BLOG T.L. , World trade slowing down as Trump shakes the pillars of shipping and logistics
World trade slowing down as Trump shakes the pillars of shipping and logistics
Container lines, freight forwarders and major ports are experiencing dramatic drops in cargo volumes due to canceled shipments. DSV predicts possible recession in the US.
Donald Trump has been President of the United States for 100 days and has already plunged global supply chains into deep crisis. | Photo: Evelyn Hockstein/Reuters/Ritzau Scanpix
BY JENS THOMSEN AND METTE GRUBE CONDRUP
30 APRIL 2025AT 13:52
The grim signs that the US president has triggered a major crisis in global trade are now unequivocal.
Consistent messages from container lines, major ports, shippers and importers around the world all point in one direction:
Trump’s punitive tariffs – and especially his towering tariffs on Chinese goods – are severely impacting global trade, as customers have pulled the emergency brake and are holding back their shipments from China to avoid being hit with punitive tariffs in the US.
It’s a very big concern for our customers. Many of them are at risk of going bankrupt or suffering serious financial consequences.
Jens Lund, CEO, DSV
Container carriers are among the first victims of the trade war.
On Wednesday, Japanese-owned container line Ocean Network Alliance (ONE) announced that the trade war could shave three-quarters off the company’s expected post-tax profits by 2025.
ONE hopes to reach a net profit of USD 1.1bn this year, but that forecast is based on a “relatively stable business environment during the fiscal year”, according to a management statement.
However, if the trade war continues and reduces cargo volumes on key freight routes, the company’s management expects a net profit of just USD 250m.
And ONE is not alone in sounding the alarm.
German container carrier Hapag-Lloyd announced last week that its Chinese customers had canceled 30% of their shipments from China due to US punitive tariffs, while there was a “massive increase” in demand for cargo from Thailand, Cambodia and Vietnam.
In response to the steep decline in China, Hapag-Lloyd has deployed smaller ships on its China routes, as has Hapag-Lloyd’s alliance partner, Maersk.
“We will continue to optimize the utilization of our network by, for example, replacing larger ships with smaller ones to better adapt to the current demand situation in some categories on the China-US routes,” Maersk said in a statement Tuesday.
Hapag-Lloyd announced on Wednesday that it expects a weaker result this year compared to 2024 due to the trade war and global uncertainty.
Risk of recession
At freight forwarder DSV, set to become the world’s largest with the acquisition of its German competitor DB Schenker, chief executive Jens Lund is very concerned about the consequences of the US trade war.
He predicts that many of the company’s customers are in danger of going under.
“It’s a very big concern for our customers. Many of them are at risk of going bankrupt or suffering serious financial consequences. Therefore, many of those who have export volumes from China are currently holding back their shipments,” Lund said on Wednesday during a press conference in connection with the publication of DSV’s first quarter results.
Lund is also concerned that the trade war could lead to inflation and economic recession in the US.
“I think in the medium term it could lead to a situation where you will have inflation in the US and potentially a recession,” said DSV’s chief exec and continued:
“That is what most economists are saying and I can confirm that view.”
In the long term, Lund expects the effects of the trade war to fade, but in the short and medium term the consequences could be severe.
Sharp decline in major ports
Via container lines and freight forwarders, the freight crisis is moving through the supply chains to the large ports on the US West Coast that receive the majority of US imports from China and Asia.
Here, lower US imports from China mean that port activity is set to fall sharply.
At the largest container port in the US, the Port of Los Angeles, which includes the Port of Long Beach, chief executive Gene Seroka expects terminals to feel the drop in cargo volumes in a matter of days.
Now major importers are saying, ‘I’m waiting, hit the pause button'
Gene Seroka, CEO, Port of Los Angeles
As early as next week, the Port of Los Angeles expects a 35% drop in the number of containers compared to the same week last year, according to the New York Times.
The reason, according to Gene Seroka, is that US importers and manufacturers have suspended their imports of Chinese goods due to Donald Trump’s punitive tariffs.
“Now major importers are saying, ‘I’m waiting, hit the pause button’,” says Seroka to the media outlet.
The port director adds that he sees no imminent change in the situation.
Figures from analyst firm Vizion confirm the gloomy reports from Gene Seroka and the container carriers.
According to the Financial Times, Vizion’s numbers show that orders for containers from China to the US were down 45% by mid-April compared to the same time a year ago.
It takes two weeks for a container ship to sail from China to the US West Coast, so the expected drop in cargo volumes at the Port of Los Angeles in the coming week means importers made a snap decision to halt shipments as soon as Trump unleashed his trade war.
“This is simply a scenario of sheer demand destruction at the moment,” Jason Miller, a professor of supply chain management at Michigan State University, tells the New York Times.
He points out that the steep drop in freight volumes will ripple from the ports through supply chains to businesses further inland.
If the trade war continues, lower demand will cost revenue and jobs, he warns.
Trump threatens Christmas
The summer months are the peak season for the container market, as this is when goods for the Christmas trade in particular are shipped from Asia to the US.
Therefore, the production of toys and Christmas decorations for the US market is usually in full swing in factories in China at this time.
But not this year. Donald Trump’s trade war is putting a damper on Christmas production, says Greg Ahearn, chief executive officer of the US toy manufacturers’ trade association, the Toy Association.
“We have a frozen supply chain that is putting Christmas at risk,” Ahearn says according to the New York Times:
“If we don’t start production soon, there’s a high probability of a toy shortage this holiday season.”
The Toy Association represents about 850 toy manufacturers in the US.
Chinese factories produce nearly 80 percent of all toys in the US and 90% of Christmas merchandise. Production, packing and transportation of the goods for Christmas shopping from China to the US takes a total of four to five months, according to the New York Times.
