Archives



Freight News, Logistics


Tackling Tariffs and Trade Shifts, Xeneta

[ May 13, 2025   //   ]

Consumers face an overall average effective tariff rate of 27 percent, the highest since 1903 and, despite the 90-day pause, trade tariffs still feel like a constantly moving picture with a huge amount of uncertainty around what could happen next.

“There seems to be more common acknowledgement that nobody expects this to be short lived, and the longer it drags on, the more inflationary the pressure will be,” said Patrik Berglund, CEO and co-founder of Xeneta, in a May 6 report by Eloisa Tovee.

In this environment, it’s crucial to combine data with community insights and freight experience to get a clearer understanding of the impact different strategies could have. And looking back at similar times can help create a clearer picture of what those impacts will be.

So how can we combine today’s data with past experiences to find the best route forward today?

Learning from the previous Trump administration. Since early April, shipping has been dominated by the need to navigate, adapt to and weather the complex tariff landscape sparked by the Trump administration. But while extreme, this is not the first time we’ve experienced something like this. The Trump administration also rolled out tariffs on imports, particularly from China, during its first term in 2018.

Many companies are frontloading to try and beat tariffs, especially now the 90-day pause is in effect. Frontloading also happened during 2018 causing the rates to spike followed by a rapid decline over the following six months. It’s important to note that while rates eventually declined again, they never fully return to the level prior to the spike.

This could happen again. However, this time the effect is likely to be less pronounced, as frontloading has already been happening in response to anticipated port strikes and Trump’s second term – meaning there’s already a good amount of inventory in the U.S.

“Some of the decisions that have been made in the past have to be reconsidered under this new light of tariffs. Shippers are really thinking about which countries present the best set up to mitigate the risk. And this is very hard when there are frequent unclear and politically driven changes happening all around us,” Fabio Brocca, chief product officer at Xeneta

Revisiting lessons from the Covid-19 pandemic. During the early months of the Covid-19 pandemic, demand was dampened by lockdowns and other response measures. And when demand decreases, carriers often take capacity out of the market with blank sailings. We’re seeing this again today, with shippers cancelling orders and exports from China and carriers enacting blank sailings to reduce capacity and potentially keep rates up.

How this situation differs to the pandemic is that countries have new LSP alliances in place and more trading options. This means carriers could decide to sacrifice rates to capture higher market share elsewhere.

How are shippers responding to the current wave of tariffs? Short-term action tends to favor frontloading, spot usage and re-routing, with companies also using scenario modelling and reassessing contracts to stabilize their long-term picture.

A lot of companies are holding off on taking rapid action; instead, waiting to see what happens next, monitoring what steps their peers are taking, or awaiting direction from business units on the course of action. Meanwhile, finance teams are carefully evaluating the cost implications of each potential initiative.

Other big volume players are taking more drastic measures, cancelling months of orders coming out of China and potentially causing rates to decline further.

These vastly different responses show just how complex the situation is. But there’s also a more middle-ground strategy that companies are adopting — using free zone warehouses where they can store cargo ready to extract and date stamp later.

Xeneta conducted a poll of its customers in April, and some of the most popular actions being considered and planned by companies are:

• Exploring new trade routes (26 percent).

• Renegotiating contracts (24 percent).

• Moving volumes between suppliers (19 percent).

• Exploring index-linked contracts (12 percent).

• Shifting manufacturing set up (10 percent).

• Other (10 percent).

The best decisions are backed by comprehensive, real-time data. With such a complicated trade landscape and so many potential routes forward, it can be difficult to know which initiative is the right move for you. The best short- and long-term decisions are backed by robust intelligence into potential tariff, market, and trade route shifts

To learn more about Xeneta’s products, schedule a demo at https://www.xeneta.com/demo.

Tags: ,