USA TARIFFS

Global trade conditions are changing by the day and even by the hour as U.S. President enacts tariffs, and allies, adversaries, and target nations enact counter-tariffs.

The economic order of the past four decades is being reshaped as we watch, driving confusion and speculation about what’s next.

A survey was ran to understand reactions to the newly announced US tariffs - and the concern is palpable:

• 19% of US importers rushed shipments to beat tariffs
• 51% feel unable to predict future tariff policies
• 33% have already paused shipments, waiting to see what's next
  
  
  

AIR FREIGHT

Air cargo markets from Asia Pacific and worldwide weakened further in April due to the effects of Easter holidays and uncertainty caused by US changes in tariffs and trade policies.

Traffic flow remained fairly vigorous on the major world air freight routes.

The prospect of additional customs tariffs seems to have sustained demand levels, as some orders were placed early.

Commercial transatlantic routes registered 4.5% growth year on year, while Asia-Europe routes, which represent the second biggest freight corridor after the transpacific corridor, registered a strong 4.7% rate.

Another notable factor in the month was the dynamism of the intra-Asian market, which showed the strongest growth rate of all the major route categories, with an increase of 9% year on year.

As a matter of fact, intra-Asian routes became the fourth biggest route category, overtaking Middle East-Asia routes, which saw their traffic fall 6.2% year on year.

Freight traffic between Europe and the Middle East and intra-European traffic was down, with falls of 14.1% and 2.3% respectively year on year.

Year on year, the Asia-Europe corridor was one of the few to avoid the fall in freight rates.

Actually, this corridor benefited from the ongoing instability which is handicapping shipping in the Red Sea, making air transport unavoidable for some time-sensitive products.

Rates on the Europe-North America corridor also rose in reaction to the announcement of additional customs duties and tariffs in the USA: American importers opted to order before they came into effect.

The strengthening of the double war and the end of the de minimis exemption are a threat to the airfreight sector, which will result in the loss of an estimated 22 billion dollars of income in three years.

Iconic companies like Temu and Shein, who depend on the direct release from China to American consumers, are particularly exposed.

SEA FREIGHT

2025 has started under more difficult conditions, as operations via the Cape of Good Hope have now become the norm. Symptom of this new situation: MSC temporarily pulled its mega container ships out of the Asia-Northern Europe trade to support freight rates, hoping to be followed by other maritime alliances. The Italo-Swiss shipping line has shifted this cumbersome fleet to the Mediterranean.

The current trade war is creating a global logistics shockwave, especially in global container bookings, which fell by early April.

Faced with this climate of tension and uncertainty, companies are responding by increasing blank sailings; the latter are reducing supply in order to support prices at a time when demand is weakening.

These cancellations can lead to delays and additional costs, forcing some importers to turn to air freight or to fragment their shipments.

Reports on the drop in China-US ocean freight demand ranged from around 30% to more than 50% in the last few weeks.

In response to falling volumes, carriers are blanking a significant share of China - N. America sailings and suspending services, with estimates that 28% of transpacific capacity will be removed to the West Coast for the coming weeks and 42% to the East Coast.

Despite a huge drop in volumes, companies are trying to stabilise freight rates.

This is a paradox.

Indeed, in order to cope with this collapse, shipping companies have withdrawn more than 20% of their capacity from the transpacific route and increased blank sailings, which are expected to represent 18% of supply in May.

In a context of collapsing demand, the aim is to avoid too sharp a drop in prices while supply remains significantly high: the global fleet has just exceeded 32 million TEUs: a record, which doesn't come at the best of times.

Besides, if the situation were to persist, a structural resizing of the fleet would have to be planned, through the shutdown or accelerated demolition of vessels.

Otherwise, a new overcapacity crisis is looming.