March 2025 Global Freight Update
By
Christian Goehring
|
March 31, 2025
Global Air Market Update
With new and increasing tariffs on a range of US imports, including steel, aluminum, and goods from important trading partners like China, Canada, and Mexico, the Trump administration's ongoing tariff situation has significantly increased trade uncertainty worldwide. Importers and shippers are already dealing with the challenges of a constantly shifting trade environment, and these developments, along with possible reciprocal tariffs and the growing complexity of compliance, are adding to their workload.
- APAC - There is a continued high demand for AI-related cargo which may require increased use chartered aircraft. As a result, demand is anticipated to rise somewhat in March as opposed to February. It is anticipated that capacity will stay constant or slightly grow in order to meet demand, and rates should reflect this. The recent actions of the U.S. administration regarding import tariffs and the de minimis rule have created uncertainty in the U.S. supply chain, the market is keeping a close eye on them.
- AMER - Despite severe capacity issues in late 2024, the U.S. export market to South America is improving. Air exports and e-commerce demand traveling from China via Miami are typically at their lowest during the first quarter. The market will likely tighten once more if e-commerce demand increases, but for the time being, the relief is welcome. We expect to see an increase in transatlantic trade capacity beginning in mid-March. Over the second half of March and into April, more flights will gradually enter the market due to an increase in passenger travel demand.
- EMEA - Trade routes have changed as a result of the ongoing conflict in Ukraine, especially with regard to air cargo volumes at important European hubs like Frankfurt and Amsterdam. However, this has also created chances for new paths and collaborations. Proactive planning and adaptable logistics solutions can lessen the effects of labor strikes that occasionally disrupt major ports like Rotterdam and Antwerp. New trade dynamics are also being driven by the increase in demand for vital minerals for green energy projects.
- South Asia's air freight capacity is still limited:
Global Ocean Market Update
Due to ongoing contract negotiations between shippers and carriers, rate changes are being closely watched this month. On some routes from Asia to the U.S., ocean container rates are currently higher than they were last year but lower than they were last month. At the end of February, rates from Asia to the U.S. West Coast dropped by 8%.
- Analysts predict large rate declines and multi-year losses as the container shipping industry enters a prolonged downturn brought on by oversupply and waning demand. J.P. Morgan predicts a 30% decline in freight rates by 2025 and continued losses through 2027 as vessel deliveries rise, even though 2024 was a profitable year.
- Rates on major routes, like those from Asia to the US and Europe, have decreased dramatically since January despite carrier efforts to raise prices.
- Overcapacity concerns persist due to fleet growth exceeding cargo demand despite an estimated 10% of global capacity locked up by longer transits around Africa as a result of Red Sea disruptions.
At a Glance
Air Freight
- Constantly changing tariff rules imposed by the U.S Administration is creating complexities for shippers and carriers, and could result in drastic demand fluctuations with short notice
- Continued strain on major EMEA hubs caused by the ongoing conflict in the Ukraine
- South Asia's air freight capaicty remains limited
Ocean Freight
- Anticipation of lower rates due to industry downturn due to oversupply and decreasing demand
- Fleet growth exceeding cargo demand, causing drop in rates
- Rates have dropped on major lanes, including Asia to the US and Europe
US Tariffs
- With effect from March 4, 2025, President Donald Trump imposed new tariffs that include a 25% duty on imports from Canada and Mexico, with a 10% reduction for Canadian energy resources. The 10% to 20% tariff on Chinese imports was increased
- The additional tariffs do not apply to goods from Canada and Mexico that qualify for USMCA tariffs. Roughly 38% of Canadian products and 50% of Mexican products are eligible under the USMCA
- Automobiles, auto parts, and produce are among the goods covered by the USMCA.
- Global imports of steel and aluminum will be subject to an additional 25% tariff as of March 12
- The new tariffs are temporarily waived for imports from China, Mexico, and Canada that meet the requirements for de minimis entry
- It's unclear if Mexico will follow China's and Canada's plans for retaliatory tariffs
- On April 2, 2025, reciprocal tariffs will take effect, according to President Trump's announcement
- To control rising costs, importers should think about duty mitigation techniques such as Foreign Trade Zones (FTZ). Notably, duty drawback does not apply to the new IEEPA tariffs
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February 2025 Global Freight Update
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-
February 10, 2025
Air cargo demand worldwide remained robust towards the end of 2024, primarily driven by carriers in the APAC and AMER regions, with e-commerce playing a significant role in this growth.