THE U.S. HAS TO ADJUST ITS TARIFF POLICY

Last week, the Supreme Court of the United States ruled that parts of U.S. tariffs on imported goods are unconstitutional. By mid-December, the government had collected around USD 140 billion from the tariffs that have now been declared unlawful. In the chart below, we have shown the effective U.S. tariff rate as the ratio of customs revenue to the value of imported goods (source: budgetlab.yale.edu). This tariff rate has therefore increased by a good 10 percentage points since “Liberation Day”. The U.S. President has meanwhile announced plans to introduce a flat replacement tariff rate of 10% or 15% starting 24 February.

For shipping, we currently see two effects: For some countries, the replacement tariffs may be lower than the original tariffs, meaning it could be worthwhile for U.S. importers to restock inventories, potentially leading to frontloading in container shipping. In addition, the U.S. government has previously used tariff rates as a geopolitical tool, for example to persuade India to import less Russian crude oil. If this leverage is lost, Russia could potentially deliver more crude oil to India again, which would reduce demand for tankers.

LINERS JUMP BY 9 PERCENT

Last week was a fabulous week for shipping investors. Our broad Notos Shipping Index rose by 6% week over week, and all sectors contributed positively. Liner companies benefited from Hapag-Lloyd’s takeover bid for ZIM, while crude tankers enjoyed another week of stunning freight rates for VLCCs. It appears that Sinokor’s appetite has not yet been satisfied, and the Korean owner is now looking for 12-month time charter contracts to secure additional tonnage.

Our trading strategy delivered an excellent weekly return of 13.6%. We took the opportunity to realize some profits and gradually reduced our exposure. Meanwhile, the Notos Maritime Sentiment Indicator surpassed the 0.5 threshold - a rare event.

DISCLAIMER

This document has been prepared and approved by Notos Consult GmbH and is for informational purpose only. The information presented in this report is intended for the recipient to whom it was delivered. Reproduction or distribution of this document in whole or in part is not permitted without the express written consent of Notos Consult GmbH.

This document contains forward-looking statements. We caution the reader that forward-looking statements are not guarantees of future performance. Past returns are no indication of future returns. The development of the industry, markets, and companies described in this document may differ materially from the forward-looking statement contained herein.

Information and opinions contained in this document have been compiled from sources believed to be reliable. Unless otherwise stated, any statements herein are based on our own estimates at the time of publication. Notos Consult GmbH makes no representation as to the accuracy or completeness of any of the information contained herein and accepts no liability for loss arising from the use of the information provided. 

This document is not an offer of any kind. This report has been prepared separately from any proposed offering of any security and as such information herein must not be relied upon as having been authorized or approved by the issuer of such security.

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