A newly announced 12-month trade truce between the United States and China may ease tensions, but it will not halt the decline in global ocean freight rates, according to a new analysis from Xeneta, a sea and air freight rate measurement platform.
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The agreement, announced in Busan, South Korea, includes a 10% reduction in tariffs related to fentanyl and a suspension of port fees, providing short-term relief to shippers. However, spot container rates in the West Coast trade between China and the US fell 59% year over year to $2,147 per FEU, while East Coast rates fell 48% to $3,044 per FEU as of October 31.
“The truce between the U.S. and China is a positive development, but it will not suddenly breathe life into weak demand for trans-Pacific container shipping in the trans-Pacific trade,” said Emily Stospol, senior shipping analyst at Xeneta.
Weak demand rates and oversupply pressure
The rate decline reflects a broader slowdown in trade volumes. Demand for container shipping from China to the United States fell 13% year-on-year in August, as importers continue to manage bloated inventories that built up earlier in the year.
According to Zeneta’s latest forecasts, global spot rates are expected to fall by up to 25% until 2026, while long-term contract prices could fall by another 10%, leaving prices around 20% below December 2023 levels – before the Red Sea crisis escalated.
“Excess capacity in container shipping supplies will run rampant in 2026 against falling demand,” Stospol warned. “Carriers face a tremendous struggle to fill ships in important China-US trade because the tariff cuts announced this week will not fundamentally change market dynamics.”
What is in the trade truce?
The agreement provides a temporary pause on escalating tariffs. The United States intends to reduce tariffs associated with fentanyl from 20% to 10%, reducing the average tariff burden on Chinese imports from 57% to about 47%.
In return, China will suspend new export controls on rare earth metals and magnets for one year, and has committed to purchasing 12 million metric tons of US soybeans during the current marketing season.
The Trump administration also temporarily suspended new port fees on ships it manufactures, owns, and flies its flag — fees that have added millions to voyage costs since October 14. The tariffs were designed to revive commercial shipbuilding in the United States, but Staspol noted that they were halted “without any progress being made on the issue nominally cited as the reason for their need.”
An uncertain horizon beyond 2026
While the truce avoids imposing 100% tariffs on Chinese goods, analysts warn that it provides little stability for long-term supply chain planning.
“It takes more than 12 months to set up manufacturing facilities in another country if a shipping company wants to move supply chains out of China,” Stospol added. “No one can say for sure what the situation will be like when the truce ends – or even whether it will last a full 12 months.”
For now, a fragile ceasefire between the world’s two largest economies provides short-term political relief, but the structural imbalance between capacity and demand is expected to keep container shipping rates under pressure until 2026.
