The reelection of US President-elect Donald Trump on November 5 has sparked fresh speculation about global trade dynamics and the potential for a freight rates spike. Trump’s stated intention to impose stringent tariffs on imports—up to 10% universally and as high as 60% on goods from China—had many market observers anticipating a surge in shipping costs as US importers rushed to boost inventories ahead of the new tariff regime. Yet, actual market behavior has so far been more muted than expected.
Anticipated Tariffs and Their Impact on Freight Rates
During Trump’s first term (2017-21), tariffs of 10-25% were imposed on approximately $380 billion worth of goods, most notably targeting Chinese exports. Analysts initially predicted that renewed tariffs could trigger a short-term freight rates spike, as importers front-loaded shipments to avoid higher duties. According to Judah Levine, Head of Research at the online freight marketplace Freightos, any announced tariffs typically give importers lead time to accelerate shipments, increasing ocean freight demand and pressuring freight rates upward.
Tepid Response in Actual Shipping Costs
Contrary to these predictions, early November freight data suggests a less dramatic reaction. Market sources reported an 8% month-on-month decline in the average cost of a 40-foot container shipped from Shanghai to the US West Coast. This downward trend contradicts the widely anticipated freight rates spike, indicating that importers are not, as of yet, stockpiling goods in large volumes.
Artem Segen, a market reporter at Expana, attributes this reluctance to the inherent risks of tying up capital in inventory during uncertain economic conditions. He noted that if importers were significantly front-loading, a consistent price uptick would be evident—something not currently reflected in the data.
Seasonal Factors and Alternative Explanations
The lack of a short-term freight rates spike may also be influenced by seasonal and cyclical factors independent of US tariff policies. Market insiders anticipate a surge in demand from Chinese exporters in December, as they rush to finalize shipments before the Chinese New Year slowdown in January. This traditional pre-holiday push could boost transportation demand and potentially influence shipping costs, but such increases may not stem directly from new tariffs.
Rolf Jansen, CEO of Hapag-Lloyd, expressed uncertainty regarding the scale of any pull-forward in demand or the lasting impact of tariffs. During the first Trump administration, shifting trade patterns—not outright reductions in trade—were observed, particularly in US-China flows. If history repeats itself, any freight rates spike might be tempered by adjustments in supply chains rather than a simple decline in global trade volumes.
Outlook for Freight Rates
While a freight rates spike due to Trump’s reelection and imminent tariffs has not materialized as swiftly as some predicted, the shipping landscape remains dynamic. Factors such as ongoing trade negotiations, shifting sourcing strategies, and seasonal demands continue to influence ocean freight costs. Should importers eventually opt to front-load orders to avoid tariffs—or if geopolitical tensions escalate—freight rates could still surge. For now, the market’s response to impending policy changes remains cautious, with many industry players taking a wait-and-see approach.
