Pegasus Market Update Q3 2025: No.22

All,

I hope everyone had a wonderful summer. While the dark clouds may be forming around the 4th quarter and international trade in general, remember that we, as an industry, are resilient and innovative. There is always a way...

Funny enough, I had planned on sending this last month, but with the consistent changes from August through even today, it seemed like an exercise in futility, which is not my favorite exercise.

Tariff Updates

• As expected, the Trump administration has appealed the ruling that the IEEPA tariffs are unlawful to the Supreme Court. First, the Supreme Court needs to decide whether it will take the case (that is likely). Then we must await a ruling which, it appears, legal commentators expect to be sometime in summer 2026. Then, as an important side issue, the recent ruling that it is unlawful only made a stay until October 14th in upholding the tariffs. We should therefore expect another petition from the government to keep the tariffs in place until the Supreme Court reaches a conclusion.
• US “reciprocal” tariffs have changed again due to a new Executive Order. This time Trump has issued an updated annex wherein 36 pages list some 8-900 specific commodities at the HTSUS level, which are now exempt from the reciprocal tariffs. Shippers would be well advised to sift through the long list to see whether or not their goods are included.
• The commodities are mainly, but not only, various minerals and other industrial chemicals and materials. But also, other types of goods, such as plywood, medical components, books, and electrical components, are included. Perhaps somewhat ironic, given the tariff debacle with Mexico and Canada, 4 types of Fentanyl are also exempt
• Mexico is also reviewing its tariffs for China as a part of its 2026 budget/agenda, so something to keep an eye on

https://www.reuters.com/business/autos-transportat...

Carrier Schedule changes and vessel/sailing reduction

The result of flagging demand, which we expect to continue, will also prompt carriers to reduce sailings and overall capacity, particularly to the USA. Leading into what at least for now looks like a very soft 4Q volume-wise, this is the first installment.

PSW:

• 7 blank sailing scheduled in the first half of September: 3 by PA, 3 by OA, and 1 by MSC.
• Excluding suspended services (e.g., MSC Pearl and certain OA loops).
• Some loops have shifted to a biweekly cadence (e.g., PS5 / AHX).

PNW:

• 3 blank sailing scheduled in the first half of September: 1 by PA, 2 by OA.

USEC:

• 7 blank sailings scheduled in the first half of September: 3 by PA, 3 by OA, and 1 jointly by MSC & ZIM.
• Service Win moves to a biweekly service from week 36, reflecting a softer India market, largely a lagged effect from earlier additional tariffs on India-origin cargo.

In addition, we receive new notices every day regarding sailings being deleted for the end of September and early October, which we will summarize and send in our next installment.
India’s capacity in September has been reduced significantly (see attached) - more or less 50% reduction for September, and we expect it to continue

Rate levels for September and 4Q forecast

• Global demand grew 5.1% in July based on cargo loaded, but the US trades are heavily impacted by the trade war. The new data from Container Trade Statistics (CTS) shows that Far East to North America volumes declined 3% which was the 4th consecutive month of declining volumes on this trade.
• Specifically for China to the US, CTS reported volumes down 15% year-on-year in July. This followed the very brief spike in late May/early June. July volumes reported by some USWC ports recently are, of course, measured as the cargo arrives at the US, and hence reflect cargo booked at least some 4-6 weeks earlier ......
• The US volumes can be contrasted with other main trades, such as Far East to Europe, which was up some 10% and Far East to South America, which was up some 13%. It would appear that the pattern continues wherein the impact of the US trade war is mainly on the US itself, whereas trade continues to be in good shape elsewhere.

Spot market rates did increase by approximately $600-800 as of September 1st against a proposed GRI amount of $1000 from the carriers. It is already volatile to the downside of this updated number; however, the carriers have also proposed a spot market increase of approximately $500 or more beginning September 15 - actual numbers are unfortunately TBD. We will be keeping you posted individually on these changes.

In terms of 4Q forecasting, expect more of the same:

Extremely volatile schedules.
Extremely volatile rates and a consistent push for increases from carriers.

However, the overall market demand is not and won't be coming back anytime soon unless something changes. One could argue that some of these reductions are a result of the Lunar Festival in most of Asia, and similar to the Lunar New Year, there are usually some schedule changes and blank sailings. However, the timing is simply serendipitous, and carriers will be consistently reducing capacity through the 4Q in our opinion for the usual reasons.

Blank Sailing Customary Advisory

Author
Matthew Crocker
Chief Commercial Officer