Yi-Tsai Yen, General Manager of T3EX: Global container shipping rates are rebounding, and shipping companies are adopting strategies for steady capacity management.

Taiwan • Business • 05/12 10:25
Yi-Tsai Yen, General Manager of T3EX: Global container shipping rates are rebounding, and shipping companies are adopting strategies for steady capacity management.

On May 12, Yen Yi-Tsai, General Manager of T.S. Lines, stated that global container shipping rates have stopped falling and are rising again, with expectations that they will continue to rise in the third and fourth quarters. Progress in the US-China tariff negotiations has helped restore market confidence, and the rebound in shipping rates is closely tied to changes in tariff policies. Shipping companies, flush with cash, have shifted their strategy to maintaining stable capacity and are no longer slashing prices to compete for cargo. With US retailers holding low inventory levels, a wave of restocking is expected to push shipping rates higher. Key factors influencing shipping rates include tariffs, the US dollar, US Treasury bonds, and geopolitical risks.

Key Updates

05/12 18:56

US-China Tariff Deal Sparks Market Rally: Tesla's Valuation Hits $1 Trillion Again, Foreign Investment Pours into Asian Stocks

On May 12, 2025, the US and China reached a tariff agreement in Geneva, suspending certain punitive tariffs for 90 days to alleviate the trade war. This action triggered a global market response, causing Tesla's stock price to soar and its market value to return to $1 trillion. Foreign capital flowed back into emerging Asian markets, resulting in a net purchase of $4.21 billion within a single week. The Taiwan stock market attracted $2.74 billion, hitting a new high for 2025, while Vietnam's VN-Index rose by 3.3%. Reports analyzed the market impact of this reduction in trade tensions.

05/12 14:57

US-China Tariff Deal Triggers Market Rally: Dow Jumps 1,000 Points, Tech and Luxury Goods Stocks Lead Gains

On May 12, 2025, the United States and China reached an agreement in Geneva, with both parties agreeing to reduce tariffs on each other's goods by 115 percentage points within the next 90 days. U.S. tariffs on Chinese goods will decrease from 145% to 30%, while Chinese tariffs on U.S. goods will drop from 125% to 10%. This move signifies a cooling down of the trade war, leading to a strong reaction in global financial markets. The three major U.S. stock indices increased, with the Dow Jones Industrial Average surging over 1,000 points. Technology and luxury goods stocks led the gains, oil prices increased, and safe-haven assets such as gold and the yen fell.

05/12 12:25

Toyota Faces Pressure from U.S. Tariffs: Strategic Decisions Between Local Production and the Japanese Supply Chain

Starting in 2024, the United States will impose a 25% tariff on imported cars, causing a major impact on Toyota. On May 8, 2025, Toyota President Koji Sato stated that the tariff had already led to a $1.3 billion loss within just two months. Toyota is faced with the choice between maintaining its supply chain in Japan and accelerating overseas production. This decision affects 60,000 small and medium-sized enterprises in Japan. Although Toyota already has 11 factories in the U.S., their capacity is nearly saturated, making it challenging to completely transition to local production. Toyota is considering diversifying its export markets to cope with the uncertainty in the U.S. market.

05/12 10:59

The White House is speeding up efforts on 24 trade agreements, and the grace period for Trump's reciprocal tariffs is set to expire in early July.

The 90-day grace period for President Trump's "reciprocal tariff" policy will expire in early July, and the White House is accelerating the push for negotiations on 24 trade agreements. White House National Economic Council Chairman Hassett stated that many of these agreements are modeled after the US-UK agreements and have reached the final stages of negotiation. Countries are striving to complete negotiations before the end of the grace period to avoid high tariffs. Trump has personally intervened in the negotiations, and the timeline for announcing the agreements is closely aligned with the tariff policy deadline.

05/12 10:25

2025 U.S. CPI Report: Trump Tariffs Unexpectedly Slow Inflation, Drawing Attention from Economists

The U.S. Consumer Price Index (CPI) report for April of 2025 is about to be released, with inflation expected to stay at 2.4% and core CPI at 2.8%. Despite the Trump administration's imposition of tariffs up to 145% on countries such as China, economists note that these tariffs have temporarily suppressed inflation. This situation has caught the attention of both the market and policymakers, with the Federal Reserve opting to take a wait-and-see approach. Economists caution that inflationary pressures could surface in the next few months, with core CPI possibly climbing to 4% by year's end.

05/12 10:25

Yi-Tsai Yen, General Manager of T3EX: Global container shipping rates are rebounding, and shipping companies are adopting strategies for steady capacity management.

On May 12, Yen Yi-Tsai, General Manager of T.S. Lines, stated that global container shipping rates have stopped falling and are rising again, with expectations that they will continue to rise in the third and fourth quarters. Progress in the US-China tariff negotiations has helped restore market confidence, and the rebound in shipping rates is closely tied to changes in tariff policies. Shipping companies, flush with cash, have shifted their strategy to maintaining stable capacity and are no longer slashing prices to compete for cargo. With US retailers holding low inventory levels, a wave of restocking is expected to push shipping rates higher. Key factors influencing shipping rates include tariffs, the US dollar, US Treasury bonds, and geopolitical risks.

05/12 08:57

The US and China Reach Provisional Tariff Agreement in Geneva: Significant Tariff Reduction Over the Next 90 Days Aimed at Easing Trade Tensions

On May 12, 2025, after high-level economic and trade talks between the United States and China in Geneva, Switzerland, the United States and China announced a temporary 90-day tariff agreement. The United States will lower tariffs on Chinese goods from 145% to 30%, while China will lower tariffs on American goods from 125% to 10%. This move is intended to ease trade tensions and set up a framework for future economic and trade talks. Both parties committed to implementing the tariff adjustments by May 14 and suspending or canceling most retaliatory measures.

05/12 06:26

The U.S. core CPI is expected to rise in April, businesses are facing challenges in passing on tariff costs, and the slowdown in consumer spending is raising economic concerns.

The U.S. core Consumer Price Index (CPI) for April is projected to increase by 0.3%, indicating a rise in inflationary pressures. Businesses are encountering a new wave of tariff pressures and are trying to pass these costs onto consumers, but the slowing demand is limiting the effectiveness of these efforts. Retail sales data is anticipated to remain unchanged, indicating consumer anxiety about the economic outlook. The Federal Reserve has cautioned that uncertainty in trade policy could increase inflation and unemployment, posing a risk to the economy.

05/12 02:59

Director of the CBO Warns: Trump's trade policies undermine confidence in foreign investment, the status of the dollar and the sustainability of U.S. debt face challenges.

Phillip Swagel, the director of the Congressional Budget Office, stated in an interview with The Financial Times that President Trump's trade policies and tariffs have had an impact on Wall Street and could potentially affect foreign investors' confidence in U.S. assets. While a 10% tariff might reduce the deficit, its impact on market confidence and the dollar's status cannot be overlooked. With the rise in U.S. debt interest expenses, the CBO and policymakers view U.S. debt as being on an unsustainable trajectory.

05/12 01:24

The US-China trade talks wrapped up in Geneva: An agreement was reached to cut the $1.2 trillion trade deficit and set up a consultation mechanism.

On May 11, 2025, the United States and China concluded a two-day high-level economic and trade talks in Geneva, Switzerland, where they reached a consensus on several key issues. This marked the first high-level talks since President Trump imposed tariffs on Chinese goods earlier this year. The agreement aims to reduce the U.S. trade deficit by $1.2 trillion and establish a mechanism for U.S.-China economic and trade consultations. Both parties are set to release a joint statement on May 12, detailing the agreement.

Progress in US-China Tariff Negotiations, Freight Rates Stop Falling and Begin to Rise

In a corporate briefing on May 12, T.H.I. General Manager Yen Yi-Tsai pointed out signs of a breakthrough in recent US-China tariff negotiations. Although only a preliminary framework has been reached, it is enough to stabilize market confidence. He stated that freight rates have stopped declining since the second quarter and have begun to show a gradual upward trend, with expectations that they will continue to rise in the third and fourth quarters.

Yen Yi-Tsai pointed out that the recovery in freight rates is closely related to adjustments in US-China tariff policies. Recently, the US reduced tariffs on some Chinese goods from 145% to 30%, leading to an increase in cargo volume on the China-US route as goods previously stored in bonded warehouses in Canada, Mexico, and the US were released. Freight forwarders also estimate that by the end of May, there will be a noticeable increase in both price and volume on the China-US line.

Shipping Companies' Strategy Shift: No More Price Cutting to Secure Cargo

Unlike in the past, shipping companies are no longer significantly cutting prices to secure cargo due to insufficient volume. Yen Yi-Tsai noted that the three major shipping alliances currently control about 80% of the global shipping capacity, making it difficult for smaller carriers to impact market prices even if they lower rates. Large shipping companies like Evergreen (2603), with over 200 billion in cash, have a strong financial position and no longer need to engage in price-cutting competition to maintain operations.

He emphasized that the current operational strategy of shipping companies is to "maintain the cost line," meaning they will not significantly lower prices below cost even in the face of volume fluctuations. This strategy ensures that even though the number of container ship sailings from Asia to the US has decreased by 35% compared to the same period last year, freight rates remain above cost, indicating a certain level of market price support.

Restocking Wave and Freight Rate Adjustment Pace

Yen Yi-Tsai noted that inventory levels at major US retailers have been reduced to the point of having "nothing left to sell," which will drive a restocking wave in the third and fourth quarters. As shipping demand persists, especially for low-priced, cost-effective consumer goods, freight rates are expected to gradually rise with the restocking demand.

However, he also cautioned that it takes at least a month for shipping companies to resume sailings and deploy vessels, making it impossible to respond immediately to market demand. Therefore, the rise in freight rates will synchronize with the pace of demand release, showing a "slow rise" rather than the sharp fluctuations seen in the past.

Key Variables: Tariffs, US Dollar, US Debt, and Geopolitics

Yen Yi-Tsai identified four key factors affecting this year's shipping market: US-China tariff policies, the US dollar trend, US debt issues, and global geopolitical risks. He described the first quarter of this year as "hidden currents and turbulent waves," and believes this trend will continue into the second half of the year.

Among these, the Trump administration's tariff policy is seen as the biggest variable. Whether the current tariff policy will be extended on July 9 will be a critical point affecting freight rate trends. Additionally, the US dollar trend and US debt issues may also impact global trade capital flows and import-export costs, further influencing freight rate changes.

Air and Rail Markets Adjusting in Sync

In addition to shipping, Yen Yi-Tsai also mentioned the current state of the air and rail markets. In air freight, the volume of e-commerce goods exported from China to the US has declined due to the cancellation of tax exemptions, and freight rates have fallen from their March peak. Currently, the air freight rate to Los Angeles is about 220 per kilogram, down approximately 6.4% from last month. In contrast, the Southeast Asian market is performing better.

In rail transport, the Red Sea crisis impact has led some exporters to turn to the China-Europe railway as an alternative, increasing demand for China-Europe train shipments. This trend also reflects market adjustments for supply chain diversification and risk dispersion.

Shipping Companies' Cash Reserves and Stable Market Structure

Yen Yi-Tsai emphasized that during the pandemic, shipping companies accumulated substantial cash flow, significantly improving their financial health. This gives carriers stronger resilience and bargaining power in the face of market fluctuations. For example, Evergreen has over 200 billion in cash, demonstrating its ability to maintain stable freight rates without resorting to price-cutting competition to maintain market share.

Additionally, the alliance ships account for over 82% of global container transport volume, leading to a highly concentrated supply side, which helps carriers adjust supply and demand through capacity control and service reduction, maintaining freight rates within a reasonable range.

References

People Also Ask...

faq

Yan Yicai mentioned that freight rates are going to rise gradually, so why aren't shipping companies lowering their prices to attract more cargo?

faq

How does the progress of US-China tariff negotiations affect global freight rates?

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Will the rising freight rates, as mentioned by Yan Yicai, impact the future shipping costs of tech products?