Over the past year, freight rates responded unevenly to global trade disruptions, says Leigh Anderson, senior economist with Farm Credit Canada. In a recent FCC report Anderson said container shipping rates have shown high sensitivity to trade policy shifts and consumer demand, while dry bulk freight rates have remained more stable, driven by consistent, commodity-specific demand such as agricultural products.
He says, quote:
“Canada’s agriculture sector is deeply integrated into global trade, with both the U.S. and China playing pivotal roles. The U.S. serves as a benchmark for agricultural pricing; soybeans are the perfect example since China is the world’s largest buyer, usually making up more than 60% of global imports. So, when China changes how much it buys from the U.S., it affects the prices of Canadian oilseeds. If China decides to buy more from South America, demand for U.S. soybeans will drop and could lead to lower prices.”
Anderson says one factor that has been overshadowed by broader tariffs is a new U.S. policy that was announced in April that imposes shipping fees on vessels built or operated by China.
These fees, currently set at zero, are scheduled to increase starting in October 2025 and are expected to further disrupt global supply chains, he says. The fees vary by vessel type.
Cargo ships will be charged USD$50 per tonne, while container ships will pay either USD$18 per tonne or USD$120 per container, whichever is higher.
Anderson uses this example: A 70,000-tonne Panamax vessel, which is the most common for U.S. grain shipments, could face fees of up to USD$3.5 million per visit to a U.S. port.
In the short term, Anderson says, the fees will raise shipping costs, leading to higher prices for imported goods including the ever-important December holiday season. Overall, it will reduce competitiveness for U.S. exporters, especially in agriculture as increased freight costs are passed on to U.S. farmers through lower farm-gate prices.
He adds that the timing of the fees on Chinese vessels is significant, coinciding with peak U.S. soybean export season.
He concludes saying,
“So, the new fees are expected to disrupt shipments during the busiest months, likely leading to further declines in new crop soybean sales.
“From Canada’s perspective, this could be an advantage for both bulk grain and containerized agri-food exports. Ships may reroute to Canadian ports to avoid U.S. fees, potentially boosting Canadian export demand and competitiveness.”
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