It's too early to tell if new tariffs levied on China will cause transpacific freight rates to rise, says a shipping industry expert.
"There are too many moving parts to give predictions with any confidence," Simon Heaney, Drewry’s senior manager, container research for Drewry, a leading shipping industry consultant with offices in China, India, Singapore and the United Kingdom, recently told MTD.
Transpacific shipping rates "are falling right now for structural reasons, such as over-supply in the market and undercutting by carriers due to new alliances forming."
However, Heaney noted that "additional tariffs on China will likely drive more U.S. imports from China to non-tariffed countries. This potentially could lead to capacity constraints if there is insufficient capacity from these new locations to the U.S., but it’s too early to say.
"Replacement countries, such as Vietnam or India, might also be hit with new duties," he continued.
"Longer-term, we’ll need to see how this impacts American’s purchasing power. If the U.S. economy is damaged significantly, there might follow a reduction - or at least a slowdown - in demand for containerized imports more broadly, in which case the supply-demand interplay will be altered again."
Earlier this week, U.S. President Donald Trump levied an additional 10% tariff on products exported from China. The government of China has announced it will impose retaliatory tariffs on U.S.-made goods.
