TPM26 Theme
Whole New World
A multi-year crisis for shippers of containerized cargo is only deepening.
Cyclical bright spots for shippers such as a plummeting of trans-Pacific spot rates by 71% between June 6 and July 18, according to S&P Global Platts, following the lifting of 145% tariffs on China, obscures deeper, long term challenges that are only growing more disruptive to containerized supply chains.
Among those are a clear pattern of growing delays at major gateway ports like Shanghai and Rotterdam, repeated ocean capacity shocks due to factors internal and external to the industry, and tariffs being wielded as a geopolitical tool — a rejection of post-World War II trade liberalization that is the foundation of modern supply chains.
For ocean shippers, a growing focus within this environment is inevitably on risk management; translation: maximize the odds that cargo gets loaded. Never entirely within shippers’ control, maximizing the odds that cargo gets loaded mitigates factors outside shippers’ control, such as abrupt vessel network changes and port delays that by their nature undermine shippers’ long-held desire for consistent schedule reliability.
Indeed the industry has veered far from the path of reliability as a goal once sought by shippers and carriers alike: If carriers in an earlier day were reluctant to blank sailings, mindful of the negative impact on customers, today carriers based on a history of failing to be compensated for schedule reliability operate their networks for profit, which more often than not means decisions to temporarily or permanently withdraw capacity from their networks.
An example: A Europe-bound ship dumping its cargo at an Asian transshipment port to be quickly repositioned into the trans-Pacific after China tariffs were lifted on May 12 is only one example of carriers’ prioritizing their own networks over customers’ needs.
Carriers that in an earlier day expended huge sums on fuel to ensure ships remained on schedule later determined that such investment in quality service to be largely unprofitable. Carriers will not make that mistake again, and shippers will pay the price.
That is why new models and ideas are being explored to somehow beat back the rising tide of unpredictability in ocean container supply chains. The TPM25 program, for example, included discussion of index-linked contracts for the first time in year. Why? For the simple reason that if contract rates slip below spot rates, the cargo risks becoming uncompetitive, especially if and when the market tightens.
That is the type of practical approach to risk mitigation that focuses on what shippers can control versus what they can’t. Tariffs have dominated the news since the beginning of the second Trump administration this past January, but for shippers — outside longer-term strategic sourcing and selling implications — tariffs fall into the category of factors wholly outside the control of day-to-day supply chain operations. The US tariff policy raises long-term questions, such as which countries will enjoy preferential access to the US market.
But the stop-start nature of the tariff policy in the first half of 2026, and carriers’ rapid reaction in moving tonnage in and out of affected markets, only adds to the unpredictability in ocean transportation that shippers now face as a likely long-term reality.