Pegasus Market Update Q1 2026: No. 24
All,
I had a few other items on the agenda, but with the breaking news today I'm sure everyone wants to know how it may play out, so we'll start with that. However, no matter how the tariff return shakes out, we are looking at another year of disruption that we will have to manage through.
Supreme Court Strikes Down Tariffs
It's all over the news, so no need to share the article, and you can find it on whatever your favorite news service is.... Better to look at the aftermath and how it may be handled. As previously discussed, I'm not sure much is going to change other than another news cycle and lots of saber rattling - but we can look at least tactically on what can happen next:- It is doubtful that the President will accept the decision, and implement ANY system that will efficiently return the tariff money. Any return that does happen, will happen with the speed of a glacier melting, perhaps slower...
- If an appeal is an option, then it will happen at least to delay any forced implementation
- As Mentioned in the New York Times, there will likely be other tactics that the President uses to maintain the current tariffs
- Those that have set up their ACE accounts will be ahead of the game in terms of the line up. However, you must consider the size and scope of this endeavor. Even IF there was significant motivation to move this forward quickly by the administration, it would still take at least a year to process any refunds, in my opinion (probably more and again that's a big IF on things actually moving forward)
- Most protest/exception processing under normal circumstances take quite a long time while USCBP reviews each case
- Consider now that pretty much EVERY import into the country now has a protest case and how long that might take to process
- There will be quite a bit of confusion and likely delays now on current entries; about which rates will apply etc. I fear that instead of a definitive line being drawn by SCOTUS and immediate implementation, we will now have confusion from everyone on what happens next and how tariffs will apply.
- Again, on every import coming into the country - that's a really long line
- Let's not forget that currently the Federal government is at least partially shut down and there are also the coming shutdowns which now happen pretty consistently. Yes, USCBP and some others are "essential" but who makes that determination?
What you can do is make sure your ACE account is set up for return processing for if and when.
Manage your expectations on timetable, and potential return along with processing current entries - I do hope I'm wrong, but I have a feeling this will create a lot of disruption and delay rather than clarity and speed.
Questions and assistance we are here to help.
India, Indonesia and Taiwan Agreements
- The India tariff reduction "agreement" is still not fully implemented, and implementation details are missing - similar to above if it takes a long time to implement something the administration wants to do, how long will it take for them to implement something it does not want to do?
- Taiwan and Indonesia are in the same boat - agreements have been made in principle, but no details on implementation, yet
- All of this is a step in the right direction though at least - one step in a very long journey, but a step just the same
Vessel Tariff Proposal aka "Maritime Revitalization Action Plan"
- This will now become center stage for the administration and will be the next "disruptor" on the list of disruptions scheduled for this year. It might even create a full-scale market/vessel re-set if carriers are forced to implement, and adjust to these proposed tariffs
- This is the most convenient, timely and effective way for the administration to still apply increases on cargo coming into the country. I'd be surprised if it did not become top priority for implementation, and the timetable will be pushed up.
- I'd be willing to bet with anyone that this particular tariff happens way before any "Supreme Court/tariff return" compliance from this administration. I'll give odds but it's still a bad bet, so as your transportation fiduciary - I'd still advise against.
- I've attached an article on the proposed cost breakdown, but that will now also change - guess why
Lunar New Year
- Expect a slow return - there was no real cargo rush leading up to the holiday and there will be an even longer lag for manufacturing coming back
- Carriers did cancel over 20% of the existing capacity and created "roll pools" to keep existing sailings moving as full as possible
- Demand continues low due to tariff uncertainty and other uncertainties
Ocean Rates and Changes
- There was a short-lived rate increase on January 15
- Carriers are proposing some massive increases March 15 to coincide with what is hoped to be a run up in demand (see attached examples)
- Overall, for at least the short term, expect some "whipsaw" rate changes while the market reacts to what was waning demand and carriers try and balance the capacity supply and of course make money on the chaos
https://www.joc.com/article/hmm-profitability-fall...
Hapag and ZIM
- Agreement made in principle - looks like one less independent option by the fall and the big get bigger
- Ultimately down the line this probably will play into more market rate control from the larger carriers
Suez Canal and Iran
- Maersk, Hapag, MSC and others had begun a cautious re-entry into moving via the Suez, then pulled back with the unrest in Iran
- More than geopolitically reasoning to not return to the Suez was market based - the additional supply entering the market would be the same as was pulled before - over 1% which is a larger number than you might think and would have added still more supply to a low demand market....
Trucking Changes and Shortages
- Trucking and availability will be a main market issue this year due to political climate, and overall economics of running a trucking company in a low demand environment
- Have heard there are significant shortages of drivers/availability, in the Midwest particularly right now though this will spread across the country sooner than later
- Expect less stomach for liability on overweight or other marginal moves along with more surcharges and billing for wait time/surcharges and possible price increases if supply continues to dwindle
Pallet Compliance and Stamps
- That's right - it's not just container market disruption; it's going all the way to the pallet level. Please note the attached and review with your suppliers/vendors
- A bad pallet stamp + eager and rigid CBP = your container gets returned to origin and significant loss
Author
Matthew Crocker
Chief Commercial Officer