Buying Time

In this week’s Roar: A temporary reprieve from tariffs, the impact of a Russia-Ukraine peace agreement, stable air freight rates, details from a key ATA index, and AI’s role in supply chain decision-making.

US importers are getting a reprieve from tariffs with major trade partners, but the looming threat of more tariffs has shippers biding time by continuing to frontload. A surge in imports is keeping trans-Pacific container rates high despite the usual seasonal slowdown. The increased demand for shipping capacity is impacting market rates and logistics planning. Carriers are benefiting from stronger than expected volumes, while shippers try to deal with cost fluctuations and disruptions. The general uncertainty around future tariffs has businesses trying to mitigate risks and secure capacity before any policy changes take effect.

Supply chain leaders are monitoring the negotiations aimed at ending the Russia-Ukraine conflict. A leading expert suggests that a peace agreement could alleviate pressures on Europe’s road freight sector, particularly by addressing the driver shortage through the return of Ukrainian transport workers. If a deal is reached, things could also improve for air freight since European and UK carriers have had to cancel routes to China, and the loss of capacity has pushed up air cargo rates.

Despite concerns over new US tariffs on China, a pause in the de minimis rule change, and the seasonal slowdown after the Lunar New Year, air freight rates have remained stable. The Baltic Air Freight Index showed a 1.7% week-on-week increase and a 12.8% year-on-year increase. Rates from China to both Europe and the US were slightly higher, while Hong Kong rates experienced a slight decline but still remain significantly higher than last year. According to analysts, the firm rates are a contradiction of what was expected from tariffs and the de minimis exemption.

As of January 2025, the American Trucking Association’s For-Hire Truck Tonnage index remained steady at 111.9, unchanged from December 2024. This comes after a 1.7% decline in November and December. However, the Index does show a 0.3% year-over-year increase, marking the first annual rise since August. The ATA chief pointed out that maintaining this level was significant, especially in light of challenges such as severe winter storms, ongoing softness in manufacturing and retail sales, and the potential disruptions from California wildfires. Each of those influenced freight volumes, but the tonnage index has remained resilient.

AI agents are increasingly playing a part in supply chain decision-making by autonomously managing complex analytical tasks and collaborating with human experts. In contrast to traditional automation tools that follow set rules, these agents can learn, adapt, and handle nuanced decisions across the supply chain. They’re able to streamline data integration, manage unit conversions, and product code mapping. This reduces the time teams need to spend on data reconciliation, leading to quicker, better-informed decisions. In a crisis management situation, AI agents could condense weeks of manual analysis into hours.

For the rest of the week’s top shipping news, check out the article highlights below.