Since US President Donald Trump imposed comprehensive tariffs on China and other trading partners in April this year, the global container shipping industry has been continuously affected, with freight rates fluctuating sharply and supply chains on major routes also experiencing disruptions.

The fluctuations in tariffs between China and the United States have caused sharp swings in freight rates on the trans-Pacific route

After the implementation of the "Liberation Day" tariffs, the demand for Trans-Pacific shipping dropped sharply. The carrier promptly shifted its capacity from the China-Us route to the routes of Northern Europe and the East coast of South America (SAEC). However, the tariff truce between China and the United States in mid-May triggered a freight boom. Spot freight rates on the West Coast soared by 75% within just two days (from May 31 to June 1), and those on the East Coast rose by 58%.

As capacity rapidly returned to the US routes, since June 30th, the oversupply situation has once again led to a decline in freight rates, with a 58% drop on the West Coast and a 35% drop on the East Coast. Data from market intelligence firm Xeneta shows that this cycle has also distorted the normal price gap between coasts. The usual $1,000 spread per 40-foot equivalent unit (FEU) has widened to $2,015, with spot freight rates on the US West Coast falling faster than those on the east coast.

The trade routes along the east coast of South America and the Far East - Northern Europe have been affected

Trade along the east coast of South America (SAEC) has also been severely impacted. Spot rates on the east coast of South America soared from $1,890 per FEU on May 1 to a peak of $6,945 on July 16, an increase of more than 260%, as carriers diverted vessels to serve the prosperity across the Pacific. In May, the demand for SAEC in Asia reached a new high, further exacerbating this problem. Nowadays, as freight rates in the United States have dropped, capacity has shifted back to SAEC to take advantage of higher rates. This will once again exert downward pressure on freight rates and highlight the problem of carriers' excessive pursuit of high-priced routes, unintentionally weakening their own profits.

Between the end of May and July, the freight rate for the Far East - Northern Europe trade also unexpectedly soared by 78%, and the current average spot freight rate is $3,410 per FEU. This was largely due to the strike and the low water level of the Rhine River hindering the navigation of barges, while the chain reaction of freight rates also played a role. When carriers withdrew from the US route in April, they added a record-breaking capacity to this channel, thereby exacerbating port bottlenecks, at a time when inland disruptions were at their peak.

How should the shipping market respond to its future trends?

Looking ahead, unless carriers significantly reduce capacity or new market shocks occur, freight rates entering the US coast and South and Central Asia are expected to continue to decline for the remainder of 2025. The short-term surge after the tariff truce has proved unsustainable as shippers have moved their inventories forward during the 90-day window period, and this strategy cannot be repeated indefinitely.

On the contrary, due to the persistent congestion at Nordic ports, European shippers may face the pressure of continuously rising contract rates, making them the main exception to the global rate decline. To address such fluctuations in freight rates, industry experts recommend adopting inded-linked contracts. These agreements link long-term pricing to current market benchmarks, reducing the need for constant renegotiations during geopolitical or economic shocks. This enables shippers and logistics partners to focus on the reliability of services and the long-term resilience of the supply chain.

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