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Ocean Carriers Consider Return to Red Sea, China Tariff Hike by Feb. 1st, LTL Providers Move After Cross-Border Business

This week:

  • Ocean carriers consider resuming Red Sea transits following Houthi announcement
  • President Trump tells reporters China tariff hike “probably” coming February 1st
  • Despite Trump’s stance on green initiatives, LA-LB port complex officials moving forward
  • US LTL carriers move to take some Mexico cross-border business from truckload providers and intermodal rail
  • China-to-US air cargo volumes up, but rates are flat after hitting exceptional highs

Ocean Carriers Closer to Resuming Red Sea Transits, Remain Cautious

Despite a recent announcement from Yemen’s Houthi militants that they will restrict attacks on ships with ties to Israel, major ocean carriers remain cautious about resuming Red Sea transits. The Houthis’ pledge was delivered via email to the Humanitarian Operations Coordination Center (HOCC) following the start of a 42-day ceasefire in Gaza.

Houthi attacks on shipping began in November 2023 as a show of support for Hamas following Israel’s military actions in Gaza. Since then, most commercial vessels have avoided the Suez Canal in favor of the longer route around the Cape of Good Hope.

Most carriers reacted to the Houthi proclamation with muted optimism. Hapag-Lloyd spokesperson Tim Seifert told the Journal of Commerce (JoC) that the company will “closely analyze the latest developments and their impact on the security situation” and will return to the Red Sea only “when it is sufficiently safe to do so.”

Maersk issued a similar statement, calling the regional developments “positive,” but said it would continue to monitor the situation before committing to a return to the Red Sea. “It is still too early to speculate about timing, but these developments are a needed step in the right direction,” Maersk said in its statement.

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Trump Says China Tariff Hike to “Probably” Start on February 1

One day after being inaugurated, US President Donald Trump said at a press briefing that he will “probably” implement on February 1 a previously announced 10% additional tariff on imports from China.

After winning the November election, Trump first announced the tariff hike and plans for 25% tariffs on all imports from Mexico and Canada. At the January 21 press briefing, Trump cited the flow of fentanyl from China into Mexico and Canada — and ultimately the US — as the reason for the tariffs.

“We’re talking about a tariff of 10% on China based on the fact that they’re sending fentanyl to Mexico and Canada,” Trump said. “Probably February 1 is the date we’re looking at.”

However, Trump issued a memorandum shortly after his January 20 inauguration that directs several federal agencies to evaluate US trade policy and deliver a report to him by April 1. Some Washington pundits speculated that the President may hold off on his tariff plans until then. Other observers say the memo’s directives still allow for a February 1 implementation.

Los Angeles-Long Beach Port Complex Moving Forward With Green Initiatives

Just hours after taking office on January 20, President Trump issued an executive order removing the US from the Paris Agreement climate change treaty. This was just one of several orders effectively implementing a reversal of US climate policy. However, leaders of the ports of Los Angeles and Long Beach have issued statements saying they will continue with their green initiatives.

The combined LA-LB port complex is the largest in the US and has long been seen as a leader in green port programs. In response to Trump’s executive orders, officials said they are prepared should the new administration target their clean air programs.

“We’ll develop the relationships as necessary among Senate staffers and others in Washington,” Gene Seroka, executive director of the Port of Los Angeles, told the JoC on Tuesday, January 21. Meanwhile, Port of Long Beach executive director Mario Cordero said the port will work with the Trump administration and Congressional representatives to ensure funding for green initiatives continues.

The leaders pointed to how their ports handle record or near-record volumes yearly while reducing harmful emissions over the past 20 years. “For those who said a green port wouldn’t be able to compete commercially, the facts show otherwise,” Cordero said.

US LTL Providers Seek Larger Share of Mexico Cross-Border Trucking

Despite potential tariffs, US less-than-truckload (LTL) carriers are expanding their presence at the US-Mexico border. The move for a larger share of Mexico cross-border trucking is driven by projected growth in Mexican manufacturing, and an increased demand for smaller, more frequent shipments.

Traditionally, cross-border freight has been handled by truckload and intermodal rail providers. However, truck-borne trade between the US and Mexico is steadily increasing. US Bureau of Transportation Statistics (BTS) data shows northbound truck traffic from Mexico up 3.6% year-over-year in the first 11 months of 2024, exceeding seven million trucks.

The growth in truck activity is fueled by the long-term expansion of Mexican manufacturers with US market ties and substantial foreign investment in the country’s manufacturing sector. Recent LTL expansions include Pitt Ohio’s new express lane from the Midwest to six border crossing points and XPO’s expansion of cross-border service centers.

Trans-Pac Air Cargo Rates Flat Despite Increase in China-to-US Volume

Despite continued growth in air cargo volumes on key trans-Pacific routes, freight rates have eased throughout January after hitting a peak in December.

Data from the air freight analytics firm Rotate shows a 3% weekly increase in China-to-US volumes and a 17% year-over-year jump. WorldACD, another air freight analyst, reported a 5% week-over-week tonnage increase out of Asia in the third week of January, with a 5% rise compared to the same week last year. However, the year-over-year comparison is affected by the later Lunar New Year in 2024.

While cargo volumes have been rising, average rates have been declining. Industry observers attribute this to the exceptionally high rates seen in December rather than a weakening market.

Image Credit

Images by  aleksandarlittlew​olf on Freepik

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