Global ocean freight markets remain in flux as tariffs, shifting trade routes, and capacity realignments continue to reshape the industry. The U.S. “Liberation Day” tariff policies have triggered a significant reorganisation of global sourcing and shipping flows, with Chinese exports dropping and Southeast Asia and Europe gaining momentum. The upcoming expiry of the 90-day tariff reprieve on August 1 is expected to introduce renewed volatility, potentially tightening capacity and pushing up rates across interconnected trade corridors—including those tied to Oceania.
The traditional H2 peak season has been disrupted by aggressive front loading in Q2, resulting in weaker-than-expected volumes in Q3. Carriers have responded with blank sailings to stabilise rates, but overall demand remains subdued. Charter markets continue to show strength, with carriers sub-leasing mid-size vessels to maximise profitability. This is reducing available tonnage and may apply pressure to space and rates on secondary trade lanes, including Australia and New Zealand.
In Oceania, economic indicators show mixed performance. Australia is managing soft GDP growth and a cooling labour market amid strong inflation control. New Zealand is showing tentative recovery, with stable inflation and improving trade balances. However, both nations remain vulnerable to external shocks. Recent infrastructure investments—including Western Sydney road upgrades and the new Melbourne Intermodal Terminal—signal a longer-term push to strengthen domestic logistics capability.
In the air freight sector, the removal of the U.S. de minimis rule for Chinese imports and ongoing tariff pressures have significantly weakened China–U.S. e-commerce volumes. Airlines are reallocating capacity to Southeast Asia and Latin America, while shippers explore ocean freight and regional warehousing solutions. Oceania-based businesses reliant on air cargo should adjust sourcing strategies, diversify routing, and plan shipments well in advance to mitigate rate and capacity challenges.
Lock in Q4 space now—uncertainty around tariffs and vessel redeployments could leave late planners behind. With front loading pulling volumes forward, and tariff policies causing sharp trade shifts, the remainder of 2025 is likely to see unexpected demand spikes and space constraints—especially if the August 1 tariff reset triggers renewed booking surges. Early engagement with carriers and forwarders will help secure reliable space and pricing, while building flexibility into routing plans can protect against upstream bottlenecks and equipment shortages.
KLN Oceania can help you discuss strategies and support you in negotiations.
Tariffs Redraw Global Trade Routes
U.S. trade policy is once again centre stage with the rollout of aggressive “Liberation Day” tariffs under the new Trump administration. Beginning April 5, a 10% baseline tariff was applied to nearly all U.S. imports, followed by targeted surcharges up to 60% on Chinese goods and 50% on steel and aluminium.
These measures have rippled through the global trade ecosystem:
Tariffs Are Reshaping Supply Chains
What began as political posturing is evolving into a structural rewrite of global trade. The U.S. now applies average tariffs exceeding 20%—the highest level in over a century. Chinese exports to the U.S. have plunged, while trade with Southeast Asia and Europe is booming. The result is a “Great Realignment,” with companies rethinking sourcing, rerouting supply chains, and navigating a complex tariff compliance landscape.
The August 1 Reset Looms
With the 90-day tariff reprieve ending August 1, rates are poised to revert to their April highs unless further negotiations succeed. Key takeaways for Oceania:
Spot Rates Slide—But Charter Market Holds Steady
Ocean freight pricing has continued its downward slide in 2025:
Bunker Prices Drop as Oil Market Softens
A combination of oversupply and sluggish global demand has pushed oil prices lower. Bunker costs are likely to ease further in H2 2025—offering modest relief for ocean carriers and shippers alike.
Front Loading Replaces Traditional Shipping Surges
A hallmark of 2025’s shipping calendar has been the absence of a traditional August–October peak season. Instead, volumes surged in April and May as importers scrambled to move goods ahead of tariff hikes.
By June, spot demand was already tapering off, with the usual Q3/Q4 momentum nowhere in sight. Carriers are blanking sailings to protect rates, but demand signals remain weak.
Planning in the Absence of Peaks
For shippers in Australia and New Zealand:
China–U.S. Trade Falls, Southeast Asia & Europe Rise
China’s export traffic to the U.S. dropped ~40% in April 2025. In contrast:
Southeast Asia has overtaken the U.S. as a top destination for Chinese goods. This shift is forcing carriers to reallocate vessel capacity, often favouring intra-Asia and Asia–Europe lanes.
What It Means for Oceania
With capacity reoriented toward high-growth lanes:
MSC Extends Its Lead
According to Sea Intelligence and Alphaliner:
MSC’s rapid growth—via acquisitions and capacity expansion—contrasts with Maersk’s shift to integrated logistics and COSCO’s exposure to geopolitical instability. The divergence is impacting slot availability, service quality, and pricing power.
Why It Matters to Oceania
Supply Outpaces Demand
As China–India trade crosses US$136 billion, new feeder services from CU Lines, Sinotrans, and SITC are flooding the market. But with demand lagging, spot rates remain low.
Knock-On Effects for Oceania
Strategic Outlook for Oceania Shippers
The remainder of 2025 presents an unpredictable freight environment. Key focus areas:
Above all, resilience in logistics planning will differentiate the shippers who stay ahead of disruptions from those who get caught in the crossfire of geopolitics and rate swings.
Australia’s Economic Outlook
In July 2025, Australia’s economy is showing signs of moderation, with inflation continuing to ease and the labour market softening slightly. GDP expanded by just 0.2% in Q1, lifting annual growth to 1.3%—well below trend—due to weak public sector activity and disruption from extreme weather events that impacted sectors like mining, logistics, and tourism. Despite these headwinds, the Reserve Bank of Australia (RBA) kept the cash rate steady at 3.85%, following cuts earlier this year from its peak of 4.35%.
Encouragingly, inflation is now firmly within the RBA’s 2–3% target range. Headline inflation slowed to 2.1% in June, while the trimmed mean measure held at 2.7%. However, inflation expectations rose to 5% in July—up from 4.1% in May—suggesting consumer concern about future price pressures. The labour market also showed signs of loosening, with unemployment reaching 4.3% in June, the highest level in over a year, though job vacancies and wage growth remain steady.
A Reuters poll of economists forecasts the RBA will cut the cash rate again on 8 July, possibly bringing it down to 3.60%, with additional reductions likely through August. NAB is forecasting 100 basis points of easing over the coming months, projecting GDP growth to reach around 2% by the end of the year. The housing market remains resilient, supported by lower borrowing costs, although affordability has worsened for first-home buyers due to rising prices and deposit requirements.
New Zealand’s Economic Developments
New Zealand’s economy continues to recover gradually from its earlier recession. GDP grew by 0.8% in the first quarter of 2025, with growth spread across construction, manufacturing, and professional services. On a per capita basis, output increased 0.5%, though annual output still sits 1.1% lower than the same period last year.
Inflation picked up slightly to 2.7% in the June quarter, compared to 2.5% in Q1. This increase was largely driven by housing-related costs, including rents and local council rates. Still, price growth remains comfortably within the Reserve Bank of New Zealand’s (RBNZ) 1–3% target band. The RBNZ opted to hold the Official Cash Rate at 3.25% in July, pausing after six consecutive cuts, but signaled it would consider further easing in August if economic conditions warranted.
Labour market data shows gradual improvement, with unemployment expected to peak at 5.2% before easing toward 4.3% later in the year. Trade performance also showed a positive signal, with New Zealand posting a monthly trade surplus of NZ$1.235 billion in May—its highest in more than a year. These developments suggest a cautiously optimistic outlook for the second half of 2025, supported by stable monetary policy and improving domestic demand.
Trade and Industry Highlights
Both Australia and New Zealand remain exposed to global trade uncertainty, particularly in light of widening U.S. tariffs. Australia’s resource sector is under pressure, with mining and energy export earnings projected to fall from A$415 billion in 2023–24 to A$385 billion this financial year, and even further to A$369 billion by 2025–26. The softening in commodity prices, combined with reduced demand from China and broader geopolitical risks, is reshaping Australia’s trade outlook.
New Zealand, meanwhile, is positioning itself for long-term growth through innovation and investment. The government launched the New Zealand Institute for Bioeconomy Science on 1 July 2025, consolidating several Crown Research Institutes to advance innovation in agri-tech, biosecurity, and sustainable production. In parallel, Invest New Zealand, a new foreign investment attraction agency, also commenced operations, aiming to bring international capital and expertise into the economy.
Looking ahead, both countries are expected to maintain their strategic focus on economic resilience—through trade diversification, innovation in key sectors, and monetary policy flexibility—as they navigate the second half of the year. These developments will likely shape regional supply chains, investment flows, and export competitiveness well into 2026.
We are into the peak and vessel space is tight. Book in advance.
Service Launch & Scope
MSC will debut its standalone “Oceania–U.S. East Coast Eagle Service” in February 2026, creating only the second direct ocean link between Australia/New Zealand and the U.S. East Coast. The weekly rotation features 11 vessels and ports of call in Oceania (Auckland, Sydney, Melbourne, Brisbane, Tauranga) and the United States (Philadelphia, Savannah, Freeport), via Panama, returning via Rodman and Cristóbal.
Strategic Implications
This move marks MSC’s strategic exit from its longstanding slot-charter arrangement with Maersk on the OC1/Oceania Loop 2 service, signalling a bold push to operate independently on this corridor. The service also connects to markets in Europe, South & Central America, and the U.S. Gulf, offering greater transit flexibility and global reach.
Passenger Benefits for Oceania Exporters
Transpacific container shipping is poised to experience the largest-ever monthly capacity in July, as carriers flooded the route in anticipation of sustained demand—which has failed to materialize. Despite this record deployment, spot rates continue to fall sharply, creating worsening volatility for shippers.
Carriers optimized their schedules in April and May, deploying substantial tonnage onto the Far East–U.S. trade. This overcapacity, coupled with sharply reduced bookings from U.S. importers retreating from uncertainty, has caused spot rates to crash and proposed rate hikes to collapse. In particular, projections showed year‑over‑year capacity growth of up to 770,000 TEU in June–July, later revised down as demand softened.
As demand decelerated, carriers began canceling sailings to correct supply-demand imbalances. However, rate declines have continued into early July, despite these capacity-limiting efforts. Spot rates have slid dramatically—by over 30% in a single week—prompting further operational adjustments.
Implications for Oceania Shippers
By shifting chartered assets to high-demand corridors, carriers are generating strong returns but reducing available capacity for general freight. For Oceania exporters and importers, this means maintaining flexibility and early planning is more important than ever.
Charter rates for mid-size container ships (typically 5,000–8,000 TEU) remain exceptionally high in mid‑2025, driven by limited open tonnage, Red Sea diversions, and port congestion. Meanwhile, container freight spot rates have softened, creating a unique arbitrage opportunity.
Strategic Sub‑Leasing Trend
Major carriers—such as HMM—are sub‑leasing vessels they chartered at lower long-term rates to other lines like MSC at sharply marked-up rates, sometimes three times the original cost. For example, HMM’s 6,765 TEU Hyundai Singapore was re‑chartered to MSC at a significant premium.
Drivers Behind the Strategy
Implications for Oceania Shippers
What KLN Oceania Can Advise
Check our snapshot for a quick glance on space, rate, equipment and transit times for Oceania
The previous era of direct China–U.S. e‑commerce air freight has collapsed under tariff pressure and regulatory change. Carriers are redeploying capacity, and ecommerce brands are shifting their logistics footprint. For Oceania businesses, this shift highlights the need for agility, alternative routing, and early booking strategies to maintain reliable supply chains in 2025.
Impact of De Minimis Removal
Since May 2, 2025, the U.S. has revoked duty-free status for low-value shipments (under US$800) from China and Hong Kong. Approximately 55% of air cargo volume on the China–U.S. corridor stemmed from these e‑commerce parcels. Following the policy change and steep tariffs of up to 145%, air freight capacity plunged by 30%, with charter agreements canceled and cargo rates collapsing.
Air Cargo Realigned: Southeast Asia, Mexico & Sea Freight
Implications for Oceania Customers
In a move that’s causing concern across the export community, the United States has officially increased tariffs on a range of New Zealand goods from 10% to 15%. The change, part of President Trump’s revised “reciprocal tariff” policy, is expected to come into effect in early August 2025.
This decision places additional cost pressure on some of New Zealand’s key export sectors—horticulture, meat, dairy, and wine—which now face stiffer competition in the U.S. market from countries such as Australia and the UK, whose tariff levels remain at 10%.
According to the Ministry of Foreign Affairs and Trade (MFAT), the increase appears to be linked to the U.S. targeting nations with a trade surplus. New Zealand’s surplus is relatively modest (around NZD $500 million), making the tariff hike especially frustrating in context.
Trade and Investment Minister Todd McClay has confirmed that New Zealand is engaging urgently with U.S. officials to seek clarification and explore pathways to resolution. While formal public statements remain limited, MFAT and industry bodies are closely monitoring developments.
We recommend that exporters begin assessing the potential implications of this change on pricing, supply chains, and customer communications.
Although sternly scrutinised, the acquisition of Silk Logistics by DP World Australia has been approved by regulators. The move enhances DP World’s influence across both port and landside logistics, which may offer operational improvements—though vigilance remains key to managing long-term competition risks in this evolving landscape.
DP World Australia has obtained clearance from the Australian Competition & Consumer Commission (ACCC) to proceed with its ~A$174 million (US$115–$115M) acquisition of Silk Logistics, a national provider of container transport and warehousing services.
Silk’s operations include moving containers to and from Australian ports and managing inland depots across several states.
Initial ACCC Concerns:
The ACCC raised concerns over potential anti-competitive outcomes prior to approval. Key issues included:
Despite these concerns, investigations concluded such conduct was unlikely to materially harm competition. DP World continues to face competition from various container transport providers.
Implications for the Logistics Sector:
Recommendations for Oceania-Based Businesses:
The Intermodal Terminal Company (ITC) and Aurizon Bulk & Containerised Freight Group have finalized a nine-year service agreement for use of the soon-to-open Melbourne Intermodal Terminal (MIT) in Somerton, Victoria. The terminal spans 45 hectares and represents a $400 million investment, with operations set to begin in October 2025.
Market Impact & Benefits for Oceania Shippers
A joint funding commitment of A$2.24 billion by the Australian and New South Wales governments will deliver major upgrades on three key arterial roads serving Western Sydney: Elizabeth Drive, Mamre Road Stage 2, and Garfield Road East.
Each road plays a significant role in supporting the approaching Western Sydney International (Nancy-Bird Walton) Airport, scheduled to open in 2026
Funding allocation breakdown:
Transport for NSW has called on contractors to register interest, with environmental assessments and community consultation to commence later in the year