FACTBOX: Dry bulk likely first shipping victim of turbulent tariffs landscape

The shipping industry faces mounting pressure as the US, China, Canada, and the EU engage in reciprocal tariff measures, with dry bulk carriers likely to be the first sector impacted as markets grapple with volatility.

The prevailing sentiment appears to be uncertainty. Freight rates for dry bulkers have started to firm but other shipping sectors have remained stable or edged down.

There is greater uncertainty hanging over duties on crude oil and products, which is why it looks like dry bulk will feel the impact first, Fotios Katsoulas, a shipping analyst at S&P Global Commodity Insights, said.

In terms of tankers, "China will likely turn to Canada and OPEC to replace US crude oil and the US may also turn to OPEC to replace the volume from its neighbors," Niels Rasmussen, chief shipping analyst at shipping industry body BIMCO, told Platts.

One key area of concern is agriculture, where industry interests continue to urge US President Donald Trump to pull back new tariffs entirely, warning they risk provoking a damaging trade conflict with key US agricultural trade partners.

On March 6, Trump retracted new 25% tariffs on most Canadian and Mexican goods he had earlier imposed, exempting products that fall under the US-Mexico-Canada Agreement (USMCA), which includes over a third of imports from Canada and about half from Mexico. His stated goal is to address his demands for better border security.

Tariffs on products from have been doubled China to 20% and Beijing has responded by imposing a slew of tariffs on US agricultural products.

Trade flows

In the agricultural sector, Chinese buyers are likely to source lower volumes of products such as soybeans from the US and more from Brazil, according to traders. As for tankers, the US-China and Canada/Mexico-US trades contribute 1% and 2% of global crude tanker demand respectively, according to BIMCO data.

Tankers:

• US crude exports to China totaled 171,000 b/d in 2024, a small fraction of China's 10.1 million b/d seaborne crude imports, according to data from S&P Global Commodities-at-Sea.
• The US is also a major supplier of refined products to Mexico, which could be impacted if Mexico were to issue retaliatory tariffs on US goods. The US exported 1.4 million b/d of refined products to Mexico in December, US Energy Information Adminisration data showed.

Dry bulk:

• The Trump administration implemented a global 25% tariff on aluminum and steel imports March 12.
• The US imported $18.97 billion in steel and aluminum products from Canada in 2024, while it imported $5.01 billion from Mexico, according to S&P Global Market Intelligence's Global Trade Analytics Suite data.
• The EU could lose up to 3.7 million mt of steel exports to the US if all product exemptions are removed, Henrik Adam, president of trade body Eurofer said.
• The US is the second biggest export market for EU steel producers, representing 16% of the total EU steel exports in 2024.
• In 2024, USA dry bulk shipments to China stood at 55 million mt, according to CAS data. Out of total dry bulk shipments, around 68% were shipped on Panamax vessels.
• Since the start of the year, 1.5% of dry bulk cargoes or 2.6% of dry bulk demand have been impacted by tariffs imposed by Trump or by retaliatory tariffs by China, according to BIMCO.

Containers:

• Higher import tariffs by the US have impacted demand for the country's polymers. Chinese customers do not want to take risks, and European customers face potential risks, according to traders, as global trade dynamics become less clear, traders said.
• The US imported 40.76 million twenty foot-equivalent units of assorted goods in containers through 2023 and 2024, of which over half came from China, according to data from S&P Global Market Intelligence.

Prices

There is still uncertainty about tariff policies across jurisdictions but grain-carrying dry bulkers are showing increases in freight rates along exposed routes.

• The Platts rate to carry an 80,000 mt cargo of crude from Vancouver to the US West Coast on an Aframax was $13.14/mt March 13, up from $9.44/mt Feb. 3.
• The Platts rate to carry a 38,000 mt cargo of clean products on a Medium Range tanker from the US Gulf Coast to Mexico was $5.26/mt March 13, down from $9.21/mt Feb. 3.
• Platts assessed the rate to carry a 66,000 mt cargo of grains on a Panamax from Louisiana to Qingdao at $39.75/mt March 13, up from $37.00/mt Feb. 3.
• The Platts assessment to carry a 60,000 mt cargo of grains from Santos to Qindao on a Panamax on a DBF basis was $35.50/mt March 13, up a touch from $32/mt Feb. 3.
• The Platts Container Rate from North Asia to the East Coast of North America was $2,800/forty foot-equivalent unit March 13, down from $5,500/FEU Feb. 5.
• The export route for polymers from the US to Europe remains flat; the Platts container rate from East Coast North America to North Continent was $300/FEU March 13, unchanged since June.

Infrastructure

Adjusting trade flows imply some ports will see greater demand for certain products, which may strain available capacities.

• USWC refiners may shift from Canadian WCS crude to more expensive alternative heavy grades, unless they absorb the higher costs. The top USWC crude import sources in December, aside from Canada and Mexico, were Brazil at 189,000 b/d, Iraq at 169,000 b/d, and Guyana at 121,000 b/d.
• Loaded exports at Houston surged 12% in December to 135,446 twenty foot-equivalent units, driven by robust shipments of resin, chemicals, rubber, and textiles and were up 8% for the year, according to port authority data.
• Brazil's National Association of Grain Exporters (Anec) exports grains to a number of countries and 29% of the country's trade flow goes through the flagship port of Santos. 160.54 million of mt of agricultural products were exported through Anec ports in 2024, according to data from the group.