US Logistics Update [May 24, 2025]-English

• Moody’s, one of the world’s top three credit rating agencies, downgraded the United States’ sovereign credit rating from the highest grade of ‘Aaa’ to ‘Aa1’, following similar moves by S&P in 2011 and Fitch in 2023. At the same time, the Big Beautiful Bill (BBB Bill), spearheaded by former President Trump and centered on expanding tax cuts, passed the U.S. House of Representatives, causing significant turbulence in the U.S. economy over the past week. In particular, despite the Congressional Budget Office's (CBO) prediction that the U.S. fiscal deficit will reach $4 trillion, double the current level, if the tax bill is pushed through, it can be said that the U.S. government is confident in revitalizing the economy through tax cuts and reducing trade and fiscal deficits through tariffs, suggesting that it will not back down from future tariff negotiations with other countries. Tariffs are likely to become the ‘new normal’ despite the opposition of many experts. The U.S. is in need of resolving a serious trade deficit, but the manufacturing sector, which accounts for only 10.2% of the U.S. economy, is unable to improve the balance of payments, so the U.S. is planning to improve the balance of payments by imposing tariffs, and in the medium to long term, to solve the problem of service-led industrial consolidation through investment, so in the future, manufacturing companies will have to either bear the burden of high tariffs or invest in the U.S. to secure the U.S. market (build factories in the U.S.). Meanwhile, the U.S. national debt is an accumulating fiscal deficit that currently stands at $36 trillion and is 123% of GDP, below the 133% level during the pandemic but higher than the 106% level during World War II, the largest war in human history. 

• On May 23, President Trump announced that he would impose a 50% tariff on all imports from the European Union (EU) beginning June 1. Trump also warned that if smartphone manufacturers, including Apple and Samsung, do not move production to the U.S., he will impose a 25% tariff on foreign-made smartphones.

•   Trans Pacific East Bound (TPEB) trends

  • Demand: Bookings surged due to pent-up demand following the tentative agreement on US-China tariff negotiations and peak seasonal demand such as back-to-school. The surge in demand is expected to continue until at least the second quarter. Ships need to be booked at least one month in advance.

  • Vessel supply: Additional vessels are being added in response to the surge in demand from China, but the full-scale supply increase has not been realized due to the lead time required for route adjustments. (See TPEB route supply table below)

• Equipment : No major issues with securing Containers. Chassis supply is also not an issue.

• Rates : All carriers announced GRI on 6/1. Expect an increase of $3,000 per container. Peak Season Surcharges (PSS) announced and expected to be implemented.

• However, no impact on US West Coast ports yet (see North America Vessel Dwell Time below)   

• Crackdown on truck drivers who do not speak English (starting 6/25)

  U.S. Transportation Secretary Sean Duffy announced that starting June 25, drivers who do not meet the English-language proficiency (ELP) test at road and weigh stations will be immediately excluded from driving. This is being implemented in the name of threatening road safety as many drivers cannot even recognize highway signs, but it is expected to exacerbate the driver shortage and increase freight rates.

• Trends after 90-day suspension of US-China tariffs and reduction of De Minimis to 54% for China/Hong Kong

  Demand from China, which was down nearly 30% year-on-year before the suspension of US-China tariffs, increased slightly after the 90-day suspension of tariffs and the adjustment of the De Minimis tariff rate to 54%, but there is no significant market impact yet. Industry experts interpret this as a result of frontloading, which has reduced the urgency for inventory replenishment. In addition, the still-high 30% reciprocal tariffs on China and the 54% De Minimis duties offer little incentive to opt for air freight — which remains roughly 20 times more expensive than ocean shipping. If the Trump administration's tariffs stick, and as Temu, Shein, and others have advocated, low-cost e-commerce shipments from China are diverted to ocean freight and sold once they reach U.S. fulfillment centers, the downturn in the air cargo market is likely to be prolonged.