The escalating trade war between the U.S. and Chinese governments has left countless shippers in a precarious position. Unfortunately, months of uncertainty and escalating tit-for-tat tariffs have made a difficult situation worse, and shippers are paying the price.
Since the trade war began in earnest, shipping patterns between the U.S. and China have undergone several monumental shifts. As part of our new series on regional shipping challenges, here’s how the trade war has impacted shipping patterns between the U.S. and China so far—and what shippers can learn from this situation.
Bracing for impact
Between 2017 and 2018, Chinese exporters rushed to get goods into the U.S. before the new tariffs came into effect. Many exporters were front-loading, moving freight while it was still relatively cheap to do so—and importers were stocking up for the same reason.
This spike didn’t just impact shipping routes for transpacific ocean cargo. Air freight lanes were also deeply affected. While U.S. President Donald Trump’s goal may have been to reduce the country’s trade deficit with China, suddenly, a lot more freight was moving between the two nations.
Despite avoiding the impending tariffs, this spike in demand led to an enormous surge in freight rates for containers moving between China and the U.S. By December of 2018, the price of freight was more than double what it had been 12 months prior.
What’s more, not every company hoping to stock up was successful. With carriers in such high demand, many shippers were unable to find the capacity they needed to move a high volume of freight very quickly. Other shipments did not arrive on time, with carriers arriving at U.S. ports after the tariffs were already in effect.
What goes up must come down
As the higher tariffs kicked in, imports into the U.S. from China slowed significantly.
This can partly be attributed to the fact that many U.S. importers increased their inventory before the tariff hikes. But many were wary about the higher tariffs eating into their bottom line, and so began looking to import from elsewhere.
This has led to greater traffic across the Atlantic ocean, with a higher volume of freight arriving on the East coast. Meanwhile, containerized imports into the West Coast’s major ports have plummetted. But the ripple effects of last year’s surge in activity are still being felt, with trucks struggling to get in and out quickly amidst the chaos.
Ready for anything
Tariff hikes impact the entire supply. And with no clear end to the trade war in sight, the future is still uncertain. But with the right partner, shippers don’t need to scramble.
At CTSI-Global, we have facilities strategically positioned around the world, so we understand the unique challenges faced by shippers in different regions. And with over 60 years’ experience under our belts, we’re in a prime position to advise and steer our clients—no matter what twists and turns the industry takes.
Our dedicated team and international consulting services make it easy for companies to navigate tariffs and customs issues, find capacity when they need it most, and consolidate shipments to reduce costs.
Don’t let tariffs leave a major dent in the bottom line. Contact us today.