KUALA LUMPUR: Global shipping costs are expected to remain high next year, with freight rates likely to continue rising due to ongoing challenges in the shipping industry, including US President-elect Donald Trump’s tariff threats and the situation in the Red Sea. CMA CGM (Taiwan) Ltd managing director John Lim noted that the targeted tariffs on China’s imports would push the country to seek new markets, leading to a shift in trade routes toward Europe, Southeast Asia, and other regions.
According to BERNAMA News Agency, China’s biggest challenge right now is to increase its gross domestic product (GDP). The country is in an overcapacity situation, making products cheaper, including electric vehicles (EV). Lim compared China’s EVs to those of Elon Musk, noting the former’s affordability. He questioned whether raising tariffs would lead to reduced production in China, suggesting that such a scenario would push China to explore markets beyond the United States, such as Europe, Southeast Asia, and Latin America
, altering trade flows significantly.
The discussion took place during the Asian Maritime Law and Business Conference, which concluded last Friday. Trump has recently pledged significant tariffs on the US’ major trading partners, including Canada, Mexico, and China. He proposed an additional 10 percent tariff on Chinese imports and threatened to revoke China’s most-favoured-nation trading status, introducing tariffs exceeding 60 percent on these imports.
As a result, US retailers are anticipated to expedite their inventory shipments before tariffs are enacted. Lim highlighted that geopolitical tensions in the Red Sea are also impacting shipping routes. Ships are compelled to bypass the Suez Canal, opting for the longer route around the Cape of Good Hope, affecting approximately 1.2 million twenty-foot equivalent units (TEUs) in container supply and extending voyages by up to four weeks.
This diversion has increased average transit times between Asia and the Mediterranean by 39 percent, intensifying port co
ngestion in key Asian and European ports. These disruptions strain shipping capacity and could lead to potential shortages. From an insurance perspective, Singapore-based OM Maritime Pte Ltd executive director Singapore Captain Subhangshu Dutt explained that shipping companies face higher insurance premiums due to the crisis.
The insurance costs correlate with threat levels, rising immediately after attacks occur. Crews operating in high-risk areas receive additional pay, and refusals to operate in these regions result in further costs for shipowners, such as training and replacement expenses. Dutt noted that operating a small ship under these conditions could cost up to a quarter-million US dollars.