Tariffs, Surcharges & A Perfect‑Storm Summer: Why Trans‑Pacific Spot Rates Just Doubled—and What Shippers Can Do
When the U.S.–China “tariff truce” cut headline duties to 30 % on May 12, importers cheered—until spot quotes for Shanghai‑to‑Los Angeles rocketed past $5,800 per 40‑foot box (FEU) three weeks later, more than double early‑May levels and the loftiest price since the pandemic boom. Drewry’s World Container Index has jumped 70 % in four weeks and 41 % in the most recent week alone.
A (Very) Short History of Trans‑Pacific Rate Shocks
2016 – 17 | Post‑Hanjin Chaos
The bankruptcy of Hanjin Shipping erased ~8 % of global capacity overnight. Spot rates spiked above $2,500/FEU, only to sink below $1,100 by mid‑2017 once surviving carriers redeployed tonnage.
2020 – 21 | COVID Super‑Cycle
Lockdowns flipped spending from services to goods and jammed West‑Coast ports. Rates hit an eye‑popping $20,000+/FEU; contract shippers paid surcharges simply to keep bookings from rolling. By late 2022 they had collapsed back to the $2,000 range.
2023 – 24 | Rate Winter & Carrier Discipline
Over‑ordering of ships met cooling consumer demand. Carriers blank‑sailed aggressively to keep rates above $1,500, but a mild peak season meant the index still slid below $2 k early this year.
2025 | “Tariff‑Truce Spike”
Today’s rally is smaller in dollar terms than the COVID era, but faster: a 100 % move in three weeks instead of three months. The trigger is policy‑driven demand—importers front‑loading before tariff terms potentially snap back on June 30—layered on top of an already tighter capacity base and higher bunkering and emissions costs.
The common thread: when demand surges suddenly (bankruptcy backlog, pandemic, tariff rush) and carriers are slow to add ships, spot rates go vertical—then retrace once cargo flows normalize and capacity catches up.
What’s Behind the Current Spike?
Far Point Global’s Morning Market Pulse 06.06.25
Cost Shock in Three Everyday Cargoes
A doubled freight bill hits products in direct proportion to how heavy (or light) freight once was in their landed cost. Typical shares—and the resulting jump—look like this:
Far Point Global’s Morning Market Pulse 06.06.25
In construction bids or retail P&Ls, those percentages land right now—long before any tariff outcome is known. What can this mean in simple terms. Simply, Firm X sells a widget. Their FOB price (price prior to shipping) is 100. They can put 100 widgets in a shipment. Their shipment per widget used to be 30. Their shipment cost now is 60 making their landed cost (prior to any tariff) 160 as opposed to 130. If they sold at a 40% markup the sales price was 182, to hold the same margin they need to now sell at 224.
Are We Near a Ceiling?
Far Point Global see early signs of plateau:
Forward quotes for the second half of June are already in the $5,000–5,500 range, suggesting front‑loading may fade once tariff uncertainty clears.
About 34,000 TEU of extra West‑Coast capacity is scheduled to arrive mid‑June as carriers unwind blank sailings.
Drewry projects softer U.S. consumer demand in H2 2025, a classic release valve for spot rates.
Still, even a $1,000 pull‑back would leave spot freight twice the level most budgeted just 30 days ago—underscoring the need for short‑term risk management.
Practical Moves for Shippers
Far Point Global’s Morning Market Pulse 06.06.25
The Big Picture
This surge is not the 2021 supply‑chain crisis revisited, but it is a reminder that tariff policy, carrier discipline, and seasonal psychology can collide faster than capacity can react. Whether rates settle at $4 k or $5 k, the era of $2 k “normal” boxes is on hold until:
Tariff clarity—an extension (or removal) of the 30 % duty would smooth the demand curve.
More ships online—mid‑year deliveries and service restorations will add slack.
Consumer cooling—if U.S. retail softens, import volumes will too.
History shows trans‑Pacific rates rarely stay at extremes for long—but the floor keeps ratcheting higher. Pre‑Hanjin “normal” was $1,000; post‑pandemic normal looks closer to $2,000; 2025’s tariff rush hints the next floor may be $3,000 once policy uncertainty becomes the new baseline. The best hedge is structural: diversify routings, bake index‑linked clauses into contracts, and stay nimble enough to shift volume when the next policy or demand jolt hits.