Sea Freight Surge Hits Steel Shot & Grit Post-US-China Tariff Deal

In mid-May 2025, the United States and China reached an agreement on tariffs, significantly reducing bilateral tariff levels. This move was welcomed by the global business community as it was expected to boost trade between the two economic powerhouses. However, an unexpected consequence has emerged - a sharp increase in sea freight rates.

The 90-day tariff window has spurred a rush of orders. American importers, eager to take advantage of the lower tariffs, have placed a large number of orders, causing a sudden surge in demand for shipping containers. According to industry data, the average spot freight rate for a 40-foot container on the China-US West Coast route has increased by 8% since May 14, rising from 2,600 to 2,805. Some shipping routes to the US East Coast have seen even more dramatic increases, with rates reaching as high as $7,000 per 40-foot container by June 1.

This increase in sea freight has had a significant impact on the steel shot and Steel Grit industries. Steel shot and steel grit are crucial abrasive materials widely used in industries such as metal surface treatment, foundry, and construction. China is one of the major exporters of these products.

Firstly, the cost of exporting steel shot and steel grit has risen substantially. Higher sea freight means that Chinese exporters now have to pay more to transport their products to the US market. For example, a company that previously spent 10,000 on shipping a container of steel shot to the US may now have to pay an additional 1,000 - $2,000. This increase in transportation cost eats into the profit margins of exporters. To maintain profitability, some exporters may be forced to increase the prices of their steel shot and steel grit products.

Secondly, the demand for steel shot and steel grit in the US market may be affected. If the price of these products increases due to higher transportation costs, American buyers may reduce their orders. Some may even look for alternative sources of supply. On the other hand, some American importers, fearing a potential return to higher tariffs after the 90-day window, may still choose to place orders despite the price increase to build up their inventories.

In response to these challenges, the steel shot and steel grit industries can take several measures. Exporters could consider optimizing their supply chains. For instance, they can explore different shipping routes or negotiate long-term contracts with shipping companies to lock in more favorable freight rates. Additionally, improving production efficiency to offset the increased transportation cost is also a viable option. By adopting advanced production technologies and management methods, companies can reduce production costs and thus maintain their price competitiveness in the international market.

While the US-China tariff agreement has brought opportunities for the steel shot and steel grit industries, the concurrent rise in sea freight poses new challenges. Both exporters and importers in this industry need to closely monitor market changes and take proactive measures to adapt to the new situation.