On the High Seas
Currently container rates are relatively stable, albeit at higher levels than seen before the Red Sea conflict. Carriers seem to be trying to raise rates, but overcapacity is dampening those attempts. While the end of de minimis exemptions had a swift impact on air cargo, the impact was already baked in as China’s exemption, which accounted for ~75% of small package air shipments was rescinded in May. As we have mentioned previously, small package shippers are now consolidating shipments into containers and shipping by sea unless air is requested, so we expect some increase in demand in the near-term, but with China the bulk of the small package business, the impact will be minor.
Interestingly, we find that those countries that have reached tariff agreements with the current administration are still operating under the old tariff amounts, as the details of the new agreements are still being worked out. This does leave some room for improved demand as lower tariffs are implemented, but without some unusual circumstance, we don’t expect those changes to have a substantial effect on rates, especially with the offset being the extreme tariffs on imports from India. As the administration has already petitioned the Supreme Court to review the case, with the court agreeing to do so on a fast track basis, the current tariffs will likely stay in place until the end of this year (oral arguments begin in November) at least, and the final ruling, even on a fast track, could take until June of next year, meaning little or no effect this year. Should the Supreme Court agree with the lower court ruling, all bets are off as we expect the administration will find other ways of implementing them, restarting the court process.. Right now odds on the Supreme Court ruling in favor of the administration are currently 46% (unofficial).
Interestingly, we find that those countries that have reached tariff agreements with the current administration are still operating under the old tariff amounts, as the details of the new agreements are still being worked out. This does leave some room for improved demand as lower tariffs are implemented, but without some unusual circumstance, we don’t expect those changes to have a substantial effect on rates, especially with the offset being the extreme tariffs on imports from India. As the administration has already petitioned the Supreme Court to review the case, with the court agreeing to do so on a fast track basis, the current tariffs will likely stay in place until the end of this year (oral arguments begin in November) at least, and the final ruling, even on a fast track, could take until June of next year, meaning little or no effect this year. Should the Supreme Court agree with the lower court ruling, all bets are off as we expect the administration will find other ways of implementing them, restarting the court process.. Right now odds on the Supreme Court ruling in favor of the administration are currently 46% (unofficial).
Figure 1 - Global Container Freight Index - 4/23 - 2025 YTD - Source: SCMR LLC, Freightos
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