Shipping analysts predict the Trans-Pacific market is heading into a downturn, while the Asia-Europe trade is gaining strength. U.S. importers frontloaded goods earlier this year to get ahead of tariff hikes, which has left inventories full. As a result, demand for the rest of 2025 on the Trans-Pacific is expected to weaken, pulling down freight volumes and spot rates – even if tariff reductions are extended beyond the current 90-day pause.

With the pause on global tariffs by the U.S. ending July 9 and the China tariff pause expiring August 14, ports along the U.S. West Coast are due to experience a short-lived cargo surge over the next few weeks. Xeneta’s Peter Sand believes demand will drop significantly after the cargo rush concludes as inventories will be full.

Niels Rasmussen, chief shipping analyst at BIMCO, said U.S importers would turn to their inventories after the 90-day pause on tariffs end. He cautioned that U.S. import volume growth would likely be dampened by both higher tariffs and slowing economic growth. If the proposed 55% tariff on Chinese imports is confirmed, the second half of 2025 could see an even sharper decline in Trans-Pacific activity. Meanwhile, trade agreements with the UK and likely with the EU will lower tariffs to 10%, softening impacts for European shippers.

In contrast, the momentum is gaining on the Asia-Europe trade. Spot rates to North Europe have surged 49% since May 31. Visibility provider eeSea indicates ocean carriers are planning to reduce capacity on this route in August, which could drive rates higher if demand holds steady.

BIMCO has subsequently revised its 2025 volume growth forecast for Europe and the Mediterranean from 3.5% to 6%, citing strong consumer spending and stable confidence levels across the EU.

While Red Sea shipping disruptions have eased, the threat from Houthi attacks persists. S&P Global notes that the risk to vessels in the region remains high despite a lull in reported incidents since December 2024.

A return to the Suez route could eventually ease capacity pressure; however, for now, BIMCO assumes the that current diversions around Africa are expected to continue. Rasmussen noted that when vessels do resume normal routings through the Red Sea and Suez Canal, it could lower ship demand by 10%.

Source: Journal of Commerce