China-U.S. Shipping Rates Spike as Exporters Rush to Beat Potential Trump Tariffs
By Bao Zhiming, Bao Yunhong and Feng Yiming
Freight rates on routes from China to the U.S. are surging amid fears of new tariffs, prompting some exporters to rush shipments and adding fresh volatility to global supply chains.
The Shanghai Containerized Freight Index (SCFI), a key barometer for shipping prices, jumped 12.9% week-on-week on Oct. 17. The increase was driven by a 32% spike in rates for containers on the Pacific route, which hit $1,936 per 40-foot equivalent unit (FEU).
The recent U.S. measures against China have destabilized global supply chains and increased trade costs, the Shanghai Shipping Exchange said in a weekly report. It noted that while the outlook for China-U.S. trade faces severe tests, the situation could trigger another short-term rush to ship goods out of China.
Several freight forwarders on U.S. routes told Caixin that some businesses are scrambling to get their goods on board before a potential Nov. 1 deadline to avoid threatened tariffs from the Trump administration. The current rush appears weaker than a similar wave in April and May, and the U.S. Customs and Border Protection has not issued any formal notice about a 100% tariff.
This spike comes after a lackluster peak season for shippers, with cargo volumes on U.S. routes lower than expected in the second and third quarters. A freight industry insider said that many shipping lines saw their rates fall below cost in September and may be using the chaotic market sentiment and larger-scale service suspensions to boost prices.
Many seasoned Chinese exporters have grown accustomed to tariff threats and are taking a wait-and-see approach, expecting trade negotiations to continue. A toy exporter told Caixin that any new tariffs are largely irrelevant as the costs are passed on to U.S. importers. “Even if the U.S. imposes a 1,000% tariff, we will add it to our costs because our products are in demand in North America,” the exporter said. “Ultimately, the consumer over there pays for it.”
Chinese businesses have been actively diversifying their supply chains and markets to mitigate risks from years of trade friction. Some companies are reducing their reliance on the U.S. market, while others are shifting production to Southeast Asia. “Our share of the U.S. market has been cut by about 40% to 50%,” said a shoe exporter based in Wenzhou. “Orders from other places have increased, so we’re quite busy now.”
U.S. importers have likewise adopted a similar strategy, sourcing from multiple countries apart from China to guard against tariff volatility. Retail giant Walmart, for instance, sourced 60% of its goods from China in the first eight months of 2023, down from 80% in 2018, according to data from Import Yeti.
This shift is reflected in trade data. China’s exports to the U.S. fell 27% year-on-year in September to $34.3 billion, marking the sixth straight month of double-digit declines, according to customs data. In contrast, China’s overall exports grew 8.3% that month, buoyed by rising sales to the European Union, ASEAN, Africa, and Latin America. Reflecting this, freight rates from Shanghai to European ports also rose 7.2% last week to $1,145 per 20-foot equivalent unit.
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
Image: Aimo Studio – stock.adobe.com