Changes in Shipping Freight and PP End-Product Export
Highlights: Freight rates initially surged due to shifting tariff policies, market speculation and temporary capacity shortages on certain routes. However, as vessel capacity recovered and export market cooled, shipping freight began to slide, reflecting that support for shipping freight from export demand was unsustainable.
Shipping capacity recovered, and premiums in freight regarding U.S. shipping lines pulled back.
The U.S.-China tariff window in May pushed up China-North America freight rates, prompting carriers to deploy more vessels. This expanded capacity subsequently triggered a drop in shipping freight of North American routes since mid-June, after continuous increases. Shanghai Shipping Exchange data shows that as of June 27, shipping freight from Shanghai to U.S. West Coast and East Coast base ports fell to $2,578/FEU and $4,717/FEU respectively, down 54.01% and 32.02% from early June peaks.
Tariff cut hinders the rush of exports to the U.S.
On May 12, China and the U.S. introduced the Sino-U.S. Geneva Trade Statement committing to reciprocal tariff reductions within 90 days, and the phenomenon of export surge to the U.S. emerged. However, as backlogged orders cleared and soaring shipping costs delayed shipments, the overseas inventory replenishment peak tapered off. Export volume underperformed expectations amid diminishing shipment urgency. Additionally, the June 10 announcement of a provisional tariff agreement framework further eased the uncertainty of tariff reduction and alleviated players’ concerns, stabilizing U.S.-bound export volume.
Seasonal Demand Slump Weakens Export Orders
According to the value of China’s exports to the U.S. released by GACC, export values of plastics and their finished product occupied 4.51% of the total in 2024; those of toys, game, sporting goods and their parts and accessories took up 5.13%; those of vehicles and parts took up 3.88%; those of electrical machinery, electrical equipment, audio and video equipment and their parts and accessories accounted for 23.99%. Those products are related to PP downstream fields. These substantial proportions make freight rate movements an indirect barometer of export order health for PP-intensive goods. Currently, weak domestic and overseas end-demand manifests in June declining order backlog days and operating rates month-on-month. Downstream plants exhibit cautious procurement behavior and diminished confidence, which also indicates that the continuity of PP finished product exports is limited.
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