U.S. rate cuts impact international moving companies

The IAM tracks major U.S. policy changes affecting the moving industry, following a series of executive orders and legislative and regulatory activities affecting the domestic and international industry.

The decision by the Office of the U.S. Trade Representative (USTR) to reduce tariffs imposed on ocean carriers and implement them on a phased-in basis has several direct and strategic implications for international moving companies. The following are the main effects and considerations for these companies to take into account:

1. Reduced operating and transportation costs

   ◦ Less pressure on freight rates:

   With the elimination of tariffs for vessels built in Chinese shipyards or those on back order for construction in China, ocean carriers will see a decrease in their costs associated with Section 301. That savings, in large part, will tend to be reflected in the freight quotes they pass on to their customers, including international movers.

   ◦ Phased implementation: By implementing the rates in a phased-in manner - for example, by tying them to net tonnage and limiting taxable trips to a maximum of five per year - movers can plan their shipments further in advance. During the first few months of operation, many routes will be exempt from tariffs or pay reduced rates, allowing them to pass these savings on to their budgets, improve margins or attract new customers through more competitive offers. Increased price competitiveness: With lower transportation costs on certain routes, movers have room to differentiate themselves by offering lower rates to those requiring ocean shipments to the U.S. In turn, this advantage can be converted into an opportunity to strengthen the loyalty of corporate and residential customers in markets where rates have historically been high.

   
   

2. Route planning and container inventory optimization

   ◦ Selection of exempt vessels and shipping lines: Companies should carefully review which carriers meet the exemption criteria (e.g., fleets with Chinese vessels on order or already built). When scheduling moves, they will prioritize shipping lines whose vessels are not subject to tariffs, so that the costs per voyage will result in lower costs.

   ◦ Container rotation and advance booking: Since only the first five voyages of each vessel will be taxed (under the annual criteria), movers will also need to work on container rotation to ensure that they take advantage of exempt voyages. Agile inventory management (i.e., scheduling imports within those "duty-free" voyages) will maximize savings.

   ◦ Coordination with freight forwarders and freight forwarders: To optimize resources, many international moves involve freight forwarders or freight forwarding agencies that consolidate shipments. Coordinating with these intermediaries to consolidate goods on exempt vessels extends the cost advantage, especially when moves involve multiple origins in the same country or region.

   
   

3. Adjustments in budgets and rates with end customers

   ◦ Review of medium- and long-term contracts: Movers offering annual contracts or extended terms should recalculate their rates based on new transportation cost projections. In many cases, they will be able to renegotiate with corporate customers (companies relocating employees, universities with exchange programs, diplomatic agencies) price adjustment clauses tied to ocean rates, incorporating the gradual reductions.

   ◦ Transparency in pricing structure: To maintain confidence, companies should clearly communicate to their residential and corporate customers how partial or full tariff exemption translates into lower freight charges. Providing cost breakdowns before and after the measure will help the customer understand the direct benefit and reinforce loyalty.

   ◦ Promotions and temporary differentials: During the early stages of implementation-when rates apply only to voyages 6 to 10 of the vessel, for example-international movers could launch targeted promotions with additional discounts. This will serve both to capture shipment volume and to manage peaks in demand associated with peak seasons (summer vacations, end of year, academic period).

   
   

4. Delivery time and customer service implications

   ◦ Time buffer strategies: Rate reductions are accompanied by an adjustment phase, during which ocean carriers can prioritize exempt cargo to optimize their billing schedules. Movers must build additional time margins into their pickup and delivery schedules to avoid unexpected delays.

   ◦ Greater flexibility in routing options: With lower freight costs on certain lines, companies can offer alternative routes that, while not the most direct, guarantee significant savings. This necessitates strengthening communication with customers-explaining the benefits and possible marginal delays-and maintaining real-time tracking systems to monitor container transit. Managing potential congestion at ports with high demand: During the start-up phase, ports that receive more exempted containers (because eligible vessels call there) may experience congestion. Movers should coordinate with local agents to anticipate clearance times and avoid demurrage (demurrage charge) that will negate anticipated savings.

   
   

5. Requirements for accessing exemptions and compliance checks ◦ Verification of fleets and vessel documentation: To determine whether a vessel is exempt from the Section 301-based tariff, companies will need to review official documentation from carriers, such as vessel construction registration certificates and updated fleet listings from shippers.

   ◦ Continuous monitoring of regulatory changes: Since the regulations will be implemented and adjusted in the coming months, it is key for companies to stay informed of USTR or DOT circularizations. An internal regulatory compliance team (or an external legal/logistical advisory provider) can be tasked with tracking these changes and communicating timely alerts. Record exempt vs. taxed operations: For internal accounting and auditing purposes, it is advisable to keep a detailed record that distinguishes each voyage - whether it falls within the vessel's first five voyages (exempt) or if it has already exceeded that limit (tariffed). This record facilitates cost auditing and correct invoicing to customers.

   
   

6. Opportunities and challenges ahead

   ◦ Leveraging the transition to gain market share: During the phase of gradual rate reduction, movers with greater agility to reconfigure their routes and budgets will be able to offer more attractive prices than their competitors, which translates into attracting new customers.

   ◦ Investment in predictive analytics: Anticipating routes that will become highly competitive -for example, those with exempt vessels- will allow optimizing the allocation of resources (trucks, containers, personnel at origin and destination) and maximizing the profitability of each shipment.

   ◦ Maintain contingent plans: If USTR or DOT introduce additional modifications (e.g., expand the number of exempted voyages or change tonnage criteria), companies should be prepared to adjust their cost models again in short periods of time.

   ◦ Encourage sustainable practices: Since many exempted vessels may have construction certificates that meet environmental standards, moving companies can leverage this to reinforce their own brand positioning as agents that promote the sustainable supply chain, a value increasingly in demand by corporate customers conscious of their carbon footprint.

Summary

The staggered rate reduction for ocean carriers, as established by Section 301 as amended by USTR, represents a significant opportunity for international moving companies:

1. Immediate reduction in freight costs for exempted vessels.

2. Possibility of improving price competitiveness and strengthening customer loyalty.

3. Need to reconfigure routes, manage container inventories and optimize shipping schedules to take full advantage of exemptions.

4. Obligation to keep up to date with compliance requirements and thoroughly document each operation to ensure rate exemption.

In the long term, the challenge will be to maintain the flexibility to adapt to regulatory changes and continue to incorporate efficiency practices (both financial and environmental) that will strengthen the company's position in an increasingly dynamic global environment.