Customs ruin America's ports; Soon there is a risk of a rush through supplies

Customs ruin America's ports; Soon there is a risk of a rush through supplies

The US ports are currently experiencing a dramatic decline in the freight volume-but in a few weeks the opposite could occur. From Wednesday, freight, which will be shipped from China to the USA, will be occupied with a 30 % customs set - a significant reduction compared to the previously applicable maximum rate of 145 %, which was in force for six weeks. In a joint announcement, the United States and China decided on Monday a significant de -escalation of the tariffs for the next 90 days. Experts expect retailers to import more freight prematurely during this period to build up stocks before the situation changes again.

retailers react quickly to change in customs

"We are exactly at the time when all of the Christmas goods should arrive. Therefore, there could be some retailers who decide to order more products early to advance the possible expiry period," said Jonathan Gold, Vice President for Librut and Customs Policy at the National Retail Federation. This was exactly what happened before the first customs wave came into force on April 9, when imports were increased in March.

importance of trade relationships with China

china is one of the most important trading partners in the USA from which most of the clothing, shoes, toys, electronics and microchips come from. For many companies, the higher tariffs are not sustainable to run business with China. Flexport, a company for logistics and freight agency, said on Monday that it was too early to predict the exact extent of the increase after the announcement between the USA and China, but expect a "boom" in the bookings.

forecasts for freight volume and transport costs

Peter Boockvar, an economist at the Boock Report, expressed that it was still unclear how significant the duty of 30 % will actually be, but some retailers will use the possibility of lower tariffs. "In the next 90 days we will experience an order flood that we have never seen before. The transport costs will also skyrocket in the coming weeks and months," says Boockvar.

Despite the forecasts that goods will soon be received in American ports, the ports on the west coast expect a significant decline in ship movements and the freight volume this month. This is because ships need 3 to 4 weeks to get from China to the west coast.

Current developments at western coast ports

Negative effects on the supply chain

currently 17 ships are less than usual for the two ports until May 16, according to the information from the Marine Exchange of Southern California & Vessel Traffic Service Los Angeles Long Beach. The port of Seattle also recorded empty dock areas in the past week, another rare event since the beginning of pandemic. The Northwest Seaport Alliance, which represents the ports of Seattle and Tacoma, expects a decline in volume by 8 % to 15 % compared to normal times. Ships from China that arrive this week transport 17 % less freight than usual.

"These (customs) reductions do not reveal the consequences of their introduction. The uncertainty, market disorders, freight fluctuations and the lost business value, caused by the original and remaining tariffs, remain a considerable concern. Both declines in the freight volume and climbs have an impact on the supply chain. explained the Northwest Seaport Alliance in a statement.

predictions for the east coast and smaller retailers

It not only affects the west coast - the ships also need 4 to 6 weeks to reach the ports on the east coast of Asia, which means that possible freight stairs are pushed out of the next month. "If the retailers are now giving up orders, the freight could arrive in mid -June. So we will probably experience a decline in the next few weeks and then an increase until July," said Gold.

An inch of 30 % on Chinese imports, so significantly lower than 145 %, remains prospective for many companies, especially smaller ones. The US Chamber of Commerce said on Monday that "the tariffs are much higher overall than at the beginning of the year" and confirmed their demand to the Trump administration to decrease small companies from tariffs.

"The larger retailers are better able to cope with the costs of the tariffs," said Gold. "I think there are many ongoing discussions about how it will develop."