Drewry: Tariff pause has no 'lasting impact' as ocean freight rates fall again

Ocean freight rates have continued to cool after a surge, suggesting the tariff pause has had no lasting impact and that real demand is weakening, according to Drewry.

container-shipping

Container rates are giving up recent gains, as container traffic to the United States has fallen sharply following a surge spurred by the tariff pause.

The World Container Index from shipping analytics firm and data partner SONAR, Drewry, fell 9% this week, marking its second consecutive weekly decline after five weeks of growth.

"This decline is a direct result of weak demand for cargo to the United States, and is a sign that the recent surge in imports into the United States, which occurred after the pause on higher tariffs, will not have the lasting impact we had initially expected," Drewry said in a note.

SONAR data shows that the volume of imported containers entering U.S. ports is approaching a record high for 2024.

(Chart caption: The yellow circle shows current U.S. import container traffic approaching a record high for 2024. (Chart: SONAR))

Rates from Shanghai to New York fell 13% to $5,703 per 40-foot equivalent unit (FEU) last week, but spot rates were still up a significant 56% from May 8. Spot rates to Los Angeles fell 20% last week, but were still 38% higher than seven weeks ago.

Rates from Shanghai to Rotterdam and Shanghai to Genoa rose 1% to $3,204 and $4,100 per FEU, respectively.

“We expect the supply-demand balance to weaken again in 2H25, which will cause spot rates to decline,” the analyst said. “The volatility and timing of rate changes will depend on the outcome of legal challenges to Trump’s tariffs and on capacity changes related to the introduction of the U.S. penalties on Chinese ships, which are uncertain.”

Container volumes have surged following the China-US tariff truce announced on April 12. On Friday, the US announced a deal with China on tariffs.

Drewry’s North American Container Terminal Throughput Index rose 2.2% month-on-month in April to 118.4, representing a strong 10.3% increase year-on-year.

North America’s 12-month moving average growth rate rebounded slightly to 10.2%. Most major West Coast ports saw volumes increase in April, both month-over-month and year-over-year.

The Port of Long Beach continued its strong start to 2025, with April throughput up 6.1% month-over-month and a significant 15.6% year-over-year. The neighboring Port of Los Angeles also performed well, with volumes up 8.3% month-over-month and 9.4% year-over-year, reflecting robust activity across these important gateways to Trans-Pacific trade.

The global index recorded a modest 0.5% month-over-month increase and a more significant 5.6% year-over-year increase. This upward trend was further reinforced by a steady 12-month moving average growth rate of 6.5%.

Looking at the year-to-date figures (January-April), North America and the Middle East-South Asia region led the way, both posting strong growth of 9.7% and 9.6%, respectively. Greater China was not far behind, with a 7.5% increase. Oceania was the only region to report a decline, down 3.1%.

The Greater China region’s container ports delivered a solid performance in April, with the region’s port throughput index rising 2.3% month-on-month to 125.4, marking a 7.1% year-on-year increase. The region’s 12-month moving average growth rate also improved, in line with the global average of 6.5%.

China’s top five ports recorded an average year-on-year increase of 10% in April. Shenzhen emerged as a particular bright spot, with throughput surging 15% year-on-year. Guangzhou also reported a strong performance, with a 10.3% year-on-year increase, closely followed by Ningbo, which posted a 9.1% increase in throughput.

In contrast, Latin America’s Container Port Throughput Index fell slightly in April, down 3.2% month-on-month. The region’s throughput was still up 2.8% year-on-year. However, Latin America’s 12-month rolling average growth rate fell to 9%. While still significantly higher than the global average of 6.5%, the decline reflects a loss of momentum in the regional market.

After a sharp increase in March, throughput at Panama’s five terminals fell 5% month-on-month in April, although it was still 1.5% above April 2024 levels.

Brazil’s Santos port saw throughput flat month-on-month but up 2% year-on-year in April. Even as Callao, Peru reported an 11% month-on-month decline, its throughput was still 11% higher year-on-year, highlighting uneven performance across Latin American ports.

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