After US President Donald Trump announced a 90-day duty moratorium for many countries, including India, global manufacturers are in a hurry to ship goods to the US during this period. “Shippers will welcome the 90-day suspension of tariffs, but it may not be a cause for celebration,” said Peter Sand, chief analyst at Oslo-based maritime analytics firm Genetta. There is currently a trade war going on between China and America, in which tariffs are increasing above 100 percent.
After four months of decline, freight rates on eight global sea routes have increased for the second consecutive week. This has happened due to the imposition of retaliatory tariffs by America and subsequent temporary ban on it. The Drewry World Container Index rose 3 percent last week to $2,265 per 40-foot container amid a volatile environment for transporters.
“Shippers who have the opportunity to exit imports from countries outside China will do so as the situation remains highly unpredictable,” Sand said. There is every possibility that the higher charges will come into effect 90 days from now.’ However, shippers are also busy planning for capacity reduction and disruption. People associated with global business had already expressed this possibility. Empty ship movements on key East West routes have almost doubled from 41 to 77 in three weeks, according to Drewry’s canceled sailings tracker, as carriers reduce capacity.
“Demand is expected to be subdued due to recent US tariffs on imports from China and other Asian countries, posing a challenge to shippers,” Drewry said. Carriers can focus on their capacity management to maintain rates levels. This may occur primarily due to empty movement of ships. The number of ship trips may decrease in the next 5 weeks. We estimate that 88 percent of departures will take place as scheduled. Going forward, shippers will be keeping an eye on how the supply chain is changing.
“If the tariffs and possible retaliatory measures lead to inflation and a slowdown in the global economy, it could ultimately impact seaborne cargo volumes and trade patterns,” said an executive at a major Japan-headquartered shipping company. We are monitoring the situation closely.
Amidst this competition, Indian port companies are also trying to take advantage of opportunities to bring expensive cargo to their terminals. Another port official said, “The disruption has already caused panic among exporters. They are demanding backup plans everywhere, so that the needs of their primary transporters and cargo handlers can be met. We are seeing huge potential for this. We are keeping an eye on whether it might be a good idea to collaborate with businesses in countries with lower tariffs for dedicated facilities. Although last week we were sure of it. But now due to the ban on fees, there is a situation of watch and wait.
The accumulation of stocks in India is putting pressure on logistics. Divyanshu Tripathi, founder of logistics firm Hexalog, said, ‘Even before this, freight rates on trade routes between the US and China had increased by 80 to 120 percent. This was due to the imposition of retaliatory tax and there was disruption in the business system. Now a similar challenge is coming in the India-America corridor. Short-term storage is expected to increase logistics activities by 20 to 35 percent.
First Published – April 13, 2025 | 10:12 PM IST
