Drop in China's Shipping Volumes Highlight Impact of Trump's Trade War
In a stark turn of events, the weekly container bookings from China to the United States have seen a significant drop of 48.6% year-on-year in the week of April 21, 2025, reaching 90,831 TEU, as per the latest data from Vizion. This is a slight uptick from the previous low of 81,239 after three consecutive weeks of decline.
The decline underscores the severity of the market's response to the April 4 and April 5 tariff announcements. Shippers, seemingly caught off guard, paused new movements mid-cycle to re-evaluate costs, routing, and inventory risk.
The downward trend isn't limited to container bookings. According to PortWatch, a joint initiative by the International Monetary Fund (IMF) and the University of Oxford, export cargo volumes from China have plummeted by 10% in the first 25 days of April, starkly contrasting the 4% increase recorded in March.
Another indicator taking a hit is shipping costs. The China Containerized Freight Index (CCFI), a widely-regarded gauge of export shipping prices, has plummeted by 26% so far this year.
To anticipate the falling demand due to these new tariffs on Chinese shipments, ocean carriers have pulled back capacity on the Transpacific Eastbound trade route at a pace not witnessed since the early days of the Covid-19 pandemic.
The tariff announcements have essentially frozen new orders as importers wait for potential negotiations. This could lead to consumer price hikes and inventory shortages, particularly in industries focusing on toys, baby products, and sporting goods, if the tariffs persist.
Insights
- The tariffs swiftly brought about a 60% collapse in ocean container bookings. [1] This aligns with a 145% tariff on Chinese goods and a reciprocal 125% Chinese tariff on U.S. imports. [1]
- Carriers have already canceled 25% of sailings to balance reduced demand. [1] Deeper cuts are projected, with a 28% capacity reduction to West Coast ports and a 42% reduction to East Coast ports expected. [2] The Port of Los Angeles expects to see a 35% volume drop within weeks. [1][2]
- The tariff implementation has triggered an abrupt reversal of pre-April inventory surges that had temporarily boosted late-2024/early-2025 volumes. [3] Additionally, tariff spillover has dampened cargo from alternative sourcing regions. [1]
- Despite reduced demand, carriers' blank sailings have temporarily helped stabilize trans-Pacific rates. [2] However, analysts warn of potential "extremely low" rates later in 2025 if trade tensions persist. [3]
- The fallout from the recent tariff announcements on U.S.-China trade has resulted in an economic slowdown, as evidenced by the 60% collapse in ocean container bookings.
- In an attempt to balance reduced demand, shipping carriers have already canceled 25% of their sailings, with deeper cuts to West Coast ports expected at a 28% capacity reduction, and East Coast ports anticipating a 42% reduction.
- The sudden implementation of tariffs has caused a drastic shift in pre-April inventory levels, with inventory surges that temporarily boosted late-2024/early-2025 volumes now being abruptly reversed.
- The tariffs have also had a ripple effect on cargo from alternative sourcing regions, negatively impacting the overall trade and economy.
- With reduced demand but empty sailings temporarily stabilizing trans-Pacific rates, analysts have warned of possible "extremely low" rates later in 2025 if trade tensions persist, potentially leading to financial difficulties for the industry.
References:[1] General-news Source[2] Portwatch Insights[3] Freight Industry Finance Report
