Rerouting via Cape of Good Hope to continue until mid-2025: Dimerco
Diversifying suppliers and alternative shipping routes can cushion tariff impacts.
The return of transits through the Red Sea remains uncertain as carriers will continue rerouting via the Cape of Good Hope until it is deemed completely safe.
"Shifting back to the Suez Canal is a complex process requiring fleet rescheduling, terminal adjustments and cost restructuring. Given these challenges, carriers are unlikely to change routes overnight and will likely continue detouring until at least mid-year," says the latest update from Dimerco.
The blank sailing rate has dropped significantly post-CNY, the update added. "While the impact of the Red Sea situation remains uncertain, the introduction of new vessels may increase capacity and put pressure on ocean freight rates."
Alvin Fuh, Vice President – Ocean Freight, Dimerco Express Group says: "As TPEB contract renewals approach in April, market rates are expected to fluctuate as carriers push GRIs. For Europe westbound, most carriers plan to impose GRIs from March 1, but whether these rates hold will depend on market demand."
U.S. President Donald Trump’s tariffs on Mexico, Canada and China will reshape global supply chains, the update added. "The 25 percent tariffs on Mexican and Canadian goods, along with the hike on Chinese imports, will disrupt trade flows, driving companies to explore new sourcing options. EU retaliation over auto tariffs adds further uncertainty. Geopolitical tensions and market volatility are expected, requiring businesses to adapt to minimise disruptions.
"Action suggested: diversifying suppliers and alternative shipping routes can help mitigate the impact of increased tariffs."
The global manufacturing PMI inched up from 49.6 in December 2024 to 50.1 in January 2025, indicating a return to expansion after a brief contraction. "However, this data was collected before the announcement of U.S. tariffs, which could significantly influence the global manufacturing landscape in the coming months."
Regional impact
Taiwan: Shipping demand from Taiwan to the U.S. and Europe will be lower in March 2025, the update added. "The U.S. 10 percent tariff on Chinese imports did not cause a demand surge, leading to lower freight rates. For Europe, advanced shipments to late 2024 and expected rate hikes have resulted in decreased current cargo volume. Freight rates have been falling in February and may continue in March due to low demand. Carriers may adjust capacity to prevent further rate drops."
North China: Cargo volume is gradually recovering post-Spring Festival, and carriers may try rate increases starting in March. U.S. tariff policy adjustments under the Trump administration have caused customers to take a wait-and-see approach, reducing cargo volume. The reduced capacity on the USWC lane due to new alliances and lower cargo volume has led to a more balanced supply and demand.
East China: "The Shanghai export market is recovering slowly, but freight rates continue to decline. The U.S. route faces uncertainty due to Trump tariffs with weak demand and ongoing rate adjustments post-Spring Festival. The European market is recovering with stable demand, using suspensions and consolidation to balance supply and demand, while spot rates decline. The Southeast Asia route remains stable, with a slight drop in freight rates."
Philippines: March freight capacity remains stable but long-haul shipments should be booked two weeks in advance, the update added. "With the summer season starting in the Philippines, expect fewer disruptions from rain and typhoons. Container movement and yard utilisation should improve during this non-peak period."
Singapore: Export capacity and rates should remain stable in early March. Changes in Singapore freight activity will depend on how Chinese exporters respond to U.S. tariffs, the update added.
Vietnam: "Export rates may rise post-Lunar New Year, especially for long-haul shipments. Tariffs, slight port congestion and capacity shifts add uncertainty. There is a slight port congestion in HCM, delaying freight 1-2 days. Booking 2-3 weeks before ETD is recommended."
North America/Los Angeles: Shippers can expect potential space constraints from the West Coast to Asia, especially Manila. It is recommended to book at least a month in advance to mitigate the risk of delays.
North America/Vancouver: "Tariffs may require rerouting cargo through Vancouver, affecting demand. Book early, especially for Asia-Pacific routes, and consider Prince Rupert as an alternative to Vancouver for inland shipments."
North America/Dallas: Space availability to India and the Netherlands is becoming limited. It is advised to make bookings for all incoming shipments in advance, the update added.
Europe: Capacity surged in late February on the North Europe to U.S. East Coast trade lane ahead of the upcoming U.S. steel and aluminum tariffs, while Mediterranean utilisation remained stable.
New fees, new challenges
The U.S. Trade Representative (USTR) has proposed a port usage fee targeting Chinese vessel operators and ships. "Fees range from $1 million to $1.5 million per U.S. port call, with additional charges for fleets and orderbooks tied to China. A $1 million refund applies for U.S.-built vessel calls. If implemented, this could raise shipping costs and shift logistics to non-Chinese built vessels or alternative ports in Canada and Mexico.
"Action suggested: Explore different carriers and routing options to identify more cost-effective and efficient alternatives."
