CITIC SEC: Cross-border trade or under consideration Potential beneficiaries of potential transshipment demand in the context of tariff game

CITIC SEC released a research report stating that, in the context of a significant increase in import tariffs in the United States, the possibility of short-term transshipment and transportation is being explored. It is still necessary to pay attention to the marginal impact of tariff negotiation progress on the supply chain. CITIC SEC predicts that the effective capacity (demand-supply) growth rate of the global container shipping market in 2025 will be -1.8 percentage points. Assuming a 15%-35% decline in North American demand from the second quarter to the fourth quarter of 2025, the growth rate of global container shipping demand in 2025 may decrease from +2.8% to +0.6%/-0.6%/-1.8%. The actual gap between supply and demand will expand from -1.8 percentage points to -3.9/-5.2/-6.4 percentage points. Reviewing the previous round of trade frictions, according to foreign media, in March 2019, the imports from Mexico/Vietnam/Malaysia to the United States increased by 48.4%/29.0%/13.1% respectively compared to the same period in mainland China. Analyzing the potential impact of this round of tariff increases on global container shipping demand, in an extreme situation, if the annualized demand for containers in China and the United States decreases by 70% and 10% are transshipped, it could lead to a 5% decrease in global container shipping turnover demand in 2025. Reshipment trade may be brewing, focusing on potential beneficiaries of re-export demand under the background of tariff negotiations. CITIC SEC's main points are as follows: The disruptions of tariffs combined with alliance restructuring may lead to a reconfiguration of the container shipping supply chain. We expect that the effective capacity (demand-supply) growth rate of the global container shipping market in 2025 will be -1.8 percentage points. Assuming a 15%-35% decline in North American demand from the second quarter to the fourth quarter of 2025, and analyzing the growth rate of global container shipping demand in 2025 from +2.8% to 0.6%/-0.6%/-1.8%, the actual gap between supply and demand will expand from -1.8 percentage points to -3.9/-5.2/-6.4 percentage points. As of April 11, 2025, most goods exported from China to the United States could face a 145% tariff rate. Consider... (cont'd in next comment)The possibility of transshipment trade between countries or regions.Domestic trade consolidation: In the context of trade frictions and export pressure, domestic circulation is a key variable to cope with external shocks. At the same time, if a portion of transport capacity is redirected to regional consolidation markets, it is expected to further promote the release of freight price elasticity. Investment strategy: Focus on potential beneficiaries of transhipment demand in the context of tariff negotiations. In extreme disruptions, this round of tariff increases may result in a 5% decrease in global consolidation demand by 2025. It is recommended to pay attention to the potential demand for transhipment trade brought about by the temporary postponement of tariff increases by some countries, which may benefit regional consolidation shipowners.