Freight rates plunge 📉 + Canada suspends 25% electricity tariff 🔋

SHIPPING NEWS

Global Freight Rates Drop Amid Market Volatility

Freight rates across major global trade lanes have plummeted due to shifting trade policies, geopolitical tensions, and carrier adjustments. Analysts warn of continued volatility as supply chain disruptions persist.

Recent data shows significant declines, particularly on trans-Pacific routes, where rates have dropped by 40% year-over-year. The trend is driven by a combination of reduced demand after Lunar New Year, carrier alliance reshuffles, and the ongoing crisis in the Red Sea, which has forced vessels to take longer, costlier routes.

Freight Rate Changes (March 13, 2025)

• Trans-Pacific Routes:

  • Asia to U.S. West Coast: $2,660 per FEU (-40% YoY)

  • Asia to U.S. East Coast: $3,754 per FEU (-40% YoY)

• Asia-Europe Routes:

  • Asia to North Europe: $3,064 per FEU (+3% MoM)

  • Asia to Mediterranean: $4,159 per FEU (Stable YoY)

• Other Notable Trends:

  • Ocean prices on Asia-Europe trades dropped below 2024 lows in recent weeks.

  • General rate increases (GRIs) in early March failed to hold, with carriers missing their planned $1,000 hike.

Why Are Rates Falling

The ongoing Red Sea crisis has forced vessels to take longer routes around the Cape of Good Hope, extending transit times but also absorbing excess capacity. Meanwhile, recent trade policies—including potential U.S. tariffs on Chinese-built ships—have further unsettled the market, making long-term rate stability uncertain.

Additionally, the restructuring of major carrier alliances in early 2025 has led to blank sailings, service disruptions, and a temporary mismatch in supply and demand. This has prevented carriers from effectively controlling capacity, leading to rate fluctuations.

Another key factor is the post-Lunar New Year slump. Demand typically softens after the holiday, but this year’s downturn has been sharper than usual, particularly on trans-Pacific routes.

What’s Next

Analysts expect continued rate volatility in the coming months. Key developments to watch include:

• The March 24 U.S. Trade Representative hearing on proposed port call fees, which could impact shipping costs.

• The April 1 trade policy report deadline, which may lead to new regulatory shifts.

• The April 2 deadline for potential 25% tariffs on U.S.-Mexico-Canada Agreement (USMCA) goods.

Shippers are advised to stay agile, closely monitor market conditions, and consider securing long-term contracts before further disruptions impact rates.

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TARIFF UPDATES

Canada's 25% Electricity Tariff

As of March 13, 2025, escalating global trade tensions have led to a series of tariffs and countermeasures involving the United States, Canada, Mexico, and the European Union.

In response to U.S. President Donald Trump's announcement of a 25% tariff on all steel and aluminum imports, Ontario Premier Doug Ford proposed a 25% surcharge on electricity exports to the United States. However, after discussions with U.S. Commerce Secretary Howard Lutnick, Ford suspended the surcharge and planned to visit Washington for further negotiations. Following this, President Trump reversed his decision to double tariffs on Canadian steel and aluminum to 50%, maintaining the original 25% rate.

The Bank of Canada has responded to trade uncertainties by cutting its key policy rate by 25 basis points to 2.75%, expressing concerns about inflationary pressures and weaker growth resulting from the ongoing trade disputes. Meanwhile, financial markets have experienced volatility; while U.S. stocks have stabilized, European markets have rallied amid the escalating trade tensions.

European Union's Retaliatory Measures

The European Union has announced plans to impose tariffs on approximately $28 billion worth of U.S. goods, set to take effect next month. These countermeasures target a wide range of products, including motorcycles, whiskey, and various consumer goods. The EU's actions are in direct response to the U.S. tariffs on steel and aluminum imports.

While this article provides a high-level overview of updates, it is essential for stakeholders to seek the most accurate and up-to-date information directly from the US Customs and Border Protection (CBP). Regulations and enforcement measures can evolve, and CBP remains the authoritative source for compliance details. For official guidance, visit the CBP website.

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