In its most recent analysis of international ocean and air freight, Freightos offered the following comments:

Geopolitical Actions

The US has announced an ambitious tightening of economic sanctions on countries trading with Iran in the latest step to break the stalemate and re-open the Strait of Hormuz. Steps that extend to penalties against China – the largest customer for Iranian oil – could have implications for already fragile US-China trade relations.

Tensions likewise remain high in the Red Sea following recent Houthi attacks on passing vessels. Nonetheless, MSC has now joined the list of major carriers sending ships through the southern Red Sea. These steps are sparking some optimism that we are seeing the start of a gradual return to normal levels of container traffic through the waterway.

Tariffs

Canada - US trade talks aimed at averting President Trump’s threat of 50% tariffs on $20 billion, or about 5%, of Canadian exports to the US collapsed at the last minute over the weekend. Those tariffs are now in effect, with Canada planning retaliatory tariffs for September 8th as well as support for negatively impacted Canadian businesses, implying that Canada may be preparing for a prolonged standoff.

In terms of US tariffs on other trading partners, Section 301 10% - 12.5% tariffs targeting forced labor controls have been in effect since the 10% Section 122 tariffs expired in late July.

The USTR has still not released its findings for the Section 301 investigations into escess capacity practices by sixteen of the US’s largest trading partners, which could be used to restore tariffs to IEEPA levels. It took two months from the time the findings of the forced labor investigations were released until those tariffs were put in place, with a comments period and public hearings in the interim.

The concern that the White House would substantially increase tariff levels to close July may have been one factor driving the early start to peak season demand and spiking container rates back in June. That tariffs remained about level, and that the window until possibly higher tariffs remains open, may help explain the current, surprising, sustained container demand and peak rate levels on the transpacific.

Cargo Shipping Costs

Asia - US West Coast prices were level last week at about $7,500/FEU, with rates ticking up so far this week, back to the peak of $7,600/FEU reached in early July and nearly $5k/FEU higher than just before peak season demand kicked in back in late May.

Prices to the East Coast, which likewise climbed $5k/FEU from late May to early July, had been steady at about the $9,000/FEU level, but have gradually climbed another $800/FEU so far this month.

In addition to resilient demand, transpacific rate behavior is also supported by some carrier capacity reductions, as well as constraints from significant congestion at several major hubs in China.

The Panama Canal Authority, which recently announced cuts to daily transit slots due to anticipated drought conditions, will postpone a planned draft reduction from September to October. Several carriers have canal surcharges set for September, which could put upward pressure on rates for some Asia - US East Coast services.

Low Amazon River water levels are likewise driving disruptions and higher costs for impacted lanes in and out of Brazil. And drought conditions in the Rhine that are contributing to persistent congestion at N. Europe container hubs, together with backed up ports in the Far East, may be helping to keep Asia-Europe container rates quite elevated despite post-peak demand levels.

Prices that surged $3,000 - $3,5000/FEU from late May to early July on an early peak season start pushed rates up to more than $7,000/FEU to the Mediterranean and $5,800/FEU to N. Europe. Rates have gradually eased since then. Mediterranean prices fell 15% last week to about $5,000/FEU and N. Europe rates eased 6% to $4,700/FEU to $5k on cooling demand, but still remain 15% and 60% higher than before peak season, respectively.

Air Costs

Air volumes are easing as the industry enters a late summer lull. Freightos Air index data show Far East - US rates decreased 8% to $6.45/kg last week, with daily rates closer to the $6.00/kg mark and approaching July levels after climbing above $7.00/kg earlier in the month after Typhoon Dolphin disrupted operations.

Far East - Europe prices ticked up 3% to $4.58/kg, about level with late June rates despite reports of slumping e-commerce volumes following the EU de minimis cancellation July 1st. This relative rate stability suggests carriers are succeeding in effectively shifting capacity to other lanes as volumes recalibrate.