Shipping profits soar + More Trump tariffs 💰

SHIPPING NEWS

Shipping Profits Soar Amid Red Sea Disruptions

Recent geopolitical tensions in the Middle East, particularly in the Red Sea region, have significantly disrupted global shipping routes. These disruptions have forced vessels to reroute around the Cape of Good Hope, leading to longer transit times and increased operational costs. While consumers face delays and higher prices, shipping lines have benefited from elevated freight rates, resulting in increased profits.

For instance, A.P. Moller-Maersk reported a substantial turnaround in its financial performance, posting a fourth-quarter profit of $1.6 billion, a significant increase from a $920 million loss the previous year. This improvement is primarily attributed to a 38% surge in freight rates, driven by the need to reroute vessels to avoid the Red Sea due to security concerns.

Similarly, the global container shipping industry saw profits exceed $10 billion in the second quarter, propelled by record volumes and rising freight rates. The disruptions in the Red Sea have tightened capacity, contributing to higher spot container rates and congestion at key ports.

While there have been indications of potential improvements in the security situation, such as the Suez Canal Authority noting returning stability in the Red Sea, shipping companies remain cautious. Despite these positive signs, many operators prefer to continue rerouting vessels around Africa due to ongoing safety concerns.

This scenario highlights a paradox where supply chain disruptions, detrimental to consumers and businesses reliant on timely deliveries, can lead to increased profitability for shipping companies. The reduced capacity and longer transit times create a supply-demand imbalance, allowing carriers to command higher rates.

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TRADE NEWS

Trump Reinstates Universal Steel & Aluminium Tariffs

On February 11, 2025, President Donald J. Trump reinstated and expanded Section 232 tariffs to a full 25% on both steel and aluminium imports, aiming to strengthen U.S. industries and close existing loopholes.

Key Changes:

• Elimination of Exemptions: Previous exemptions granted to countries such as Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, the European Union, Ukraine, and the United Kingdom have been removed. These exemptions had allowed foreign producers to bypass tariffs, undermining their effectiveness.

• Implementation of "Melted and Poured" Standards: New strict standards require that steel and aluminium products be fully processed—melted and poured—in their country of origin. This measure prevents countries from minimally processing metals elsewhere to circumvent tariffs.

• Expansion to Downstream Products: Tariffs now extend to key downstream products, addressing the issue of foreign manufacturers exporting semi-finished goods to avoid tariffs on raw materials.

• Termination of General Approved Exclusions: All previously granted general exclusions have been terminated, ensuring a uniform application of tariffs across all imports.

• Enhanced Enforcement Against Evasion: The administration is intensifying efforts to crack down on tariff misclassification and duty evasion schemes, ensuring that importers cannot exploit loopholes to avoid tariffs.

These actions are intended to revitalize the domestic steel and aluminium industries, aiming for a sustainable capacity utilization of at least 80%. The move addresses concerns that foreign nations have been flooding the U.S. market with cheap, often government-subsidized metals, which has harmed domestic production. By restoring and strengthening these tariffs, the administration seeks to bolster America's manufacturing sector and ensure the country can meet demand for national defense and critical infrastructure during emergencies.

Full white house fact sheet can be seen here.

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