This year, Christmas is arriving sooner, and this early start is causing an increase in shipping rates. A surge in wholesale orders ranging from holiday decorations to home furniture has driven maritime shipping costs to their highest levels in four years. Uncertainty surrounding tariffs and the conflict in Iran are contributing factors to this rise, with potential implications for consumers.
Experts in the industry point out that retailers and importers, particularly in the United States, are hurrying to secure shipments ahead of anticipated new U.S. tariffs affecting numerous countries, expected by the end of July. This rush in demand is driving up seaborne transportation prices globally.
Judah Levine, head of research at the shipping platform Freightos, stated that the primary reason for the spike in freight rates is the early onset of peak-season demand. This is mainly attributed to the presumed tariffs and also to the escalation in fuel prices resulting from the extended closure of the Strait of Hormuz.
Long-term contracts between large shippers and carriers include adjustments for fuel costs on a quarterly basis. The recent surge in fuel expenses over the past few months will be transferred to shippers starting this summer.
Similar agreements between importers and manufacturers, who have also experienced cost increases due to rising energy prices, are further motivating shippers to expedite their orders.
Global shipping rates for containers, as per the Platts Container Index, surged approximately 80% in the 30 days leading up to June 24, reaching their highest point since April 2022. Rates for shipping containers from East Asia to North America’s west coast have increased by 120% in the past six weeks, reaching $6,200 US on average, according to Freightos.
John Corey, president of the Freight Management Association of Canada, noted that people are stocking up on supplies amidst concerns about potential U.S. tariffs on countries under investigation for forced labor practices and the uncertain status of the Canada-United States-Mexico Agreement.
The White House mentioned Canada as one of the countries, alongside the European Union, that may face additional tariffs due to allegations of allowing goods produced with forced labor into the U.S. supply chain. However, the majority of goods exported from Canada to the U.S. comply with existing trade agreements and are not subject to tariffs.
Lisa McEwan, co-owner of the customs brokerage Hemisphere Freight, emphasized the current ambiguity surrounding trade agreements is prompting companies to secure their supplies in advance, driving prices up. She advised clients to make bookings promptly to avoid potential disruptions in the future.
She highlighted that a wide range of products, from clothing and holiday decorations to furniture and electronics, are being ordered earlier than usual. Ultimately, consumers are likely to bear the cost at the point of sale.