LINERS DRAW UP DEFENSIVE MEASURES IN THEIR ARMOURY TO FIGHT TRUMP’S TARIFF WAR In a post on his social media platform Truth Social on Monday, Trump threatened to impose an additional 50% tariff on China, following China’s implementation of a 34% counter tariff on American goods last Friday. Trump stated that if China’s latest retaliation is not withdrawn by today, the extra 50% tariff will take effect tomorrow, bringing the total tariffs to 104%. He added in his post that “all talks with China concerning their requested meetings with us will be terminated,” and that “negotiations with other countries, which have also requested meetings, will begin taking place immediately.” “Increasingly, it is becoming clear that US importers are adopting a wait-and-see attitude. To the degree their supply chain, and inventories allow them to halt and postpone shipments, this is what is happening now,” commented Lars Jensen, the head of liner consultancy Vespucci Maritime. The next “domino” to fall would be additional last-minute blank sailings to the US from the carriers in case the drop in bookings becomes too severe, Jensen suggested in a post on LinkedIn, with other liner experts advising some ships could head into hot layup.
WHICH SECTORS ARE SUFFERING THE MOST FROM TARIFFS?
Shipping equities came under intense pressure last week, with the average stock covered by Jefferies, an American investment bank, dropping 15.5%. No sector was spared as tankers, containers, dry bulk, LNG and LPG were sold off. On Friday, China announced a retaliatory tariff increase of 34% on all US imports. These are in addition to tariffs implemented in February and March, focusing on goods such as grains, coal, LNG and crude oil. Data from Clarksons Research shows volumes freshly tariffed this year have increased to 3.7% of all seaborne trade, now tracking at 460m tonnes out of a total of 12.6bn tonnes. “Direct exposure is increasingly material in some shipping segments (e.g. cars) and the indirect negative impacts on the world economy are gathering pace,” Clarksons noted in its most recent weekly report. The US accounts for 5% of all seaborne imports and 7% of seaborne exports. Most analysts believe that the container sector will be among the worst hit from the trade tit-for-tat that Trump has unleashed.
EXPECT ‘SUBDUED’ PEAK CONTAINER SEASON IN WAKE OF TARIFFS, SAYS ANALYST
The scope of the current tariff implementations is unprecedented, both in terms of the levels applied to China and the high rates extended to other U.S. trading partners, said Judah Levine, head of research for Freightos, in a new report. Most economists now predict slower U.S. gross domestic product (GDP) growth, an increased likelihood of recessions
both domestically and globally, and a potential contraction in global trade. These factors will inevitably impact the freight market, particularly ocean freight and air cargo, said Levine. Levine said these strategies may include diversifying supply chains, exploring alternative shipping methods, and closely monitoring policy developments. While challenges lie ahead, he said, it is possible to find opportunities amid the disruption.Levine advised providers to stay informed and agile, as the coming months will likely reshape the freight industry in ways we’re only beginning to understand. With reciprocal tariffs not applying to goods loaded before April 9, Levine said that there may be a brief scramble pushing container rates and demand up for a few days. But this is likely to be followed by a significant drop in volumes and rates as importers pause orders to let the tariff situation stabilize.
FINANCIERS SEE OPPORTUNITY IN US MARITIME TECHNOLOGY AND VESSEL CONVERSION The conversation turned to developments in Washington, DC., and the attention being paid to the US shipbuilding and merchant fleet. It’s going to be different from what we are seeing today.” Following up, panelist Shaerf said: “Older ships <presently owned by non-U.S. interests> will be sold into the US fleet for conversion.” Shaerf expressed scepticism about the ability of US shipyards to build competitively priced merchant vessels. “Even with subsidies and the like, they are so far removed…I don’t see it in newbuilds…I don’t see it in the US shipyards right now.” Panellist Kevin Kennedy, lamenting the decline of the US shipyards, said, “It’s a very complex and difficult business that I think investors here got tired of decades ago.” Arntzen and Shaerf did stress a different aspect of the ship finance scene; where strategic investors looking for market positioning as well as financial return are coming in to finance new technologies that will benefit the maritime sphere. “At least once a week, we get a request for funding a new maritime technology….the US can and actually will play a role in that…we’re not going to compete against China, Japan and Korea…for the U.S., it’s investing in the new technologies and improved efficiencies, and moving to the next generation of ships.”