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Mad shipping dash ensues after U.S., China put tariffs on temporary hold

Published: 21 May. 2025, 18:39 Updated: 21 May. 2025, 18:43

Containers are stacked up at the Sinseondae Dock in Busan on April 30. [YONHAP]

Shipping rates for routes to the United States have surged sharply following U.S. President Donald Trump’s recent tariff truce with China, raising concerns among Korean exporters already grappling with high logistics costs. If the current spike in ocean freight prices continues through the year as it did last year, rising transportation costs may further erode operating profits.

The Shanghai Shipping Exchange said Wednesday that the Shanghai Containerized Freight Index — a benchmark for global shipping rates — rose 10.0 percent from the previous week to 1,479.39 on Friday. This marks the first time in over two months the index has surpassed the 1,400 mark, last seen on March 7.

The surge was especially pronounced on U.S. routes. The West Coast index soared 31.7 percent to 3,091, while the East Coast index climbed 22.0 percent to 4,069. German shipping giant Hapag-Lloyd said on May 15 that bookings between China and the U.S. had jumped 50 percent from the previous week.

Analysts attribute the spike to the unexpected announcement on May 12 of a 90-day tariff reprieve by the U.S. and China. Anticipating a slowdown in cargo volume due to prolonged trade friction, many global shipping lines had cut back operations on U.S.-bound routes. However, the sudden tariff suspension led to a surge in cargo demand, tightening space and driving up rates.

According to the Korea International Trade Association, about 25 percent of ships originally scheduled to dock at the Port of Los Angeles this month were canceled due to a lack of cargo. The number of vessels arriving at the Port of Long Beach in the last week of April dropped 38 percent from the previous week.

Jonathan Roach, an analyst at British shipbroker Braemar, said that U.S. importers are now under growing pressure to bring in as much cargo as possible during the 90-day tariff suspension, adding that freight rates are expected to rise rapidly.

The spike in freight prices during the traditionally slow second quarter has brightened the business outlook for shipping companies. Kenneth Loh, an analyst at Bloomberg Intelligence, projected that the unexpected tariff truce would drive a sharp increase in trans-Pacific cargo over the coming weeks, boosting earnings for major carriers including China’s Cosco Shipping Lines, Denmark’s Maersk and Japan’s Mitsui O.S.K. Lines.

Loading and unloading operations take place at Incheon New Port in Incheon on May 16. [NEWS1]

Korean exporters are closely monitoring the situation. Last year’s Red Sea crisis and supply pressure from China already caused freight rates to soar, inflating logistics costs.

Samsung Electronics reported 2.96 trillion won ($2.13 billion) in logistics costs last year, up 71.9 percent from the previous year. LG Electronics spent 3.11 trillion won, up 16.8 percent.

“We are monitoring capacity availability and rate fluctuations, as well as trade negotiations and related developments,” a source at a major conglomerate said.

Experts believe high freight rates will likely continue in the near term.

“We expect to see early demand inflows for peak season cargo ahead of the third quarter, driven by the 90-day U.S.-China tariff reprieve,” a Korea Shipowners’ Association official said. “Considering the typical two to three-month lag in restoring service schedules, strong rates on U.S.-bound routes will likely persist through the second quarter.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY PARK YOUNG-WOO [[email protected]]