US Logistics Update [Apr 5, 2025]-English

U.S. Economy

• The shockwaves from the reciprocal tariffs announced by President Trump are reverberating through the United States. First, the WSJ reported that $6.6 trillion in market capitalization was wiped off the New York stock market on April 3-4. U.S. households, known for their low savings rate and profligate spending, are also spending less and saving more. According to the Commerce Department, the household savings rate was 4.6% in February, well above the typical savings rate of 2-3%. Meanwhile, tourist arrivals to the U.S. this year are expected to be 9.4% lower than last year, with Tourism Economics predicting a 20% plunge in Canadian tourists. Walmart, the largest U.S. retail chain, is continuing price pressure on Chinese suppliers despite warnings from Chinese authorities to offset “Trump tariffs,” Bloomberg reports. Hyundai Motor Company has announced possible price hikes for cars sold in the U.S. But perhaps the biggest problem is that it's hard to predict the full impact of Trump's tariff war. In contrast to the growing economic unease, the President has maintained a calm demeanor, even appearing relaxed while playing golf, signaling his confidence in the situation.

• In response to Trump's announcement of reciprocal tariffs, major trading partners such as the EU, China, and Canada have responded with strong retaliatory measures, including retaliatory tariffs, leading many experts to believe that a Trump-led tariff war could change the global trade order and adversely affect the U.S. economy in the long run. Bloomberg Economics estimates that if Trump's tariffs are imposed at full force, the average tariff rate could rise by as much as 28 percentage points, reducing gross domestic product (GDP) by 4% and raising inflation by nearly 2.5% over the next two to three years. However, these projections do not account for retaliatory tariffs and other indirect impacts, such as businesses suspending investment and reducing consumption due to uncertainty about the future. On the other hand, as the tariff formula (import-export/importx1/2=tariff rate) shows, President Trump's intention is to attract manufacturing plants to the US and reduce the trade deficit. Therefore, many experts expect that export volumes from the United States will increase in the near future, and the demand for factory equipment in the United States will also increase significantly.

Maritime Cargo Market Trends

• North America Vessel, Rail Dwell time (Week 14 / Flexport)

• Service Contracts for 2025-26 Settled at 15-20% Higher Prices than Previous Year

  Large U.S. retailers are negotiating service contracts for Asia to the U.S. that will run from May 1, 2025 to the end of April 2026 at prices that are approximately 15% to 20% higher than the current 2024-2025 service contracts, JOC reports. However, some shippers are still refusing to sign as they believe the market will continue to soften in the second half of the year. In fact, the average spot price from Asia to the US has fallen to a 15-month low. According to analysis by S&P Global's sister company Platts, westbound from Asia fell to $1,600 per FEU, down nearly 70% from the first week of January. However, ocean freight rates, which began to rebound in late March, rose significantly (by around $1,000) in April on the back of carriers' general rate increases (GRIs) and increased blank sailing (see graph below), forcing shippers who had been pressing for further price reductions at the last minute to reverse course and sign SCs at higher prices than originally negotiated. It will be interesting to see who wins the battle between some shippers who are pushing for price reductions in anticipation of increased supply and carriers who are fighting back by blank sailing.

Air Cargo Market Trends

• President Trump Repeals De Minimis Exemption for Cargo from China (Effective May 2)  

  President Trump signed an executive order repealing the de minimis exemption for imports from China (including Hong Kong) valued at $800 or less, meaning that tariffs will be imposed on May 2 at 00:01 AM. Tariffs of $25 per piece or 30% of the value of the goods will be imposed on all goods valued at $800 or less, rising to $50 per item on June 1 (peak airline season expected by the end of April due to pushback demand). The higher-than-expected tariffs are expected to end an 18-month period of high fares and tight supply that has seen nearly 1 billion duty-free goods enter the U.S. last year, filling dozens of large cargo planes per day and accounting for half of all U.S.-bound airline demand. Meanwhile, some in the industry have expressed skepticism about the implementation date, arguing that "it is difficult to believe that a system for collecting tariffs has been put in place so quickly” in response to the Department of Commerce's announcement that "it has a complete system in place” (the May 2 implementation, a month late, is evidence of this). In fact, in February, the de minimis ban on cargo originating in China was reversed within a day, citing system inadequacies. In response to the U.S. government's regulatory moves, Temu, Shein, TikTok, and others are preparing to shift to a more ocean-oriented shipping model and have already established several large distribution centers in the U.S. If tariffs on low-cost imports from China reduce demand for U.S.-bound e-commerce, it will have a significant impact on the airfreight market, with a significant amount of freighter supply being released back into the general forwarding market, causing a significant drop in freight rates.