US Logistics Update [Mar 29, 2025]-English

U.S. Economy

President Trump announced on March 26 that he will impose a 25% tariff on all automobiles imported into the U.S. starting April 2 (effective April 3). About half of the vehicles sold in the U.S. are imported, and the tariff will apply to complete vehicles such as sedans, SUVs, crossovers, minivans, cargo vans, and light trucks, including U.S. car brands, and some parts such as engines, transmissions, powertrain parts, and electrical components. However, parts covered by the U.S.-Mexico-Canada Trade Agreement (USMCA) will be deferred until a process for imposing tariffs on non-US goods is established, which is favorable for U.S. companies that rely heavily on these regions for parts. Following the auto tariffs, President Trump has stated that he will proceed with the imposition of itemized tariffs on pharmaceuticals, lumber, semiconductors, etc. as well as the announcement of reciprocal tariff rates for all countries in the world on April 2, which is expected to create a “perfect storm” for global trade.

President Trump has set a new record by signing 104 executive orders in his first 65 days in office, CBS reports, compared to 33 in the first 100 days of his first administration (totaling 220 in his first four years). By subject area, 17 of the executive orders were related to Elon Musk's Department of Government Efficiency (DOGE), followed by 16 on trade policy, including tariffs, 10 on energy and climate, and 9 on immigration. Meanwhile, mixed economic data is fueling the recession debate in the U.S., with soft indicators based on surveys of households and businesses and hard indicators such as government data on employment and production sending mixed signals about the future of the economy, Bloomberg reported. The University of Michigan's March consumer sentiment index fell to its lowest level in two years and four months, and the Conference Board's March consumer confidence index fell 7 points from February, the largest drop since August 2021. In particular, the expectations index, which reflects consumers' short-term outlook, fell 9.6 points month-over-month to 65.2 in March, the lowest level in 12 years since 2013. On the other hand, the unemployment rate remained strong at 4.1% in February, and consumer price inflation remained favorable at 2.8% y/y in February. Experts caution that while hard indicators reflect past economic conditions, survey-based soft indicators capture future expectations, making it essential to pay close attention to consumer sentiment trends.

Maritime Cargo Market Trends

Results of USTR Chinese Tonnage Policy Public Hearing
The US Trade Representative (USTR) held heated public hearings on the USTR's policy to impose port fees of up to USD 1.5 million per port call on Chinese-built ships calling in the US. While most of the participants mentioned the negative effects of 'Chinese tonnage' (rising costs and stagnation of small and medium-sized ports), they also recognized that the policy is part of the US government's plan to revive the shipbuilding industry and proposed various alternatives such as 'per container', 'phased-in', and 'per voyage instead of per port'. “The industry sees port fees as a bigger threat than tariffs,” said Jonathan Gold, spokesperson for the National Retail Federation (NRF), ”because shipping companies will pass the costs on (elsewhere) and smaller U.S. ports will be hit hard. Meanwhile, Chinese ships account for over 30% of the world's vessels, and China's share of ship manufacturing now exceeds 50%. In contrast, the U.S. ship manufacturing share is only 0.01%.

JOC rebuts shipping recession cycle thesis
JOC argues against JP Morgan and others' prediction that the container shipping market will remain sluggish in the coming years due to oversupply and weak demand. In an editorial, the Journal of Commerce (JOC) first dismissed the demand contraction forecast, saying that 2025 demand is expected to grow 4% year-on-year despite President Trump's tariffs. It also predicts that the return of Red Sea shipping will not be easy due to the difficulty of defeating Houthi rebels, and cites several experts as saying that even if the Red Sea is reopened and planned vessel orders are actually put into service, increasing supply, the latest supply management techniques by shipping companies will offset this. For example, in addition to techniques such as blank sailing and space allocation, slowing down a ship by just three knots (from 18 knots to 15 knots) can have a significant supply reduction effect, and while the fleet growth rate for 2025 is 7.9% year-on-year, the actual increase in functional capacity is only 3.4%, according to eeSEA data.

Air Cargo Market Trends

Air cargo freight rates remain steady despite concerns about e-commerce demand contraction
Air cargo freight rates remained high in March despite a number of headwinds, including additional US tariffs on many countries and controversy over the application of de minimis, and demand is growing. According to WorldACD, demand (tonnage) in Asia surged +13% to Europe and +10% to North America on a two-week-on-two-weeks (2Wo2W) basis in week 12. On a week-on-week basis, Europe-bound was up +7% and US-bound +5%. By country, South Korea (+18%), Taiwan (+13%), and Vietnam (+9%) were the strongest performers. In terms of freight rates, Asia to the U.S. is priced at $4.91/kg (+11% year-over-year). Continued de minimis deferral for e-commerce cargo from China will keep air demand and freight rates robust for the foreseeable future.