According to a new Freightos analysis, Donald J. Trump's victory in the US presidential election may start impacting the ocean freight market even before his January inauguration.
During his recent campaign, Trump proposed applying across-the-board tariffs of 10% to 20% on most of the US$3 trillion worth of annual US imports and a minimum 60% tariff on all imports from China.
The digital freight booking platform noted that in 2018, Trump's announcement of tariff increases led to a significant pull forward of ocean imports as shippers rushed to bring in goods before the tariff increases went into effect in early 2019.
Freightos Baltic Index data showed that transpacific container rates doubled from July to November in 2018 as ocean volumes and inventories grew, with rates and volumes in 2019 muted in comparison.
"This time, anticipation that Trump will follow through on these campaign promises could be enough to spur some increase in ocean freight demand and rates starting now, with these trends possibly intensifying once tariff increases are actually announced," commented Judah Levine, head of research at Freightos.
He noted that if pressure is renewed on US ocean freight rates due to the election, it will start from an already elevated floor.
Though prices have fallen significantly as peak season demand pressure has eased, transpacific rates to the East Coast are nearly 50% lower than their July high — at about US$5,200/FEU.
Levine noted that East Coast prices are more than double their level last year, and West Coast prices are more than triple what they were last year and in October 2019.
He said that rates are also US$1,000 - US$2,000/FEU higher than their lowest for the year reached this April.
"The root cause of elevated rates across the container market is the Red Sea crisis, which continues to absorb capacity. But there may be other factors at play unique to the North American market, keeping more pressure on rates compared to other trade lanes," the Freightos head of research added.
He noted that the first could be some pull forward of volumes in the last couple of months by shippers in anticipation of a possible Trump victory — a trend that could intensify now that the election is over.
The other is the looming January 15 deadline for a possible renewal of the port worker strike at East Coast and Gulf ports, which could also be contributing to transatlantic spot rates, which climbed to US$2,583/FEU last week, 35% higher than a month ago and at their highest level since May 2023.
Levine noted that in North America, port operators in Prince Rupert and Vancouver – Canada's largest container port – have locked out ILWU workers since the start of the week in response to the union's strike announcement and several vessels are currently stuck at the ports waiting out the strike, with others scheduled to arrive soon.
"Disruptions at these hubs could lead to diversions and increased traffic at Seattle - Tacoma. Meanwhile, port workers in Montreal have ceased operations at two of the port's terminals, impacting 40% of the port's capacity as the newest escalation in this ongoing dispute," he said.
In air cargo, China—N. America rates of around US$7.00/kg for the last couple of weeks—the high for last year—suggest that air peak season is upon us for this lane.
Levine said prices to Europe have stayed level just below US$4.00/kg, still below the US$4.80/kg high reached last December. The elevated starting point for air rates is due to the surge of B2C e-commerce volumes, which have kept capacity tight for much of the year. However, challenges to this flood of low-cost imports continue to mount.
"Besides the Biden administration's proposed closing of the de minimis exemption to most Chinese imports – which may be unlikely to happen before the end of its term, though the Trump administration could feasibly try to enact something similar – the European Commission has opened an investigation into Temu's possible failure to limit the sale of illegal goods," the Freightos head of research said.
"In the US, increases in warehouse leasing by Chinese logistics companies, including for e-commerce, may signal that some platforms are preparing for a shift away from de minimis and air cargo," he added.
