Jaguar Freight | The Weekly Roar: Ho! Ho! Hold the Holidays

In this week’s Roar: Where U.S.-China will lead us, the Supreme Court and the IEEPA, a new rush on airfreight from China, don’t expect improvements in the Red Sea (yet), and a new framework for tracking emissions.

The impact of the U.S.-China trade war may be worse than most realize. Last week, we covered the start of U.S. port fees on Chinese-linked vessels and the announced 100% tariff on all Chinese imports. And, how China slapped back with its own port fees and other countermeasures. But it’s important to step back and consider the long-term implications of what’s happening. The U.S. still depends on Chinese inputs for a massive part of its manufacturing supply chain. Analysts are correctly pointing out that the relationship works both ways, and without compromise, the standoff may only serve to weaken both sides.

The world’s supply chain will not need to hold its breath much longer as it awaits the important IEPPA case court decision. But there is still nervousness and concern. Multiple businesses across seven states are urging the Supreme Court to overturn President Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs. According to them, it’s the equivalent of a $3 trillion tax increase on Americans. The contention is that the IEEPA grants no unilateral tariff authority and that only Congress can levy such taxes. Oral arguments are set for November 5, with a decision to follow soon after.

The aforementioned new threat of a new 100% tariff on Chinese imports has sparked a rush in airfreight from China to the U.S., pushing rates higher and tightening capacity, especially out of North China. Importers are scrambling to get shipments out before the November 1 deadline, with e-commerce and tech companies snapping up much of the available space. According to the TAC Index, limited capacity and ongoing tariff uncertainty will likely keep airfreight rates elevated for a while.

Despite the Gaza ceasefire, major container lines are still avoiding the Red Sea/Suez Canal due to ongoing attacks, high war-risk insurance premiums, and unresolved maritime security threats near Yemen. In the end, safe passage isn’t about political deals. That’s determined by insurers and naval authorities. And insurance quotes are up anywhere from .07% to 1%. So, until incident rates fall, insurance costs drop, and carriers restore scheduled Suez service, it’s very likely that the Cape of Good Hope route will remain the default for the rest of the year, at least. And even then, any Red Sea reopening will be cautious and gradual, not immediate.

The industry is still working to improve emissions and sustainability, despite other recent setbacks. Carbon Measures, a new global coalition of major shipping, port, and industry players, has launched an initiative to create a more accurate framework for tracking carbon emissions. The founding members include Mitsui OSK Lines, Vale, ExxonMobil, and the Port of Rotterdam. The goal is to eliminate double-counting and instead use a ledger-based system guided by financial accounting principles. The coalition also plans to develop product-level carbon intensity standards to drive market-based solutions for emissions reduction.

For the rest of the week’s top shipping news, check out the article highlights here.

Compliments of Jaguar Freight – A member of the EACCNY