The recent U.S.–China tariff truce, which reduced tariffs from 145% to 30%, triggered a sharp increase in mid-June import activity. While this drove a short-term surge in ocean freight bookings and rates, the momentum began tapering off as the month ended. The situation remains volatile, with the U.S. appeals court temporarily reinstating 10–20% reciprocal tariffs. The final ruling, expected later this summer, adds a layer of uncertainty for shippers and traders planning for Q3.
Ocean Freight Rates Retreat After Brief Spike
Ocean freight markets saw a cooling trend in late June. The Drewry World Container Index (WCI) dropped 9% to $2,983 per 40-foot container, reflecting slowing demand after the mid-June spike. Despite this dip, C.H. Robinson and DHL reported tight capacity and a 27% average rate increase since early May. Transpacific spot rates stabilized at $4,400–$4,700 to the U.S. West Coast and $5,200–$5,600 to the East Coast—still below early June GRI targets of $6,000–$7,500.
Global Port Congestion & Blank Sailings Disrupt Flow
Port congestion across Asia and Europe persists, contributing to an increase in blank sailings—now rising to 28% on some routes, particularly into the U.S. West Coast. Export container shortages are projected across U.S. inland rail hubs and Gulf Coast ports starting in July. In South America, port activity remains inconsistent, while in the Middle East, Red Sea diversions continue to cause delays of 2–3 days at major hubs like Jebel Ali and Dammam.
Air Freight Holds Strong Amid Mode Shifts
Airfreight demand remains resilient, driven by ongoing e-commerce shipments and a shift of some cargo from ocean to air in response to tariff uncertainty. Shippers are recalibrating their supply chains to balance cost and speed amid dynamic policy changes.
Inland Transport Eases Slightly on Diesel Drop
Inland transport costs in the U.S. have eased slightly, with diesel prices falling to ~$3.49/gal in May. However, global trucking indexes continue to trend downward due to soft demand and surplus capacity, putting pressure on trucking margins worldwide.
India Fast-Tracking Logistics Overhaul
India is aggressively pursuing a logistics transformation strategy aimed at reducing costs to 9% of GDP. Key initiatives include building economic corridors, expanding expressways, implementing digital tolling, and promoting alternative green fuels. Concurrently, India–U.S. tariff talks are reshaping air cargo routing, with increased interest in using Indian hubs for U.S.-bound shipments.
Supply Chain Cybersecurity Risks Surge
A joint advisory from the FBI, NSA, and private watchdogs warns of escalating cyber threats across global supply chains. Companies are encouraged to enhance vendor vetting and system security. Meanwhile, the CTPAT (Customs Trade Partnership Against Terrorism) program continues to expand, offering certified companies benefits like reduced inspections and expedited customs clearance.
Market Trends & Strategic Shifts
- Ocean Freight: Demand softened post-tariff spike; capacity remains tight, but spot rates are easing.
- LNG Carriers: Daily rates hit 8-month highs (Atlantic: ~$51.8K/day; Pacific: ~$36.8K/day) due to tight tonnage and Middle East unrest.
- Oil Tankers: War-risk premiums remain high near the Strait of Hormuz, although rates eased following the Israel–Iran ceasefire.
- Shipping Strategy: Carriers are delaying space releases and implementing new GRIs and PSS to stabilize revenue.
Red Sea & Strait of Hormuz Still Key Disruption Points
Geopolitical tensions in the Red Sea and Strait of Hormuz continue to impact global trade flows. Although container routes remain mostly unaffected by Iranian threats, insurance premiums and tanker war-risk charges are spiking. Carriers rerouting around the Cape of Good Hope are facing added costs and delays of up to 10 days.
Industry Strategy: Adapt or Fall Behind
With tariff policy and capacity swings dominating headlines, leading carriers are implementing strategic delays and premium surcharges to balance profitability. Shippers are advised to diversify ports of entry, inventory timing, and freight modes to hedge against volatility. India, meanwhile, is emerging as a viable supply chain alternative amid global diversification efforts.
Sustainability & Safety in Focus
2024 saw 576 containers lost at sea—many tied to Red Sea rerouting. Green investments continue, as exemplified by Seacon Shipping’s order of its first electric container ship in China. In the UK, a Hull port fire spurred both operational disruption and calls for accelerated terminal modernization.
Looking Ahead: Modest Demand, Uncertain Margins
BIMCO forecasts relatively stable demand through 2025–26, with slight softening due to overcapacity. Meanwhile, HSBC warns container lines could see a three-year profit erosion as supply-demand imbalances, trade disputes, and high tariffs persist.