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Bookings have been getting soft since July, and the carriers expect volumes to weaken through Q3 or even Q4, as shippers have frontloaded much of their seasonal freight. With the new US tariff rates, the cargo demand is expected to further dampen, particularly for smaller cargo owners and those shipping low-value goods who may have to reduce orders or stop shipping entirely due to higher tariffs making the buying cost uneconomical and seemingly the end of the United States de minimis program as is currently constructed.
Capacity utilization on Transpacific services have continued to fall and are now at their lowest level since April. LINERLYTICA reported in the latest weekly newsletter that the capacity utilization on both USWC and USEC may drop to only 85% this week, and “US tariffs have already spurred higher inflation and slower job growth which will lead to slower demand growth in the 2nd half of 2025”. Capacity management can be the only 'weapon' used by carriers to push up spot rate. The question on everyone’s minds, though, is how much capacity management can they actually do – or worse, take out of service – to stabilize load factors where they want them to be.
Even in a capacity-constrained environment, there is still demand forecasted for the holiday season. Therefore, a sharp drop in cargo volumes and spot rates in August, could be followed by a short-lived boom toward the second half of September, especially with factory shut-downs in China during Golden Week during the first week of October. Again, with effective capacity cut by carriers, there might be sudden sharp rises for two or three weeks, and equally rapid downturn after that.
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