Trade wars, ocean rates, and trucking

May 21, 2019

Our friend and colleague, Henry Byers at FreightWaves, analyzes where ocean rates should go over the coming months in reaction to the latest tariff news.  

We both expect to see a replay of Q4 2018 as shippers will front-load as much product as possible before the next round of 25% tariffs can be applied to virtually all remaining Chinese imports.  This window could be as little as 60 days..


Here's Henry's analysis: 

Just because ocean container rates decreased on May 15th that does not mean that arrangements are not being made to move shipments earlier than anticipated due to the impending tariff increases. 

In my opinion, rates decreased on the 15th mostly because supply chains did not have time to react and get their shipments out before May 15th (which would have increased demand for vessel space). 

You have to remember that in order for U.S. supply chains to move their goods early, it requires a great deal of effort from all parties involved (suppliers/warehouses/logistics providers), and would likely take 10-15 days minimum. Then, you have the ocean transit that would be anywhere from 14-16 days. 

Therefore, I expect to see the first wave of tariff-driven containers coming in at the end of this week and hitting the US roads and railways that next week (May 27th-31st).

I also expect that June 1st will mark the beginning of an upward trend in rates from China to the West Coast that will continue through the end of November. 

Below are my rate predictions in the spot market for a 40' container from China to the US West Coast through the remainder of the year:

 

 

 

Henry Byers 
SONAR Customer Success Manager 
Market Expert - International Freight Forwarding
(828) 429-5307

FreightWaves

 

 

 

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