Market Conditions – As the summer shipping season approaches, import planning for peak season faces no shortage of uncertainty. A 90-day pause in tariff escalation, particularly with China joining trade negotiations in mid-May, has dramatically shifted market conditions from famine to feast. Key dates for potential tariff changes are July 9th for non-China origins and August 11th for China. Importer container volume forecasts are projected to be bullish throughout this period.
Market Rates – The first of potentially multiple container freight increases is now in effect. As of May 15th, several ocean carriers have raised their rates by an average of $500 per 40'HC container. This immediate price hike is a direct consequence of a significant lack of immediate capacity within the trade, caused by suspended services, blank sailings, and vessels being reassigned to other routes. Given that it will take several weeks to re-deploy these vessels, a sharp rise in rates is expected during this period.
Ocean carriers have announced significant general rate increases (GRIs) on the short-term market, effective June 1st. The primary increase is $3000/ 40HC, with proportional multipliers for other equipment types. This GRI alone will nearly double existing freight rates on the trade. Importers are closely monitoring potential congestion delays, as the customs clearance date (currently July 9th and August 10th), not the cargo ingate date at the origin port, will determine their tariff exposure. Furthermore, carriers have filed additional increases for June 15th, anticipating oversubscribed vessels on most sub-trades into the U.S. over the next 45-60 days.
Peak Season Surcharges Start Early, June 1st Effective Date – Ocean carriers quickly implemented or increased peak season surcharges to narrow the growing disparity between long-term fixed rates and current market rates. Projections indicate that this gap, excluding surcharges, could reach an astonishing $4,000 per 40-foot container by June 15th. Carriers anticipate market conditions will support these surcharges, as early volume forecasts appear robust through July.
Fortunately, unless the situation significantly escalates, we are nowhere near the severe port congestion experienced during COVID. The market is currently well-supplied with capacity, and while there's a short-term imbalance, this is temporary. It is likely that peak season surcharges and FAK increases will likely top out by early July for East Coast-bound shipments, and roughly two weeks later for the U.S. West Coast. Even as rates may recede from their peaks, they are predicted to hold well above historical averages through the third quarter.
Congestion hits China Ports, U.S. Next? – Significant berthing delays, averaging 24-36 hours, are currently impacting primary load ports in China, with no immediate relief anticipated. These delays began in April, forcing ports to operate on a "first come, first serve" basis. This shift was a direct result of blank sailings and service suspensions, which rendered ocean carriers' 2025 pro-forma schedules unfeasible. Such a dramatic and rapid change in conditions has historically led to similar disruptions at U.S. ports.
U.S. ports, particularly those in Southern California, anticipate significant delays in June and July due to the arrival of fully loaded vessels. These ports will bear the brunt of increased cargo as extra loaders and additional services are deployed to manage the surge in imports.
To mitigate the impact of potential tariff increases in July and August, importers are expected to pre-clear goods, even for traditional and non-traditional intermodal shipments. Currently, most importers utilize an "In-Bond (IT) Entry" with ocean carriers and forwarders. This allows cargo to move directly from the port to rail destinations like Chicago or Memphis for customs clearance, avoiding port delays. However, the anticipated increase in cargo volume could disrupt this process, leading to further port congestion, a scenario that appears increasingly likely in the current market.
Rail Dwell Averages Remain Above Average – Although port complexes like Los Angeles are reporting dramatic drops in container volumes—some by as much as 30%—rail dwell times remain an issue. Specifically, some West Coast ports still experience spot dwells of over seven days from discharge before rail departure. We anticipate a gradual improvement in these conditions, particularly in Southern California, as April vessel departures from China were significantly reduced due to escalating tariffs.
Rail dwell times from Vancouver and Prince Rupert are not much better, with Vancouver seeing the most severe rail departure delays. It's common for trains to be delayed by seven days from the port of discharge. While we anticipate some improvement in conditions over the coming weeks, these delays are expected to spike again by mid-June as fully loaded vessels begin to arrive.
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