This week:
- As the August 12 return of the US reciprocal tariff policy nears, Trans-Pac carriers cut capacity
- The environmental impact of Red Sea diversions revealed as crisis nears second anniversary
- Vote on Canada Post’s “final offers” begins this week; CUPW urges union members to vote no
- US ports and shippers ask Congress to support legislation reigning in CBP’s inspection demands
Carriers Slash Trans-Pac Capacity as Tariff Deadline Looms, Demand Weakens
Ocean carriers are aggressively cutting capacity on routes from Asia to the United States for the remainder of July, according to data from maritime intelligence provider eeSea. The cuts are in response to faltering demand ahead of the August 12 return of the full US reciprocal tariffs on Chinese imports.
According to a recent analysis of the eeSea data by the Journal of Commerce (JoC), efforts to reduce supply can’t counteract the weakening demand, a sign that container spot rates are likely to fall further through the end of summer.
“A lot of frontloading has happened, which means that the volumes will remain soft,” Sanjay Tejwani, chief executive of consulting firm 365 Logistics, told the JoC. “August through December will be soft. Even if the tariffs were to drop back to zero, a lot of merchandise has been shipped and inventory levels are decent, why would anyone bring in more cargo?”
The eeSea data show an increase in blank sailings this month. In June, 118,500 TEUs of capacity were blanked, which accounted for approximately 9% of the deployed capacity between Asia and the US West Coast. In July, approximately 175,000 TEUs are being removed, representing 11% of the total deployed capacity.
Trans-Pacific carriers are attempting to use the blank sailings to prop up prices, quoting spot rates around $2,500 per container to the West Coast. However, industry stakeholders say the lack of demand is pushing the actual prices lower.
“The mid-July rates were driven largely by a reduction in capacity,” Robert Khachatryan, CEO of Freight Right Global Logistics, told the JoC. He went on to say that he is seeing voyage-specific rates closer to $1,700 per container.
Red Sea Diversions Drive Shipping Emissions Sharply Higher, Crisis to Continue
While the increased costs and shipping delays associated with the Red Sea crisis are well documented, a new report by Greg Knowler, a JoC senior editor, has uncovered the environmental impact.
Greenhouse gas emissions from container shipping surged by nearly 20% in the first quarter of 2025 as vessels continue to divert around Southern Africa to avoid militant action in the Red Sea. Recent deadly attacks on commercial ships have extinguished any hope for a return to the shorter Suez Canal route this year.
The Red Sea Crisis, which began in late 2023, forces ships on the critical Asia-Europe trade lane to take a route that is 30% longer, adding 10-12 days to transit times. The diversions have absorbed up to 10% of global container shipping capacity and driven up freight rates.
Knowler said these longer voyages are responsible for reversing years of progress in reducing the industry’s carbon footprint. Greenhouse gas emissions rose 19.38% year-over-year to just under 60 million tons, according to sustainable supply chain platform VesselBot.
Alan Murphy, CEO of Sea-Intelligence Maritime Analysis, noted that the increase in emissions from the crisis is equivalent to “the total annual emissions of Cambodia.” He places the responsibility for this environmental setback squarely on the Houthi militants, who have made the Red Sea unsafe for passage for nearly two years now.
Subscribe to JMR’s Weekly Supply Chain Roundup!
Stay informed with the latest supply chain news, trends, and insights. Get it delivered directly to your inbox every week.
Canada Post Union Begins Vote on Final Contract Offers Amid Strong Opposition
Starting this week, more than 53,000 Canada Post employees will begin voting on two final contract offers from the government-owned carrier, a move mandated by a federal official to resolve contentious negotiations that have gone on for 19 months.
The Canadian Union of Postal Workers (CUPW) is urging its members to reject the offers, setting the stage for a critical decision that will shape the future of postal service in the country. The proposals cover two distinct bargaining units, one for urban workers and another for rural and suburban mail carriers.
The vote, which runs from July 21 to August 1, was ordered by Patty Hajdu, Canada’s Minister of Employment, Workforce Development and Labour. The Canada Industrial Relations Board is facilitating the process, which allows CUPW members to vote by phone or online.
Canada Post is offering a 13.59% compounded wage increase over four years, but the union is seeking a 19% raise. An even more contentious sticking point is the carrier’s plan to hire new workers for weekend deliveries. CUPW leadership has drawn a line in the sand on this issue and contends that existing employees should be given the option to work weekends.
CUPW workers have been without a contract since May, at which point the union instituted an overtime ban in place of a complete work stoppage. However, the prolonged dispute has resulted in massive financial losses for Canada Post. According to the carrier, shippers have been diverting packages to competitors, such as FedEx and UPS.
If a majority “yes” vote is received in either bargaining unit, it will create a new collective agreement for those members. If a deal is rejected, CUPW National President Jan Simpson has confirmed the union will not escalate to a full strike. Instead, the overtime ban would continue while the two sides return to the bargaining table yet again.
US Ports Ask Congress for Help With “Unreasonable” CBP Upgrade Demands
A coalition of US ports and shippers is urging Congress to pass legislation aimed at stopping what they describe as unreasonable demands from the US Customs and Border Protection (CBP) agency for facility upgrades. The group argues that local ports are being unfairly billed millions of dollars for capital improvements, sometimes under the threat of delayed cargo inspections if they don’t pay.
In a letter sent last week, the American Association of Port Authorities and 26 other groups expressed their support for the CBP Space Act, a bill being reintroduced during this congressional term.
According to the letter, local CBP offices have been presenting ports with bills for capital improvements that the ports argue are unrelated to cargo inspection. The demands allegedly include payment for carpeting, heated driveways, unused computers and TVs, and general office renovations.
“Many public port authorities are run by local or state governments with small, fixed budgets,” the letter said. “Yet CBP has presented them with bills that often total hundreds of thousands of dollars, and in some cases, exceed $1 million.” The coalition claims that when ports push back, CBP threatens to “slow walk inspections or reduce local staff.”
The CBP Space Act aims to create a more sustainable and transparent funding model for CBP’s infrastructure needs. It would require the existing merchandise processing fee, which is paid by importers, to cover capital costs for inspection facilities, not just officer salaries and expenses. It would also directly prohibit CBP from asking ports to fund “administrative, training, or recreation facilities.”
