Latest news with #US-bound
Fibre2Fashion
an hour ago
- Business
- Fibre2Fashion
Drewry WCI falls 7.45%, after six weeks of gains
The Drewry World Container Index (WCI)—a composite measure of container freight rates—dropped for the first time in over a month, falling 7.45 per cent to $3,279 per 40-foot equivalent unit (FEU) on June 19, down from $3,543 per FEU the previous week. The index declined after six consecutive weeks of gains, mainly due to low demand for US-bound cargo. This suggests that the recent surge in US imports, triggered by the temporary halt of higher US tariffs, is unlikely to have the lasting impact initially anticipated. Drewry WCI fell 7.45 per cent to $3,279 per FEU on June 19, its 1st decline in over a month, due to weaker US-bound demand. Despite recent drops, spot rates remain significantly higher than six weeks ago. Drewry forecasts softening in the supply-demand balance in the second half of 2025, with rate volatility likely influenced by legal challenges to tariffs and new US penalties on Chinese vessels. Freight rates from Shanghai to New York fell 10 per cent to $6,584 per 40-foot container over the past week. However, spot rates remain significantly higher—up 81 per cent compared to six weeks ago (May 8). Rates to Los Angeles dropped 20 per cent this week but have risen 73 per cent over the same six-week period. Meanwhile, freight rates increased from Shanghai to Rotterdam by 12 per cent to $3,171, and from Shanghai to Genoa by 1 per cent to $4,075 per 40-foot container. However, Drewry's Container Forecaster expects the supply-demand balance to weaken again in the second half of the current year, likely causing spot rates to decline. The volatility and timing of rate changes will depend on the outcomes of legal challenges to Trump's tariffs and on capacity shifts related to the introduction of US penalties on Chinese ships—factors that remain uncertain. Fibre2Fashion News Desk (KUL)
New Straits Times
13 hours ago
- Business
- New Straits Times
Malaysia sees container spillover as shippers reroute from China
KUALA LUMPUR: Malaysian ports are expected to maintain high container volumes in the coming months, despite a 90-day 'grace period' granted by the United States to China for tariff renegotiations. Maritime scholar and commentator Nazery Khalid said Malaysia has experienced positive spillover effects from US tariffs on China, particularly at its ports. These ports have benefited from the rerouting of containers carrying finished and semi-finished goods originally destined for the US. He told Business Times that many American importers, especially small and medium-sized enterprises (SMEs), are cancelling orders or refusing shipments from China. Consequently, these containers are either unclaimed at US ports or sent back. Nazery explained that faced with higher costs, these SMEs prefer to abandon the cargo rather than absorb the tariffs or pass the added costs to customers, which could harm their businesses. Concurrently, containers turned back or those that never leave China for the US are redirected to other countries, including Malaysia, which also imports many finished and semi-finished goods from China. "This has resulted in several Malaysian container ports reporting an increase in throughput volumes in the months following the announcement of US tariffs on China. "A large share of these containers comes from intra-Asian trade, mainly from Chinese ports, which dominate the list of the world's top 20 busiest container ports by volume," he added. Nazery said while a rebound in US-bound containers from China is expected once the grace period ends, it is likely to occur towards the end of the third quarter of this year. This is because shippers and shipping companies sailing from China to the US are 'frontloading' their cargoes and services ahead of the 90-day 'breathing period' expiry. In the interim, he said Malaysian ports are likely to continue handling higher-than-usual container volumes over the next two to three months, until seaborne trade between the US and China stabilises following the disruption caused by the tariff standoff. He noted that the 90-day window granted by the US expires in mid-August, making it unlikely for normal trade flows between the two economic superpowers to resume before then. However, due to US President Donald Trump's unpredictability, it remains unclear what he will do after the 90-day trade embargo against China ends. "Should he stick to his 90-day timetable, container bookings, shipping services, and freight rates in the Trans-Pacific trade between China and the US can be expected to rebound from current lows. "Malaysian ports will likely cease to enjoy the purple patch of container spillover and return to handling normal container throughput volumes once order has been restored between the US and China," Nazery said. *Seizing opportunity amid uncertainty* Malaysia's maritime industry could face both challenges and opportunities if global supply chains shift due to US-led efforts to reduce reliance on China. Nazery said Trump's administration could push American firms to "re-shore" production closer to home in a bid to revive domestic manufacturing and reduce their reliance on China. He said that while such a change would take time, given the well-established global supply chain order that has taken decades to build, Malaysian exporters and logistics providers risk losing long-standing business with US companies seeking shorter, localised supply chains. "Our ports and logistics service providers could also find themselves handling fewer US-bound cargoes should the re-shoring shift of suppliers from Asia Pacific or Southeast Asia to the US or to neighbouring countries or regions materialise," he added. However, Nazery said the disruption could also drive Malaysian firms to innovate and climb the value chain. Rather than producing low-cost goods easily replaced elsewhere, he said local companies may focus on higher-value, specialised products. "The US-China tariff war could also motivate Malaysian ports, shipping companies, and logistics service providers to upgrade their infrastructure and strengthen their human capital. "This, in turn, would help them improve efficiency, productivity, service quality, and cost competitiveness, ensuring they remain relevant and are not bypassed, regardless of future developments," he added. Regionally, Nazery said Malaysia can use its Asean chairmanship to drive several key initiatives. These include boosting intra-Asian trade, deepening economic integration, and enhancing Asean's appeal as a destination for foreign direct investment. He added Malaysia can also work to strengthen governance, reduce trade barriers, harmonise trade rules, and promote good regulatory practices and transparency. "The decoupling of the US economy from China could become a powerful force that reshapes Asean," Nazery said. "It may allow the region to fully realise its potential, assert itself as a significant player on the global stage, and demonstrate its readiness and resilience in facing shocks such as the tariff war and its geopolitical impacts." *Strategies to boost maritime competitiveness* To remain competitive in today's increasingly borderless, hyperconnected, and digitalised global economy, Nazery said Malaysia must transform into a more value-adding, knowledge-based, and innovation-driven economy. He noted that despite Malaysia's strategic location and access to major shipping lanes, the country's economy remains heavily reliant on assembling low-value goods and exporting raw materials, missing out on downstream opportunities. He cited national initiatives like the National Smart Manufacturing Plan under the New Industrial Master Plan 2030 and the National Fourth Industrial Revolution Policy as positive steps to automate and modernise manufacturing and enhance industrial capabilities. However, he stressed that the critical success factors identified to attain the objectives of those plans must be executed steadfastly to ensure they are met. These include establishing a supportive ecosystem that offers incentives, improves infrastructure, develops human capital, and promotes the adoption of Industry 4.0 technologies and solutions. He added that policymakers, ports, shipping companies, logistics service providers, shipyards and other maritime industry players must work more closely together. Their collaboration is essential to keep Malaysian ports attractive to global shipping lines and to strengthen the country's integration into global supply chains. "In this way, we can shield ourselves better from the vagaries of the VUCA (vulnerabilities, uncertainties, complexities, and ambiguities) landscape and minimise the impact of game-changing global events like the tariff tiff, or even position ourselves to benefit from them. "All these must be done without compromising the need to safeguard the environment, practise good governance, and adhere to international standards and rules, as long as they do not conflict with our policies and our national and strategic interests," Nazery said.
Gulf Today
2 days ago
- Automotive
- Gulf Today
Japan's exports post first drop in 8 months as tariffs hit auto firms
Japan's exports fell in May for the first time in eight months as big automakers like Toyota were hit by sweeping US tariffs, and the failure of Tokyo to clinch a trade deal this week will likely pile pressure on a fragile economy. Prime Minister Shigeru Ishiba said after the Group of Seven summit in Canada on Tuesday his country had not reached a comprehensive tariff agreement with Washington as some disagreements persisted between the two nations. Japan and the US 'explored the possibility of a deal until the last minute,' he added. Tokyo is scrambling to find ways to get Washington to exempt Japan's automakers from 25 per cent automobile industry-specific tariffs, which are hurting the country's manufacturing sector. Japan also faces a 24 per cent 'reciprocal' tariff rate starting on July 9 unless it can negotiate a deal with Washington. Japan's automobile sector accounted for about 28 per cent of the total 21 trillion yen ($145 billion) worth of goods the Asian country exported to the US last year. Its total exports in May dropped 1.7 per cent year-on-year by value to 8.1 trillion yen, government data showed, smaller than a median market forecast for a 3.8 per cent decrease, and following a 2 per cent rise in April. Exports to the US slumped 11.1 per cent last month from a year earlier, the largest monthly percentage decline since February 2021, dragged down by a 24.7 per cent plunge in automobiles and a 19 per cent fall in auto components, while a stronger yen also helped reduce the value of shipments. Exports to China were down 8.8 per cent. In terms of volume, however, US-bound automobile exports dipped just 3.9 per cent, indicating that the biggest Japanese exporters were absorbing the tariff costs. 'The value of automobile exports to the US fell, but their volume did not drop that much,' Daiwa Institute of Research economist Koki Akimoto said. 'This indicates Japanese automakers are effectively shouldering the tariff costs and not charging customers.' So far major Japanese automakers have refrained from price increases in the US to mitigate the tariff costs, except for Subaru and Mitsubishi Motors. 'They are buying time right now to see the course of Japan-US trade negotiations,' Akimoto said. The absence of price hikes could affect their profits, but their fiscal base is generally solid, he added. While Japanese stocks and the yen showed little reaction to the data, shares of car companies have come under pressure this year due to concern about the tariff impact. Automakers and other transport companies are the second-worst performer this year among the Tokyo market's 33 sector sub-indices, down almost 12 per cent. Only makers of precision equipment have fared worse. Toyota 7203.T, the world's top-selling automaker, has estimated that tariffs likely sliced 180 billion yen from its profit in April and May alone. Honda 7267.T has said it expects a 650 billion yen hit to its earnings this year from tariffs in the US and elsewhere. Reuters
Business Times
2 days ago
- Business
- Business Times
Singapore, Thailand may see negative growth by 2026 as Asean reels from tariffs: economists
[SINGAPORE] The full impact of the escalating US tariffs on Asean's growth will likely emerge in 2026 – when the region is expected to face a sharp slowdown. Bloomberg Economics projected on Tuesday (Jun 17) that gross domestic product growth across the Asean-5 economies – Singapore, Malaysia, the Philippines, Vietnam and Indonesia – is expected to fall from 4.5 per cent in 2024 to 3 per cent in 2025. The research unit added that growth could even fade to 1.5 per cent in 2026 if the tariffs stay in place. Among the five, Thailand and Singapore are likely to be hit the hardest because of their exposure to global trade, said Bloomberg's senior economist for South-east Asia Tamara Henderson. Thailand, the exports of which account for nearly 70 per cent of GDP, faces potential tariffs as high as 36 per cent. She warned that the country's growth is likely to slip below 2 per cent in 2025, and may contract outright in 2026 if the tariffs remain. 'Over 11 per cent of Thailand's GDP comes from merchandise exports to the US, particularly in electronics and chips,' she noted. 'Auto-supply chains are also affected, and tourism recovery has faltered.' 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 Although Singapore faces the minimum 10 per cent baseline tariff, it is arguably the most exposed in the region because of its export-oriented economy. About 6 per cent of its GDP depends on exports to the US, with significant trade in semiconductors and pharmaceuticals, for which the likelihood of additional duties remains unclear. This could drag Singapore's 2025 growth sharply below the strong 4.4 per cent recorded in 2024. If the tariffs remain in force, Singapore's economy could contract by around 1 per cent in 2026, Henderson projected. 'Singapore is likely to take the largest hit to growth in the near-term from the tariff shock. However, its agile and well-resourced government may allow the city-state to emerge with less scarring over the medium term,' she added. Economies such as the Philippines and Indonesia are expected to weather the tariff storm better, given that their growth is more led by domestic demand. In Indonesia, US-bound shipments account for only around 10 per cent of exports. 'Exports in Indonesia are about 25 per cent of overall GDP, compared to household spending, which makes up around 50 per cent,' said Henderson. Likewise, the Philippines' tight labour market and strong household sector are likely to support domestic spending, shielding the country from heavy tariff shocks. She noted, however, that the tariffs could hit both economies in areas beyond trade, given that weak global demand and weaker pricing power along supply chains could dampen the region's investment and hiring opportunities. Balancing acts Heavy US tariffs on South-east Asian economies mean that the region's attractiveness as an alternative 'China-plus-one' destination is slowly fading. Asean countries must therefore find new opportunities to remain resilient, said Priyanka Kishore, lead economist at the policy consultancy Asia Decoded; she was speaking at the launch of a report on the region's economic outlook by the Institute of Chartered Accountants in England and Wales on Jun 12. China's role in the changing global order will be difficult to navigate, she said, because its improvements in manufacturing could be damaging to the region's economies, even as it offers an alternative trade destination to the US. She noted that the region's labour productivity has lagged at half the pace of China's in recent years. 'China is capital-intensive and mechanised; it is producing items at a fraction of the cost of that in a factory in Indonesia. 'Regional cooperation will have to include reform in infrastructure and human capital development, such as training of skills and digitalisation,' she said. Henderson added that Asean's resilience will depend on identifying new competitive niches. 'Finding these gaps will be the challenge. Perhaps, these will be in services. Countries such as Singapore, with its many Mandarin speakers, could see an advantage in its ability to understand both the West and China,' she suggested. But China's place in the Asean story is not entirely damaging, analysts say. The Chinese government's efforts to boost its ailing economy have been widespread, and aimed at making domestic demand the main engine and anchor of its economic growth. If successful, a wealthier Chinese middle class could spark opportunities in trade and investment for certain sectors in the region. Gary Tan, portfolio manager at Allspring Global Investments, said: 'These include tourism, logistics and e-commerce; regional hubs like Singapore could see increased cross-border activity.'
New Straits Times
2 days ago
- Business
- New Straits Times
Japan exports post first drop in 8 months as US tariffs hit autos
TOKYO: Japan's exports fell for the first time in eight months in May, data showed on Wednesday, indicating that sweeping US tariffs were threatening the country's fragile economic recovery. Japanese Prime Minister Shigeru Ishiba and US President Donald Trump have yet to reach a trade deal. Tokyo is scrambling to find ways to get Washington to exempt its automakers from 25 per cent automobile industry-specific tariffs, which are dealing a heavy blow to the country's manufacturing sector. It also faces a 24 per cent 'reciprocal' tariff rate starting in July 9 unless it can negotiate a deal with Washington. Total exports by value dropped 1.7 per cent year-on-year in May, data showed, smaller than a median market forecast for a 3.8 per cent decrease and following a 2 per cent rise in April. Exports to the United States plunged 11.1 per cent last month from a year earlier, while those to China were down 8.8 per cent, the data showed. The tariff threat had driven companies in Japan and other major Asian exporters to ramp up shipments earlier this year, inflating levels of US-bound exports during that period. The data showed imports dropped 7.7 per cent in May from a year earlier, compared with market forecasts for a 6.7 per cent decrease. As a result, Japan ran a trade deficit of 637.6 billion yen (US$4.39 billion) last month, compared with the forecast of a deficit of 892.9 billion yen. The hit from U.S. tariffs could derail Japan's lacklustre economic recovery. Subdued private consumption already caused the world's fourth-largest economy to shrink in January-March, the first contraction in a year. They also complicate the Bank of Japan's task of raising still-low interest rates and reducing a balance sheet that has ballooned to roughly the size of Japan's economy. The BOJ kept interest rates steady on Tuesday and decided to decelerate the pace of its balance sheet drawdown next year, signalling its preference to move cautiously in removing remnants of its massive, decade-long stimulus. According to an estimate by the Japan Research Institute, if all the threatened tariff measures against Japan were to take effect, US-bound exports will fall by 20-30 per cent. Some economists say those duties could shave around 1 percentage points of the nation's gross domestic product. Japan exported 21 trillion yen worth of goods to the United States last year, with automobiles representing roughly 28 per cent of the total. .
