China trade outlook improves, but container rates do not

As the July 9 deadline for the end of the Sino-US tariff pause approaches, the outlook for the Trans-Pacific trade route is less clear.

Although tariffs and other details have not been announced, President Donald Trump said the United States has struck a deal with China that would see China resume trade in rare earth minerals in exchange for the United States ending some countermeasures.

The administration said it plans to complete negotiations with its top 10 trading partners after July 4 and could soon impose unilateral tariffs on other countries.

In an update, SONAR data partner and shipping analyst Freightos said the May 12 reduction in U.S. tariffs on Chinese goods led to a rebound in Sino-U.S. container volumes, but that momentum appears to be fading. Carriers, perhaps anticipating a longer-term demand surge, have been adding capacity on the Trans-Pacific, particularly to the U.S. West Coast, which now appears to be out of balance with demand.

While SONAR data shows container volumes departing from China to West Coast ports approaching record levels, freight rates have plummeted after weeks of weak demand.

Freightos said that from late May to mid-June, container rates from Asia to the North American West Coast jumped more than $3,000 per 40-foot equivalent unit (FEU), or 115%, to $6,000. However, by the end of last week, a combination of demand and capacity issues had seen average rates plummet to $3,388 per FEU, 43% below their June peak, though still 22% higher than late May.

Rates to the East Coast have followed a similar, albeit less dramatic, trend. Rates had risen 80% from late May to mid-June, reaching around $7,200 per FEU, but had fallen 15% to $6,116 by the end of the month. This dramatic drop in rates, coming early in the usual peak season, has prompted carriers to consider capacity cuts.

Even with tariff pressures pushing rates up sharply in June, peaks on both lanes were at least $1,000 per FEU lower than a year ago, potentially reflecting overall capacity growth in the container market, Freightos Head of Research Judah Levine said in a note.

Asia-Europe and Asia-Mediterranean rates both ended June up 25% month-on-month, at $2,969 and $4,222, respectively. The shift away from the Red Sea has triggered an earlier peak season on the trade, which, along with port congestion and a shift of capacity to the Trans-Pacific, contributed to higher rates in early and mid-June.

However, rates on both trades cooled towards the end of the month, suggesting that market conditions may not support upcoming general rate increases (GRIs) by the trades in July. However, the significant capacity cuts planned by the trades – unusual for the high season – could still create room for additional rate increases. 

Similar to the Trans-Pacific, current rates on these trades are significantly lower than a year ago, suggesting that increased capacity is putting downward pressure on rates, even as the trades continue to avoid the Red Sea.

But other market sources say container rates from China are even lower.

“Spot rates dropped to somewhere between $2,000 to $2,500 (depending upon carrier) and have hovered around $2,500 for two weeks now,” said consultant Jon Monroe in a LinkedIn post. “Rates have fallen fast, space out of China’s base ports is wide open, and so far, carriers haven’t flexed their capacity control muscle to put the squeeze on the market.” 

Monroe added that new carriers entering the Trans-Pacific trade are offering rates at or just below $2,000 to the West Coast. 

“The gap between East Coast and West Coast rates has settled back to normal, at about $1,000,” Monroe said. “Right now, everyone’s just sitting tight, waiting to see what Trump decides to do with tariffs.”

See more:

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• International Shipping and Logistics Market Update - Week 26/2025 | Phaata

Source: Phaata.com (According to Freight Waves)

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