World’s Trade Superhighway Feels Strain From US-China Decoupling

kd9l87oze]{rp42fzfwpcp}y_media_dl_1.png Drewry World Container Index

Article content

(Bloomberg) — Container liners are starting to sever shipping routes that link the US and China across the Pacific, as President Donald Trump’s trade war upends the industry and forces the two largest economies apart.

Article content

Article content

Among signs of disruption are plunging fees, fewer services, and a pall of uncertainty over what for decades has been one the main maritime highways of the global economy, carrying manufactured goods and vital commodities.

Article content

Article content

German container shipping group Hapag-Lloyd AG has canceled 30% of China-to-US bound shipments, according to a spokesperson. Separately, Swiss liner Kuehne + Nagel International AG said some trades had stopped completely, while it expected a 25% to 30% drop in bookings from China to the US, Chief Executive Officer Stefan Paul told investors on a conference call.

Article content

Article content

The Trump administration’s globe-spanning trade war that’s dominated the president’s opening months in office has trained its harshest measures against China, with the imposition of US import levies totaling 145%, and similar punitive retaliatory measures from Beijing. While there have been carve-outs for some goods, the dispute has roiled the shipping industry.

Article content

Although Trump and other senior officials have talked up the chances of a potential deal with China — and negotiations will take place in Switzerland later this week — any resolution of the dispute may take months to hammer out. In the meantime, executives in China are turning away from the US market.

Article content

As a result, fees are plunging. The cost of shipping a 40-foot box from Shanghai to Los Angeles — port nodes on either side of the Pacific — hit the lowest since 2023 in late March, according to the data from Drewry Shipping Consultants, a maritime advisory firm. A tally of rates across global routes has also softened.

Article content

Article content

“It’s a trade lane on what is a global highway,” said Joe Kramek, chief executive officer at the World Shipping Council, whose members operate 90% of global liner capacity. “So it does have ripple effects all the way across.”

Article content

Shippers are also contending with US measures beyond the barrage of levies, adding a further layer of complications. These include the ending of a tax exemption for small shipments, as well as a potentially disruptive plan to charge hefty fees on large Chinese ships calling at American ports.

Article content

“There’s uncertainty about what will happen to cargo flows in and out of the US,” said Niels Rasmussen, chief shipping analyst at trade group Bimco. In contrast, there’s no policy uncertainty in trades elsewhere, so shipowners can approach these normally, he said.

Article content

Elsewhere in the shipping market, there are mounting headaches for the dry-bulk operators that haul farm products, as well as tanker owners, whose fleets had been used to ferry US energy exports to Asia’s largest economy.

Article content

Flows of crude from the US Gulf to China came to a stop in April, after reaching a year-to-date peak of nearly 174,000 barrels a day in March, Kpler data show. Among individual vessels, a tanker hauling US propane diverted from China mid-voyage after Beijing slapped punitive taxes on American imports.

Article content

The rerouting of US coal and soybean cargoes away from China to nearer markets is expected to reduce sailing distances, and therefore hurt so-called ton-mile demand for the dry-bulk sector, according to Roar Adland, the global head of research at shipbroker SSY.

Article content

“Current levels of US tariffs, and Chinese counter-tariffs, have effectively shut down most bilateral dry-bulk commodity trade,” said Adland.

Article content