Trans-Atlantic Shipping Surge During Tariff Pause – Early Peak Season?

With uncertainty about what the tariff levels on goods from other countries will become, shippers are using the 90-day pause on reciprocal tariffs as a window to import goods, at least on goods from countries other than China.

While many tariffs could end up lower than the current 10% baseline tariff the Trump Administration put on goods from other countries, even get fully eliminated in some zero-for-zero deals, many tariffs could increase back to the much higher percentages announced on “Liberation Day.” Though we won’t see official numbers on cargo volumes moved during this window until after each month passes, there are already signs pointing to increased shipping demand from U.S. importers. Particularly on west-bound trans-Atlantic shipments to the U.S. East and Gulf ports.

Greg Knowler reported on three major signs of this trans-Pacific demand increase in a Journal of Commerce (JOC) article:

• Decreased Blank Sailings
• Increased Freight Rates
• Peak Season Surcharges (PSS)

Let’s look at each of these.

Decreased Blank Sailings

Blank (cancelled) sailings are a bane on shippers. In general, they cost importers and exporters time and money when it comes to shipping their goods. Shippers notice blank sailings most when they delay shipments, pushing cargo back on later sailings. Carriers use them to decrease capacity, particularly when demand is low to try to keep freight rates from dropping with demand. Thus, when carriers are effective with blank sailings, shippers feel them not only in delays but also in higher freight rates importers and exporters must pay.

Excessive blank sailings can cause even larger problems, like was seen in the early days of the pandemic, in containers and equipment ending up maldistributed around the globe. That can to shortages, congestion, and upward pressure on freight rates.

When the international shipping sees a decrease in blank sailings, it tends to be indicative of an increase of shipping demand. Carriers meet that demand with higher capacity on trade lanes, which blanked sailings would reduce.

Here’s what Knowler reported on decreased blanked sailings:

… there have been limited blank sailings announced on the trans-Atlantic in the coming weeks, with just 7,124 TEUs to be withdrawn from North Europe to the US East and Gulf coasts in May, according to ocean visibility provider eeSea.

”It seems as if carriers are pushing up capacity to cater for whatever frontloading may be needed by European exporters,” Peter Sand, chief analyst at rate benchmarking platform Xeneta, told the Journal of Commerce.

Combining this with the next item is what’s really indicative of a trans-Atlantic shipping surge happening…

Increased Freight Rates

Seeing freight rates rise may be one of shippers’ least favorite things. This may be especially true now after shippers saw skyrocketing freight rates in recent protracted periods of events, such as the pandemic and Iran-backed Houthi attacks in the Red Sea.

However, freight rates have been dropping lately. In fact, at the end of last month, I was writing about freight rates being lower than they’d been at any time in all of 2024. With lower freight rates, the odds of them rising is more likely. However, demand is, of course, at play.

Decreased demand has been making freight rates fall. Some of that demand drop was due to natural demand lulls this time of year. Some of the demand drop was due to earlier shipping surges to beat new tariff implementations and because of labor strife at the ports. It’s possible for freight rates to rise again without demand increasing, but that would pretty much have to require supply constricting. That freight rates right now are increasing while supply is also increasing through reduced blank sailings is an enormous indicator that shippers are moving goods during this reciprocal tariff pause window.

Here’s what Knowler reported on the freight rate increase:

After months of decline, the spot market on the North Europe-US East Coast trade is up almost 4% since late March, reversing the downward trend following the brief strike at ports along the East and Gulf coasts last October. Spot rates are currently at $2,162 per FEU, according to Xeneta.

Peak Season Surcharges

Blank sailings aren’t the only tools carriers use to raise freight rates. General Rate Increases (GRIs) and PSS are common devices. Of course, if demand doesn’t exist to support these freight rate increases, carriers have a hard making the fees stick.

Knowler reports that some carriers are already implementing PSS in May:

Mediterranean Shipping Co. (MSC), one of the most active carriers on the trade lane, has announced a $1,000 per FEU PSS to take effect on May 13 from North Europe to the US, Canada and Mexico.

Peak season surcharges are also planned for the Mediterranean to North America trade lane from May 3. Hapag-Lloyd will add $750/FEU while MSC and CMA CGM will implement a $1,000/FEU PSS.

Peak season is the time of year when there’s the most shipping demand from U.S. importers. While it’s not unheard of for May to be considered part of the peak season, it is very early. Late summer and into the fall is where peak season typically is at its, well, peak. August, September, and into October are typically the biggest times for shippers to import goods to stock the shelves for the holiday season.

May, June, and July can be part of the peak season, especially for stocking up for back-to-school and Halloween shopping, but that time period is generally considered early peak season. Sometimes, factors make shippers frontload their imports in this portion of the peak season, causing the latter part of the peak season to be slower. It’s possible we could be seeing this kind of early peak season here in 2025.

With carriers seeing demand increase now as we head for May and shippers importing during the 90-day reciprocal tariff pause window, it wouldn’t be at all surprising for this to be an early peak season year. A number of factors will determine if this is the case.

How many shippers are frontloading in the tariff-pause window? How much extra stocking up might they be doing? If the percentage of shippers doing this are high and the amount of stocking up they’re doing is also high, we could have a strong early peak season that impacts the size of the later peak season. However, with this being trans-Atlantic shipping, and a great amount of peak season shipping typically being trans-Pacific, the latter part of the peak season may not be that affected.

We could have a strong early peak season with a perfectly strong August, September, and October. If it’s a strong year, that could stay strong in November. However, with the ever-rising tariffs between the U.S. and China, many shippers may be looking for manufacturers in other countries like Vietnam, Malaysia, Japan, and so on from which to import goods if there aren’t domestic options that work.

Retailers’ outlook on the market will make a difference too. The better than expected numbers that just came in on inflation reduction may create optimism and be indicative of a robust holiday shopping season. That could make for a strong peak season indeed. In the meantime, we’ll be watching how things play out with demand, tariffs, and freight rates.