Tariff truce keeps China-US trade flowing across the Pacific

The ceasefire in the tariff fight between the world’s two largest economies is encouraging trade across the Pacific, holding up freight prices three weeks on, even as container bookings have begun to slow.

Thanks to the reprieve, which began earlier this month, the price of shipping a forty-foot equivalent unit from Shanghai to Los Angeles notched its biggest relative weekly gain this year, rising by nearly 17% to $3,738. The price per container in the week through May 29 was still almost a third below this year’s peak in January, but above a late-March nadir of $2,487, just before President Donald Trump’s “Liberation Day” announcement.

Bookings for containers have eased though. In the first three days of this week, bookings totaled about 106,000 twenty-foot equivalent units, data from Vizion and Dun & Bradstreet show. That’s a drop from 137,000 TEUs in the same period the previous week, as the initial enthusiasm that followed the announcement of the truce began to ease. Globally, the week beginning May 19 marked the highest volume of bookings so far this year.

Data tracking shipping over the last two weeks, which tends to move at a lag to bookings, showed a similar softening. There were about 34 vessels departing Chinese ports for the US over the past 15 days, according to a Bloomberg analysis of transponder data. That’s down from an average of 48 the previous week. The ships were also carrying one-third fewer containers.

The delay between booking and sailing means that current departures from China to the US are frequently a reflection of the reality at the start of the month — in this case, when the US and China were still at loggerheads — prompting container liners to cancel or blank some services, meaning vessels sail empty.

“It’s a fluid situation. What we’re seeing is a constant rebalancing of the supply chain and between indicators like freight rates, bookings and sailings,” said Jayendu Krishna, a director at Drewry Maritime Services.

Other factors contributing to the drop include Chinese companies’ supply chains, which can allow them to ship products from other countries around the region, according to Bloomberg Intelligence shipping and logistics analyst Kenneth Loh.Capacity, however, is beginning to recover. Major container liners have already promised to add more, while smaller forwarders are also returning to the route after years of absence as demand improves. Chinese operator China United Lines will start shipping across the Pacific to connect Chinese ports with Long Beach, while South Korea’s KMTC Line will resume a trans-Pacific service after pulling out from it for decades.

Chinese trade overall is still at high levels, with the total number of containers processed at the country’s ports up 6% last week from the same period a year earlier, the 16th straight week of improvement.And air cargo flights have also continued to rise, despite the US ending the de minimis tariff exemption for small packages. Earlier this month, Trump reduced duties on items valued up to $800 to 54% from 120%.