Container shipowners swamped as US-China trade detente revives demand

LOS ANGELES/HONG KONG - Container ship bookings for China to US cargo have surged since the countries declared a 90-day truce on punitive tit-for-tat tariffs on May 12, operators said, spawning traffic jams at Chinese ports and factories that could take weeks to clear.

US importers of sports shoes and sofas to construction supplies and auto parts are racing to get goods in before the deadline resets tariffs again, setting the stage for disruptions that recall the global transport quagmire during the Covid-19 pandemic.

The cargo surge at major trade gateways like Shenzhen’s Yantian Port, which handles more than a quarter of China’s exports to the US, has shipowners scrambling to coordinate berths and adjust vessel schedules.

“The demand is so high that we can serve only customers who have made long-term contracts with us,” a spokesperson for German container ship operator Hapag-Lloyd told Reuters.

“We have hardly enough space for spontaneous bookings.”

Container-tracking software provider Vizion said average bookings for the seven days ended on May 14 soared 277 per cent to 21,530 twenty-foot equivalent units (TEUs) from the 5,709 TEUs average for the week ended May 5.

Owners of factories that make toys to holiday decor told Reuters they are booking previously frozen cargo headed to US stores, including Walmart.

Lalo, for example, which sells its baby furniture online and through retailers like Target and Amazon.com, is among the companies that gave factories the green light to move their finished orders.

“We had hundreds of thousands of units waiting to ship,” said Lalo co-founder Michael Wieder. “These products can now get on the water.”

“Everybody is very busy from my company, at my friend’s companies,” said Mr Richard Lee, chief executive of NCL Logistics in China’s southern metropolis of Shenzhen.

“They are preparing a lot of cargo, a lot of products, to be shipped immediately from China to the US.”

Second tsunami?

The shipping surge will translate into a rush of arrivals at US West Coast ports in the coming weeks.

Still, industry experts – including the executive director of the Port of Los Angeles, the busiest US seaport and No. 1 for ocean shipments from China – do not foresee a Covid-19-level tsunami of cargo. Rather, they project a large but manageable wave.

On May 15, the off-contract spot rate – a one-time shipping rate determined by current market conditions – from Shanghai to Los Angeles shot up 16 per cent from the prior week to US$3,136 (S$4,080) per 40-foot container, according to data from maritime consultancy Drewry.

This is less than half that in April 2024, but could jump sharply on June 1 to about US$6,000 for every container if shipowners push through rate increases.

In the early days of the pandemic, as now, cargo demand spikes overwhelmed factories and container ships, kinking supply chains.

Shipping and retail experts said 90 days is not enough time for most factories to fill new orders.

Fewer slots are available on cargo ships because vessel owners had been culling China to US voyages and schedules. Now, ocean carriers are “cancelling cancellations” of sailings, Drewry said.

Demand, however, is markedly different this time.

Mr Trump’s

second-term tariffs

have weakened US retail sales, homebuilding and manufacturing – key drivers of container shipments.

Moreover, many US companies are sitting on inventory accumulated before Mr Trump imposed tariffs on China and other countries. And nobody knows what import duties will be when the 90-day deadline expires in August.

The Trump administration confirmed to Reuters that the US rate would reset to 54 per cent, assuming no agreement is reached by the deadline.

High anxiety

Many retailers are prioritising which products to order and ship, said Ms Jessica Dankert, vice-president of supply chain for the Retail Industry Leaders Association trade group, whose members include Home Depot and Gap.

“It is still 30 per cent at the end of the day,” said Mr Jamie Salter, chief executive of Authentic Brands Group, referring to tariffs on China. Authentic Brands owns and licenses clothing brands including Reebok, Champion and Forever 21.

Some large suppliers to Detroit’s Big Three automakers told Reuters that on customers’ requests, they are flying in parts from China and stockpiling them.

Others declined to add to inventories, saying they lacked the space and funds to do so.

A Halloween goods exporter from Yiwu in China, who gave her English name, Cecilia, said tariff increases have cut total orders by half in 2025 and warned that prospective buyers are running out of time.

“If you order now, you will have an anxious wait to see if it will be too late,” she said.

Mr Jimmy Zollo, chief executive at Joe and Bella, sells Chinese-made clothing for adults who have trouble dressing themselves due to arthritis, dementia or being in a wheelchair.

He placed a new order with his supplier, even though the 90-day window could close before he can take delivery. “We are hopeful that a new trade agreement is implemented, and the lowered tariffs do not expire,” he said. REUTERS