In the context of the escalating US-China trade tensions along with negative news in the shipping industry in recent times, perhaps the news that container freight rates on the trans-Pacific route have remained remarkably stable is good news, right?! That is all thanks to flexible coordination strategies from shipping lines and the shift of demand to Southeast Asian markets.
Specifically, the US's imposition of a minimum tax of 145% on goods from China has led to a sharp decline in transportation demand (up to 50%) in recent weeks. The Port of Los Angeles also forecasts a decrease of up to 35% in cargo volume in the coming time. This has forced carriers to take drastic measures such as blank sailings and capacity cuts, estimated at up to 28% for the West Coast and 42% for the East Coast.
Amidst the tension, increased exports from other countries in the Far East, especially Southeast Asia, are largely filling the gap. Judah Levine, head of research at Freightos, noted that bookings from the region have increased by about 20%, helping to stabilize freight rates despite the volatility. However, if the situation persists, it could impact commodity prices, and US consumers could face shortages of toys, children's products, and sports equipment.
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