The recently announced tariff de-escalation between the United States and China is expected to trigger an early peak season, as shippers rush to frontload inventory in anticipation of potential future shifts in trade policy.
HSBC said in its latest Global Freight Monitor that it has observed a resurgence in US-China container bookings with the Shanghai Containerized Freight Index (SCFI) bouncing 10% week-on-week (w-o-w), with rates to the US West Coast and East Coast up 22-32% as the May 15 general rate increase (GRIs) likely succeeded due to the US-China tariffs pause.
This sentiment was also noted by Hapag-Lloyd (HLAG) in its recent May 14 Q1 briefing where it saw an over 50% surge in bookings since the tariff pause.
The HSBC analysis said Vizion TradeView data also points to China-US daily bookings rebounding sharply during May 12-14.
"On the supply front, HLAG expects swift industry capacity redeployment and lower blank sailings in the next few weeks. We are already seeing signs of capacity being reactivated," HSBC said.
The report said the expected early peak season is also seen to boost Q2 and Q3 earnings for liners.
"HLAG's comments reinforce our view that the China-US tariffs pause would drive an early peak season," HSBC said.
It noted that while the May 15 GRIs have likely succeeded there is a further hike planned for June 1 in the transpacific (TP) and carriers have also announced rate hikes for the Asia-Europe route where we think capacity may be withdrawn to redeploy on the TP.
"We believe that the tariff de-escalation, alongside the continued Red Sea disruptions, will ensure that the sector remains profitable at least for Q2 and Q3 2025 following a profitable Q1 2025," HSBC said.
The trade truce between the US and China would also boost sentiment for bulk and tanker.
The analysis noted that the Baltic Dry Index (BDI) also bounced to 1,305 on May 15, driven by strong Capesize rates.
Iron ore futures prices rallied 3% since US-China tariffs pause, as the market expects steel production to pick up.
HSBC noted that the US-China tariff pause agreement also mentioned discussions on potential purchase agreements of US goods by China.
"We think any breakthrough on this front could potentially drive imports of US grain, gas and oil by China."
Rebound in air freight demand
The report said the Baltic Air Freight Index recovered 2% week-on-week. (w-o-w) on May 12, with outbound Hong Kong and Shanghai rates up 1%, likely driven by capacity reduction following the removal of de minimis exemptions for China, and Labour Day holidays.
"However, as part of the tariff pause, the US also slashed the duty rate for low value packages arriving by postal service to 54% from 120% or a flat fee of US$100/parcel (unchanged) while a planned increase to US$200 due on June 1 was cancelled," HSBC said.
"We expect the relaxed tariffs for small packages and the cargo rush to get goods into the US during the 90-day period could drive a rebound in air freight volumes and rates in the coming weeks," it added.
