Trump’s victory in the US will likely disrupt container shipping industry
OSLO ; Donald Trump’s victory in the US 2024 presidential election is a will likely disrupt industry for international trade as importers fear another spike in ocean container shipping freight rates, according to ocean and air freight rate benchmarking and market intelligence platform Xeneta.
Trump has vowed blanket tariffs of up to 20% on all imports into the US and additional tariffs of 60% to 100% on goods from China. The proposal comes at a time when the global container shipping industry is already negatively impacted by ongoing geopolitical tensions.
Data from Norway-based Xeneta shows the last time Trump ramped up tariffs on Chinese imports during the trade war in 2018, ocean container shipping freight rates spiked more than 70%.
“Shipping is a global industry feeding on international trade, so another Trump Presidency is a step in the wrong direction,” Peter Sand, Xeneta Chief Analyst, emphasized.
“The knee-jerk reaction from US shippers will be to frontload imports before Trump is able to impose his new tariffs. Back in 2018, the tariff on Chinese imports was 25%, now it is increasing up to 100% so the incentive to frontload is even greater.”
Trump recently stated that his proposed import tariffs would not result in increased prices for consumers. However, a new study published by the US National Retail Federation (NRF) found that American consumers could lose between $46 billion and $78 billion in spending power each year if new tariffs on imports to the United States are implemented.
“If you have warehouse space and the goods to ship, frontloading imports is the simplest way to manage this risk in the short term – but it will bring its own problems. A sudden increase in demand on major trade lanes into the US when ocean supply chains are already under pressure due to disruption in the Red Sea will place upward pressure on freight rates,” Sand added.
“We saw the negative impact of tariffs during Trump’s first term in office in 2018 when ocean container shipping rates spiked 70%. Shippers will be fearing more of the same this time around.”
“In the longer term, another Trump presidency will reignite the trade war with China and provoke retaliatory action. In 2018, we saw China respond to US aggression by imposing tariffs of its own, which added even more fuel to the fire, so there is a risk this situation could escalate further in the months and years to come.”
Average spot rates from the Far East to US West Coast and US East Coast have remained relatively flat in the weeks leading up to the US Election, down -3.5% and -2.5% respectively since 15 October. However, the current average spot rates of USD 5,210 per FEU (40ft container) into the US West Coast and USD 5,820 per FEU into the US East Coast are 167% and 134% higher than 12 months ago, primarily due to the ongoing impact of conflict in the Red Sea.
“2024 has been a brutal year for US shippers who have already endured massive disruption due to the Red Sea crisis and spiralling freight rates. There is also the looming threat of further strike action at ports on the US East Coast and Gulf Coast in January next year.”
“Another Trump presidency will not be welcomed by US importers and exporters, but they needed a swift and clear result in the election. Uncertainty is toxic for supply chains, so at least the industry now has a clearer understanding of the financial and operational risk and can execute the plans they will have prepared in the event of another Trump presidency,” Sand concluded.
Source : Xeneta