to market movement.
This prevents long-term agreements being torn up, or regularly renegotiated, in the wake of shocks such as the US tariffs.
“This allows shippers and providers to concentrate on service delivery and supply chain resilience as part of a long-term partnership,” said Xeneta.
