US Logistics Update [Mar 22, 2025]-English

U.S. Economy

With less than 10 days to go until April 2, the day President Trump vowed to impose reciprocal tariffs, U.S. Secretary of Commerce Scott Bessent reaffirmed that he will “announce tariff rates on a country-by-country basis on April 2,” while Secretary of State Marco Rubio stated that “after reciprocal tariffs, we will work on new trade agreements through bilateral negotiations.” The two ministers' comments are interpreted to mean that the U.S. will impose reciprocal tariffs on April 2, taking into account both tariff and non-tariff barriers of U.S. trading partners, and then negotiate new trade agreements with them based on fairness and reciprocity, marking the beginning of the realignment of the global trade order. President Trump also emphasized that “tariffs have had and will continue to have an enormously positive impact (on the economy),” and that the greatest achievement of his tariff policy has been the growth of jobs as foreign companies invest in the United States. Meanwhile, in response to Trump's tariffs, the EU has threatened to impose additional tariffs of 50 percent on U.S. whiskey and other products, leading to a significant increase in exports, with U.S. alcoholic beverage companies moving as much as possible to the EU market before the tariffs take effect, Bloomberg reported.

The Federal Reserve (Fed) decided to keep its benchmark interest rate unchanged at 4.25-4.50% at the Federal Open Market Committee (FOMC) meeting held on March 18-19. The Fed also announced that it forecasts the benchmark interest rate at 3.9% at the end of this year, suggesting that two rate cuts of 25 basis points will be made by the end of the year amid growing economic uncertainty in the wake of the 'tariff war'. Meanwhile, the Fed has taken a dimmer view of the U.S. economy this year, lowering its GDP growth forecast to 1.7% from 2.1% in December and raising its year-end unemployment forecast to 4.4% from 4.3%. Last week, international credit rating agency Fitch followed JPMorgan and Goldman Sachs in lowering its U.S. listing rate forecast for this year to 1.7% from 2.1%, citing the risk of a global trade war following the Trump administration's tariff policies. Meanwhile, the spread of avian influenza has pushed egg prices to a record high ($1 per dozen) in recent months, spurring a surge in smuggling along the southern border, the WSJ reports. Egg prices accounted for two-thirds of February's producer price index (PPI), which rose 53.6% month-over-month and 3.2% year-over-year.

Maritime Cargo Market Trends

Analysts say entering a recessionary cycle in the shipping market due to overcapacity
Analysts such as JP Morgan and S&P Global predict that the container transportation market will remain sluggish in the coming years due to oversupply and weak demand. JP Morgan forecasts a 30% year-over-year decline in freight rates in 2025 (down from its previous estimate of minus 15%), “which could result in an EBIT (earnings before interest and taxes) loss in 2025,” and expects this shipping market downturn to continue for the next three years. According to S&P Global, Northeast Asia to U.S. West Coast freight rates have fallen 65% since the beginning of January, and fell another $400 last week to $1,800/FEU, while Northeast Asia to U.S. East Coast freight rates are also down $500 last week to $2,800/FEU and are down 58% so far this year. While weakening demand is causing prices to plummet, container ship orders now exceed 7 million TEUs, representing 25% of the existing fleet, and the imbalance between supply and demand is expected to be particularly acute over the next two years as supply, which had absorbed around 10% of global capacity, recovers from a glut after Houthi airstrikes clogged the Red Sea and bypassed Africa, causing ships to be diverted from the region.

Breakbulk Carriers React Strongly to Chinese Tonnage Plan
Multipurpose vessel (MPV) charterers and operators are pushing back hard against the U.S. Trade Representative's (USTR) plan to impose fees of $1 million to $1.5 million per U.S. port call on Chinese-built and operated vessels, saying it will significantly increase the cost of transportation for breakbulk and project cargoes ahead of Monday's deadline for industry comments, JOC reports. MPV operator BBC Chartering has called for the breakbulk sector to be completely excluded from the fee “as there are no US-built multipurpose vessels and multipurpose vessels carry critical industrial cargo, strategic components and resources originating in the US.” Small and medium-sized carriers operating in the Caribbean and elsewhere are also pushing back, saying the increased costs will force them to shut down operations, while large container carriers and large shippers have been largely silent. The American Association of Port Authorities (AAPA) says the fee will eventually be passed on to U.S. consumers and that carriers may increase calls to Canadian and Mexican ports to avoid the fee, while reducing calls to U.S. ports, which will increase costs for shippers, including straining large U.S. ports and causing other ports to see a significant drop in business.

Air Cargo Market Trends

JAL to enter the U.S. freighter market with Kalitta Airlines code-share in the U.S.
Japan Airlines (JAL), which announced its re-entry into the freighter market in February 2024, has signed a code-share agreement with Kalitta Airlines of the United States for scheduled freighter flights from Tokyo Narita (NRT) to Chicago O'Hare (ORD) starting May 10, marking the first time in 13 years that JAL has operated freighters in the U.S. since it left the freighter market in 2011 when it retired its Boeing 747-400 freighters. “The new codeshare agreement with KALITTA will allow JAL to meet the continued strong demand for cargo transportation between Asia and North America by adding Kalitta's large freighter aircraft to provide reliable and flexible air cargo services,” JAL said in a press release, adding that ”on May 31, passenger flights will commence on the Narita-Chicago route, adding to the cargo supply.” Meanwhile, JAL has been testing freighter operations with three B767 P2Fs (converted) since announcing its re-entry into the freighter business.