The United States and European Union are in a trade conflict, with the US threatening 200% tariffs on European alcoholic beverages, while the EU plans to retaliate. All of this could drive inflation and hurt consumers. The US has also imposed a 25% tariff on foreign-made cars, effective 2 April, while proposed US port fees could severely impact Caribbean trade, inflating costs and potentially shifting imports to China. Meanwhile, the Houthi militia has threatened to resume attacks on Israeli shipping but not on other vessels. The freight market is also facing a downturn, with the Freightos Baltic Index dropping over 50% since January, and further declines are expected in 2026 due to increased fleet capacity and changes in vessel sharing.

 

Key Points

- EU-US Trade Tensions - The US and EU are engaged in a trade conflict, with the US threatening to impose 200% tariffs on European alcoholic beverages, while the EU threatens to retaliate. The trade wars are predicted to increase inflation and harm consumers.

- US Imposes 25% Tariff on Car Imports: Donald Trump announced a 25% tariff on foreign-made cars, effective 2 April, as part of escalating trade tensions with US allies.

- Severe Impact on Caribbean Trade: The proposed US port fees could significantly harm the Caribbean, where many services rely on Chinese-built ships and frequent US port calls, causing inflated costs per container. This could disrupt trade and force the region to increase imports from China.

- Houthi Attacks: Yemeni militia group Houthi has signalled the resumption of attacks on Israeli shipping but has not mentioned attacks on non-Israeli owned vessels.

- Freight Market Decline: The FBX Index has dropped over 50% since January. The increase in fleet capacity on East-West services and changes in vessel sharing alliances are contributing to cooling freight rates. Forward freight indicators point to further declines in 2026. 

- Freight Market Decline: The FBX Index has dropped over 50% since January. The increase in fleet capacity on East-West services and changes in vessel sharing alliances are contributing to cooling freight rates. Forward freight indicators point to further declines in 2026. 

 

Asia-US

Spot rates on FBX01 Asia-USWC (alongside futures rates) have seen a 14.1% decrease from 6 March through to 27 March. This route saw a general downtrend throughout the month, with some fluctuations, but the overall trend was downward. FBX01 Asia-USWC and FBX03 Asia-USEC spreads (the premium to ship to the US East Coast versus the US West Coast from Asia) have also closed dramatically. FBX03 Asia-USEC spot rates experienced some fluctuation but had a noticeable decrease over the month, closing at a 6.7% decrease.

As of 25 March, the latest futures assessments for FBX01 (Asia-North America) and FBX03 (Asia-Europe) for Calendar Year 2026 (Cal26) are $2,625/FEU and $3,850/FEU, respectively. These rates are significantly higher compared to pre-COVID levels, with FBX01 being 72% higher than the 2019 annual average and FBX03 being 38% higher than the 2018 annual average.

However, there are concerns that the decline in US consumer confidence may lead to a slowdown in consumer spending, potentially causing a further downward correction in the forward freight assessments for Asia- North America. On the other hand, the Asia- Europe market appears to face a more marginal decline in spot rates for Cal26.

While freight rates for both major routes remain elevated compared to historical averages, potential macroeconomic pressures, particularly from reduced consumer confidence in the US, could exert downward pressure on future rates in the Asia- North America trade lane.

 

Asia-Europe

Price action in Northern Europe and the Mediterranean has experienced substantial decreases. Spot rates for FBX11 have seen a fall by 15.7% from 6 March to 27 March. This could be an indicator of a seasonal adjustment or due to purely less demand for shipping in Europe. 

As of 25 March, the futures assessment for FBX11 (Asia- Europe) for Cal26 stands at $2,625/FEU, which is 80% higher than the 2019 annual average. Although there is room for a downward correction in the Asia- Europe freight market, the low number of ultra-large container ships scheduled for delivery in 2025-26 could provide some temporary supply relief.

As of 25 March, the futures assessment for FBX11 (Asia- Europe) for Cal26 stands at $2,625/FEU, which is 80% higher than the 2019 annual average. Although there is room for a downward correction in the Asia- Europe freight market, the low number of ultra-large container ships scheduled for delivery in 2025-26 could provide some temporary supply relief.

The freight market is currently facing significant uncertainty, with geopolitical instability increasing daily. Future freight assessments remain volatile, influenced by factors like the proposed US port fees on Chinese-built ships. Industry leaders like Hapag-Lloyd CEO Rolf Habben Jansen, expect changes to these proposed fees to mitigate potential massive costs for shipping lines.

As 2025 progresses, the market is likely to experience continued fluctuations influenced by these evolving geopolitical and regulatory developments.

About Ioannis Imirziadis, Freight and Energy Derivatives, Braemar

Ioannis Imirziadis works on the Container Freight and Cross-commodity desks at Futures brokerage Braemar Securities Ltd. – a part of Braemar Shipbroking. He started his career in Ship Finance at Berenberg Bank in Hamburg on the Greek client desk and has recently joined Braemar to help grow the Container FFA desk and has a passion for risk management within the wider shipping industry.


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