Ocean shippers raise prices within 24 hours of China-US announcement to slash tariffs: industry observer

Less than 24 hours after China and the US released a joint statementon Monday following their trade talks in Geneva, Switzerland, global shipping companies moved swiftly to reinstate rate hikes. Spot rates for 40-foot containers bound for US West Coast for June have already been quoted as high as $6,000, an industry observer told the Global Times on Thursday.

With a 90-day window now in place, US buyers are rushing to place orders, leading to a short-term surge in both supply and demand, Zhong Zhechao, founder of One Shipping, an international logistics consultancy, told the Global Times on Thursday.

The world's two largest economies on Monday released a joint statement following the China-US Economic and Trade Meeting in Geneva, agreeing to reduce tariffs substantially.

Some shipping companies have quoted rates as high as $6,000 for early June sailings - a sharp increase from around $2,500 prior to the hikes. Zhong noted that capacity remains extremely tight. Since April 9, many vessels serving US-bound routes have been diverted to Europe, South America, or the Middle East, with some routes even undergoing structural adjustments.

"If rates rise again to $6,100 on June 1, that would represent a staggering 160 percent surge in freight rates in just two weeks," Zhong said.

"With the unexpected shift in tariff policy, market demand has surged almost overnight. We're seeing a short-term shipping boom, but capacity has not fully recovered yet. In this kind of environment, rates are bound to rise quickly," Zhong said.

A Maersk employee told the Global Times on Thursday that following the significant reduction in China-US tariffs, they "have seen an increase in cargo bookings," though specific figures could not be disclosed.

"We will also increase capacity on the China-US route to meet rebounding market demand," the employee said, adding that capacity adjustments are a process and will be implemented gradually.

Container shipment bookings from China to the US placed by American importers surged nearly 300 percent following the tariff reductions.

"The average bookings for the seven days ended Wednesday soared 277 percent to 21,530 20-foot equivalent units from 5,709 TEUs for the average for the seven days that ended on May 5," Reuters reported, citing Ben Tracy, container-tracking software provider Vizion's vice president of strategic business development.