Asian container liner profits set to decline as tariff-driven demand fades.

Asian container liners' profits may have peaked after a tariff-driven demand surge in Q2 pulled forward volumes from the traditional Q3 peak season. Rates may drop sharply later this year due to weaker trade growth and volumes brought forward triggering deeper rate corrections. Japanese liners like Mitsui OSK Lines and Nippon Yusen KK have already shown signs of the peak, while Chinese peers like Cosco Shipping Holdings may see a boost before a harsher reality sets in.

Asian container liners' profits may have reached their peak following a tariff-driven demand surge in Q2 that pulled forward volumes from the traditional Q3 peak season. This surge, fueled by the U.S.-China tariff truce, led to a significant increase in shipping rates. However, as trade growth weakens and volumes brought forward trigger deeper rate corrections, rates are expected to drop sharply later this year.

The tariff-driven demand boosted transpacific trade, with freight prices rising sharply in June. Smaller players like China United Lines Ltd. resumed transpacific services, indicating the impact of the tariff truce on demand. According to Bloomberg Intelligence analyst Kenneth Loh, Chinese liners saw the greatest increase in demand compared to peers in Japan and South Korea, suggesting a potential robust quarter [2].

However, the positive momentum may not last. Analysts predict a downturn in the container shipping market, driven by overcapacity and weakening demand. Japanese liners like Mitsui OSK Lines Ltd. and Nippon Yusen KK have already shown signs of the peak, with earnings from these companies indicating a potential slowdown. Chinese peers like Cosco Shipping Holdings Co. may see a boost in the short term due to front-loading and strong exports in the first half of the year, but a harsher reality is expected to set in [2].

The tariff truce has merely postponed demand headwinds, according to HSBC analysts, who noted that the accelerated vessel delivery schedule will collide with potentially weakening demand, exacerbating overcapacity. From the third quarter on, transpacific container traffic is set to decline, with only a slight seasonal uptick seen in the second quarter of 2026 [2].

The U.S.-China trade talks are progressing, with President Donald Trump set to make the final call on maintaining a tariff truce. A more favorable deal for China could yield greater upside for the country's liners, but even favorable tariffs could still weigh on rates and volumes. Diversification efforts by China, such as increasing exports to Southeast Asia, have shielded the country from some tariff impacts [2].

In conclusion, while Asian container liners have benefited from the tariff-driven demand surge in Q2, the market is expected to face a downturn later this year due to weaker trade growth and overcapacity. Investors and financial professionals should closely monitor the progress of U.S.-China trade talks and the potential impacts on container shipping rates and volumes.

References:
[1] https://www.theglobeandmail.com/business/article-us-trade-deficit-china-tariff/
[2] https://www.bloomberg.com/news/articles/2025-08-05/asian-container-liners-set-for-profit-drop-as-tariff-boom-fades