Container shipping lines sharply cut capacity on Asia-North America routes

Container shipping lines sharply cut capacity on Asia-North America routes as trade collapses due to Trump's tariffs, sending the global shipping market into a tailspin.

container shipping

Container shipping. Photo: Freepik/Phaata

Major container shipping lines are suspending at least six weekly service between China and the United States as President Donald Trump's punitive tariffs on the world's top exporter crimp trade, according to shipping consultants.

The ships on those routes have a combined capacity of 25,682 40-foot containers per week — or more than 1.3 million 40-foot containers per year — carrying items such as toys, sneakers, auto parts and inputs for U.S. manufacturing, according to capacity data in customer advisories.

The service cuts, along with individual cancellations, are a response by major container lines to mitigate the impact of Mr Trump’s volatile trade policies.

Policymakers, economists and businesses are increasingly looking to seaborne trade – which accounts for 80% of global trade – as a key indicator of the health of the world economy.

“This is not the precursor, it is the proof of a drop in economic activity,” said Simon Sundboell, CEO of Danish maritime data provider eeSea, referring to the ongoing capacity cuts.

The routes being suspended include weekly services operated by MSC, Zim and the Ocean Alliance (which includes Cosco, Evergreen, CMA-CGM and OOCL), Sundboell said.

Of these, four affect US West Coast ports, one affects the East Coast and one is in the Gulf of Mexico.

The shipping lines involved either declined to comment or did not immediately respond.

Maersk and Hapag-Lloyd, part of the Gemini alliance, have not suspended service – although both have seen a significant drop in bookings from China to the US in April and have replaced some vessels with smaller vessels.

Representatives from the US and China are set to meet this weekend in Switzerland after more than two months of deadlock in trade talks.

Blank sailings surge

Global shipping lines use a strategy called blank sailing to protect profits, avoiding deploying too many vessels when demand is weak. This helps cut fixed costs, keep supply and demand in balance and support spot freight rates.

Blank sailing has become increasingly popular since the Covid-19 pandemic disrupted global trade in 2020 – and is one reason why shipping lines have recently posted record profits.

Major US retailers such as Amazon.com and Walmart have responded to Mr Trump’s 145% tariffs on Chinese goods by suspending or cancelling orders as import costs have doubled.

The rate of blank sailings on the trans-Pacific trade from Asia to North America has increased from 9% (week ended March 30) to 24% (week ended May 4), consultancy Drewry said in a recent podcast.

Drewry data shows that capacity on the Asia-West Coast of North America trade fell 20% in April and is down 12% so far in May.

On the North American East Coast, the declines were even steeper: down 22% in April and 18% in May.

MSC, the world’s largest container line, canceled 30% of its scheduled trans-Pacific sailings in April, the highest of any carrier, according to Daniela Ghimp, project manager at Drewry.

The Premier alliance (which includes ONE, HMM and Yang Ming) led the cancellations in May with 20%, Ghimp said.

ONE declined to comment, and HMM and Yang Ming did not immediately respond.

The full impact of Trump’s tariffs may not be seen until July, when total US container imports could fall 25% or more year-on-year, according to John McCown, senior fellow at the Center for Maritime Strategy.

“Something’s gotta give, and I believe either considerably more capacity will have to be culled, or spot rates will start to crash,” said Alan Murphy, CEO of supply chain consultancy Sea-Intelligence.

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