Mariners know that the sea can be harsh, unpredictable and sometimes destructive. After weathering a pandemic and attacks by Houthi rebels that all but closed the vital trade route through the Suez canal, container-shipping companies may have hoped for some calm before the next storm. Alas, Donald Trump’s ever-changing tariffs and his plans to impose exorbitant port fees on Chinese vessels have led to more choppy waters.

American imports accounted for some 15% of global container trade last year, two-fifths of which was made up by imports from China. That has caused shipping bosses to watch every oscillation in Mr Trump’s trade policies closely, though anticipating them has proved impossible. Vincent Clerc, the boss of Maersk, one of the world’s biggest container-shipping firms, once foresaw 4% growth in global container traffic this year. In May he revised his estimate to anywhere between that and a 1% decline.

In the shipping business, however, disruption can be good for bottom lines. Up to now Mr Trump’s tariff vacillation has helped container firms continue a run of profitability that, though volatile, has surpassed any other in the history of the industry. Yet a coming drop in demand combined with a flood of new vessels could soon send the industry plunging.

In 2019 the global container-shipping industry made operating profits of just $6.5bn, according to Drewry, a consultancy. In 2021-22 profits surged to a combined $520bn, as covid-19 kept people indoors with time and money on their hands for a relentless buying spree. Trade surged. Container rates rose to record heights.

Rates and profits tumbled in 2023 as demand waned and shipping companies began to receive new vessels ordered during the boom, but recovered again in 2024, the industry’s third-most profitable year on record (it raked in $78bn). Overcapacity was averted thanks to the Houthi attacks, which led to lengthier voyages to avoid the Suez Canal, soaking up new ships entering service. Rates returned to records surpassed only during the pandemic.

Profits have remained on the crest of a wave in the first half of 2025 because of what Simon Heaney of Drewry calls a “tariff boon”—though it has been a bumpy ride. “Frontloading” of imports by America in anticipation of higher levies caused global container volumes and rates to surge, then slump after “Liberation Day”, then spike again with the tariff reprieve as American firms raced to restock before the next deadline loomed, before falling yet again (see chart). That may be enough to make even the sturdiest mariner seasick. But taken together, the volume of containers sent to America in the first half of the year was 3.8% above the level in 2024, according to Descartes, a shipping-data firm.

The second half of the year looks more worrying. Despite the spikes on routes between China and America, rates more generally are well down on last year and may continue to fall. The frontloading of shipments to America will mean a muted peak season in the autumn and lower rates. As tariffs raise prices for shoppers in America, spending may take a hit, further slowing demand. Although shippers may rake in another $20bn in profits this year, 2026 will be the year that “reality bites”, notes Mr Heaney of Drewry.

Another of Mr Trump’s misguided policies will provide a modicum of relief for some companies. The imposition of hefty port fees on Chinese-owned and Chinese-built vessels docking in America—a vain attempt to revive domestic shipbuilding—will lead big Western shipping lines to switch to using their non-Chinese vessels on these routes. Mr Clerc is adamant that Maersk will not pay any port fees even though over a quarter of its ships are Chinese-made. The policy will mostly squeeze rival Chinese shipping lines such as Cosco and OOCL. As Niels Rasmussen of BIMCO, an organisation representing shipowners, points out, the upshot will be instability—and higher rates.

Nothing, however, is likely to avert the coming deluge. The huge cash pile amassed during the pandemic launched a buying spree for new vessels. The order book stands at around 30% of the current capacity of the global fleet. HSBC, a bank, reckons global demand for shipping will expand by just 2% annually in 2025-27, down from 6% last year. If, in addition to the glut of new vessels, the Red Sea starts to reopen next year, the bank reckons fleet capacity will grow by 7.5% a year over the same period.

Huge overcapacity will send rates tumbling. Unless Mr Trump finds more ways to inadvertently support global shipping, the industry will soon revert to the slender profit margins that keep it barely afloat. ■

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