Trump's tariff tide lifts Asean ports again – some more than others
[SINGAPORE] Ports across South-east Asia are riding a second wave of a 'great reroute', buoyed by a fresh swell as businesses give Beijing a wide berth to dodge US tariffs – adding to earlier gains when companies adopted the China-plus-one playbook.
US President Donald Trump's latest tariff blitz, albeit dialled-back temporarily, has sent businesses rerouting their shipments, with pundits The Business Times spoke to agreeing that ongoing supply chain shifts are putting wind in the sails of South-east Asia's ports – the backbone of global trade.
But the region's rising shipping volumes are straining ports, with infrastructure gaps and pandemic-era congestion resurfacing as shippers rush to beat the tariff clock.
S&P Global Ratings analyst Yang Shanshan noted that since the tariffs were introduced, the China-US throughput has naturally faced the largest drops, while the largest boost was seen on routes between China and South-east Asia.
Ports in Vietnam, India and Malaysia are clear beneficiaries, recording double-digit volume growth, said Praveen Gregory, senior vice-president for ocean freight at DHL Global Forwarding Asia Pacific.
'Smaller ports like Thailand's Laem Chabang are also gaining traction for niche sectors like automotive parts,' he highlighted.
A NEWSLETTER FOR YOU
Friday, 8.30 am Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Sign Up
Sign Up
Earlier, the US slapped on China goods an overall tariff of 145 per cent, which has since been cut to 30 per cent after a trade deal was brokered from weekend trade talks in Geneva.
South-east Asia earlier faced levies ranging from a baseline 10 per cent to as high as 49 per cent, until Trump on Apr 9 announced a 90-day pause on these reciprocal taxes.
While some companies adopted a wait-and-see approach by utilising existing inventory to meet demand or frontloaded orders to ensure sufficient stock on hand, others are changing their sourcing networks where possible, in the short term, added Gregory.
'This can be seen from the surge in demand for alternative sourcing hubs like Vietnam, India and Mexico,' he noted. 'We have also seen an increase in transhipment through South-east Asian hubs like Malaysia.'
Despite an additional one to three days in transit times, companies are still pivoting to such regional transhipment hubs as they hunt for alternatives to bypass direct China-US routes, said DHL's Gregory.
Similarly, Flexport's vice-president for global ocean procurement Nerijus Poskus pointed out that the tech-focused logistics management firm is seeing a 'notable increase' in requests for quotations originating from Vietnam, Cambodia, Indonesia, Malaysia and Thailand.
'Haiphong is experiencing an increase in direct service offerings, particularly on Transpacific routes,' he said of the Northern Vietnamese port city.
Transpacific Eastbound trade lane
Poskus added that the wider China's market share of US imports along the Transpacific Eastbound (TPEB) route – a trade lane that stretches across the Pacific Ocean between Asia and the US, and arguably the most important to American importers – has gradually been declining.
The market share of China, Hong Kong and Taiwan combined fell to 61.7 per cent in the year to date, from 62.8 per cent last year and 74.6 per cent in 2016, he said.
Meanwhile, Vietnam's share of the TPEB market grew to 15 per cent this year from 6.2 per cent in 2016. Poskus noted that Vietnam has more than doubled its share to become the second-largest source of US imports.
Thailand's market share increased to 5.5 per cent this year so far from 3.1 per cent in 2016, he added.
Indonesia also achieved 'modest growth' to 2.9 per cent in the year to date from 2.4 per cent in 2016, and Flexport has recently received 'a lot of interest' in the largest South-east Asian economy, said Poskus.
Congested ports
But increased throughput comes with a price tag for the region, and its perennial struggle with infrastructure financing gaps is coming back to bite.
South-east Asia is experiencing a level of port congestion not seen since the pandemic, said Lockton Singapore's head of protection and indemnity, Freddie Hawke.
'In Thailand, Indonesia and Vietnam, we're seeing a surge to expedite cargo within the 90-day implementation window (and) we expect to see further congestion for ports in this region as importers look for alternatives to Chinese suppliers,' he noted.
Said DHL's Gregory: 'Infrastructure gaps remain a challenge (for regional ports), and congestion resurges where capacity lags demand.'
The global story
Observers across the board maintain that the outlook for the shipping industry remains murky, with much hinging on the trajectory of trade and tariff policies in the coming months.
The shipping industry is often seen as a proxy for global economic growth, and freight rates are viewed as a barometer of the sector's health.
Jayendu Krishna, director – head of maritime advisers at Drewry, noted that freight rates from Malaysia and Vietnam to the US have 'increased considerably, (which) is reflective of surging volumes'.
Then again, that of other major US-bound routes have been falling, he added. 'It tells a global story of a steep decline in freight rates, mainly because of oversupply in the container shipping market,' warned Krishna. 'With a fall in US-bound trade, container shipping may be facing a double whammy.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
an hour ago
- Business Times
Japan scraps US meeting after Washington demands more defence spending: report
[WASHINGTON] Japan has cancelled a regular high-level meeting with its key ally, the United States, after the Trump administration demanded it spend more on defence, the Financial Times (FT) reported on Friday (Jun 20). US Secretary of State Marco Rubio and Defence Secretary Pete Hegseth had been expected to meet their Japanese counterparts in Washington on Jul 1 for annual 2+2 security talks. But Tokyo scrapped the meeting after the US side asked Japan to boost defence spending to 3.5 per cent of GDP, higher than an earlier request of 3 per cent, the paper cited unnamed sources familiar with the matter, including two officials in Tokyo, as saying. A US official who did not want to be identified confirmed Japan had 'postponed' the talks but said the decision was made several weeks ago. The source did not cite a reason. A non-government source familiar with the issue said he had also heard Japan had pulled out of the meeting, but not the reason for it doing so. US State Department spokesperson Tammy Bruce said she had no comment on the FT report when asked about it at the regular briefing, and the Pentagon also had no immediate comment. Japan's embassy in Washington did not respond to a request for comment. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The Financial Times said the new higher spending demand was made in recent weeks by Elbridge Colby, the third-most senior Pentagon official, who has also recently upset another key US ally in the Indo-Pacific by launching a review of a project to provide Australia with nuclear-powered submarines. In March, Japanese Prime Minister Shigeru Ishiba said that other nations do not decide Japan's defence budget after Colby called in his nomination hearing to be under secretary of defence for policy, for Tokyo to spend more to counter China. Japan and other US allies have been engaged in difficult trade talks with the United States over US President Donald Trump's worldwide tariff offensive. The FT said the decision to cancel the Jul 1 meeting was also related to Japan's Jul 20 Upper House elections, at which the ruling Liberal Democratic Party is expected to suffer a loss of seats. It comes ahead of a meeting of the US-led Nato alliance in Europe next week, at which Trump is expected to press his demand that European allies boost their defence spending to 5 per cent of GDP. REUTERS
Straits Times
an hour ago
- Straits Times
Japan scraps US meeting after Washington demands more defence spending
Japanese Prime Minister Shigeru Ishiba gives his opening speech at the beginning of the meeting with US Secretary of Defense Pete Hegseth at his office in Tokyo, in March. PHOTO: REUTERS WASHINGTON - Japan has cancelled a regular high-level meeting with its key ally the United States after the Trump administration demanded it spend more on defence, the Financial Times (FT) reported on June 20. US Secretary of State Marco Rubio and Defence Secretary Pete Hegseth had been expected to meet their Japanese counterparts in Washington on July 1 for annual 2+2 security talks. But Tokyo scrapped the meeting after the US side asked Japan to boost defence spending to 3.5 per cent of GDP, higher than an earlier request of 3 per cent, the paper cited unnamed sources familiar with the matter, including two officials in Tokyo, as saying. A US official who did not want to be identified confirmed that Japan had 'postponed' the talks but said the decision was made several weeks ago. The source did not cite a reason. A non-government source familiar with the issue said he had also heard Japan had pulled out of the meeting, but not the reason for it doing so. US State Department spokesperson Tammy Bruce said she had no comment on the FT report when asked about it at regular briefing, and the Pentagon also had no immediate comment. Japan's embassy in Washington did not respond to a request for comment. The Financial Times said the new higher spending demand was made in recent weeks by Mr Elbridge Colby, the third-most senior Pentagon official, who has also recently upset another key US ally in the Indo-Pacific by launching a review of a project to provide Australia with nuclear-powered submarines. In March, Japanese Prime Minister Shigeru Ishiba said that other nations do not decide Japan's defence budget after Mr Colby called in his nomination hearing to be under secretary of defence for policy for Tokyo to spend more to counter China. Japan and other US allies have been engaged in difficult trade talks with the United States over US President Donald Trump's worldwide tariff offensive. The FT said the decision to cancel the July 1 meeting was also related to Japan's July 20 Upper House elections, at which the ruling Liberal Democratic Party is expected to suffer a loss of seats. It comes ahead of a meeting of the US-led NATO alliance in Europe next week, at which Mr Trump is expected to press his demand that European allies boost their defence spending to 5 percent of GDP. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
an hour ago
- Business Times
Meta discussed buying Perplexity before investing in Scale
[LOS ANGELES] Meta Platforms held discussions with artificial intelligence (AI) search startup Perplexity AI about a possible takeover before moving ahead with a multibillion-dollar investment in Scale AI, according to sources familiar with the matter. The two companies could not come to an agreement and decided not to pursue the deal, said the sources, who asked not to be named as the details of the talks are not public. The financial terms under discussion could not be learned. Perplexity recently closed a new round of funding at a US$14 billion valuation. Meta also attempted to hire Perplexity chief executive officer Aravind Srinivas to join the social media company's new 'superintelligence' team, which is focused on building more powerful AI systems, the sources said. The talks with Meta, which have not previously been reported, highlight Meta CEO Mark Zuckerberg's willingness to use deals and big hires to catch up in the AI race. The talks took place before Meta finalised a US$14.3 billion investment in Scale AI that gives it a 49 per cent stake in the data-labelling startup. Meta and Perplexity did not respond to requests for comment. Founded in 2022, Perplexity has emerged as one of the most prominent startups using generative AI to rethink core Internet services. Perplexity is taking on Alphabet's Google by offering an AI tool that summarises search results, lists citations for its answers and helps users refine their queries to get the best responses. The startup is also developing an AI-powered web browser. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Frustrated with the pace of Meta's AI development, Zuckerberg is making a concerted push to poach top AI talent from across the industry with lucrative pay packages. Meta has succeeded in hiring Scale AI's former CEO Alexandr Wang, as well as top researchers from Google DeepMind and Sesame AI. Not everyone is jumping to join Meta, however. OpenAI CEO Sam Altman said in a podcast this week that some on his staff had been approached by Meta with offers of US$100 million signing bonuses and even bigger compensation packages, but had declined to join the company. Meta has been in talks with former GitHub CEO Nat Friedman to recruit him to the new team, according to sources familiar with the matter. The company has also been working on hiring Daniel Gross, the CEO of Safe Superintelligence, a research lab founded by former OpenAI chief scientist Ilya Sutskever, the source said. Meta has also held early discussions for a computing deal in which Safe Superintelligence would use Meta's data centre infrastructure, the source said. Representatives for Safe Superintelligence did not immediately respond to a request for comment. Other Big Tech firms, including Google and have tried to establish themselves as the backbone of the AI ecosystem by providing chips and cloud computing resources to AI startups. Meta has not gone this route to date. BLOOMBERG
