The escalating trade tensions between the U.S. and China have significantly disrupted global shipping operations with freight rates expected to surge by 30%, say analysts.
“The imposition of steep tariffs—145% by the U.S. on Chinese imports and 125% by China in retaliation—has led to a substantial slowdown in cargo movement,” said Rohit Chaturvedi, Partner, Transport & Logistics, Forvis Mazars, an international professional firm with presence in more than 100 countries.
“Major Chinese ports like Shanghai and Guangdong are experiencing severe congestion, with containers piling up due to cancelled orders and rerouted shipments,” he said.
He said this bottleneck has resulted in a notable decrease in cargo volume handled by Chinese ports and the uncertainty surrounding these tariffs had also impacted shipping rates.
“Spot shipping rates between China and the U.S. East Coast have surged, while rates to the West Coast have also increased. Additionally, the proposed $1 million fee on Chinese-built vessels docking at U.S. ports threatens to further destabilise maritime trade, potentially bringing international shipping to a standstill,” Mr Chaturvedi said.
He said these developments were not only affecting shipping companies but also would have broader implications for global trade, potentially leading to increased costs for consumers and disruptions in supply chains worldwide.
Analysts said the trade tensions with China is expected to trigger freight rate hike of 30% as containers are getting piled up in China on account of the escalating trade war.
They said shippers to the U.S. and Indian exporters were bracing for the freight hikes and delays which could lead to losses in the foreign trade.
Jitendra Srivastava, CEO, Triton Logistics & Maritime, a logistics company said “The global shipping and logistics sector is heading into a period of uncertainty, and both US shipping lines and the Indian exporting community will have to deal with the aftershocks.”
He said the volume of containers stuck in China right now due to trade uncertainty, tariffs, and geopolitical shifts would put the entire global supply chain at risk of a lack of containers available for shipments.
“This will cause freight rates to rise as shipping lines will try to recoup operating costs due to a decline in the volume of cargo moving globally. For Indian exporters, especially SMEs, this may amount to a meaningful increase in their supply chain costs—costs incurred to source raw materials, costs due to delay in warehousing, and costs incurred due to higher freight rates,” he added.
Stating that the full impact would be felt in phases, he said the if the market sentiment around China’s inability to export continued to worsen, a complete disruption of trade routes and pricing models would be seen due to the imbalance of the global container market.
“If the situation does not stabilise quickly, we expect freight rates to start fluctuating between 10% to 30% across regions starting next month,” he cautioned.
Published – April 16, 2025 08:28 pm IST
