The United States and China have reached a temporary agreement to halt their ongoing trade war by reducing fentanyl tariffs by 10% and suspending port fees for a period of 12 months. However, this arrangement is not expected to prevent a downturn in ocean container freight rates in 2026.
Current spot rates from China to the US West Coast, as of 31 October, indicate a 59% year-on-year decrease to USD 2147 per 40-foot container, while rates to the US East Coast have fallen 48% to USD 3044 per container. This decline coincides with a reported 13% year-on-year drop in shipping demand from China to the United States as of August.
Impact of the US-China trade truce
Xeneta projects a global drop in average spot rates by up to 25% throughout 2026
Despite the truce, analysts express concerns about ongoing challenges. Emily Stausbøll, Senior Shipping Analyst at Xeneta, commented, "The US-China truce is a positive development, but it will not suddenly breathe life into weakening ocean container shipping demand on Transpacific trades."
She notes that tariffs remain high and expects US importers to deplete existing inventories accumulated earlier in the year.
Xeneta projects a global drop in average spot rates by up to 25% throughout 2026, with long-term rates potentially decreasing by as much as 10%, emphasising the continued subdued demand between these major trading powers.
Challenges for ocean carriers
Xeneta’s forecast for 2026 suggests global average long-term rates could fall 20% below December 2023 levels, prior to the Red Sea conflict.
Emily Stausbøll highlighted, "The US-China truce sees the removal of port fees for ships calling at both sides of the Pacific. This is welcome news for carriers, with some being hit with multi-million-dollar port fees, but they are still heading towards potentially loss-making territory if long term contract rates drop significantly below pre-Red Sea Crisis levels at the end of 2023."
An anticipated overcapacity of container shipping supply, against the backdrop of weak demand, poses significant challenges for carriers in 2026. The truce's announcement of lower tariffs is unlikely to significantly alter economic prospects.
Uncertain future post-truce
This agreement between the US and China is temporary and does not equate to a long-term trade deal
This agreement between the US and China is temporary and does not equate to a long-term trade deal, leaving carriers and shippers in a state of uncertainty.
Emily Stausbøll remarked, "Once again we see trade used as a weapon in geo-political wars. USTR port fees have been paused without any progress being made on the issue that was nominally cited as the reason they were needed – strengthening US shipbuilding."
Short-term truce
Stausbøll pointed out that the truce is short-term and lacks sufficient detail for shippers to make informed long-term decisions, stating, "It takes longer than 12 months to set up manufacturing facilities in another nation if a shipper wants to shift supply chains out of China."
She concluded with a note of caution, acknowledging the uncertainty, "No one can say with any degree of certainty what the situation will be when the truce expires – or even if the agreement lasts the full 12 months."
