With the U.S. and China agreeing to scale back their tariffs imposed on each other for 90 days, expect cargo on the trans-Pacific trade lane to kick back up imminently—facilitating an earlier peak shipping season.
While import volumes into the U.S. cratered more than 35 percent at the San Pedro Bay port complex in early May after tariffs on Chinese goods escalated to 145 percent, with retailers cancelling bookings and carriers blanking sailings, the new agreement breathes new life into trade between both countries.
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Lars Jensen, CEO of container shipping consultancy Vespucci Maritime, expects an immediate surge in containers exiting China, which saw exports to the U.S. decline 21 percent in April due to the tariffs.
“The 90-day pause expires in the middle of the usual peak season for holiday-related goods going to the U.S,” said Jensen in a LinkedIn post Monday morning after the announcement was made. “We should therefore expect a possible pull-forward of cargo creating a shorter, sharper, peak season from basically right now.”
Jensen noted that there is “already a large amount of cargo ready to go” due to the “wait-and-see” strategy U.S. importers have adopted over the past month. With that in mind, Chinese exporters and manufacturers have had high levels of finished goods already ready to ship.
“With the expected surge in cargo, we should also expect that the U.S. ports, which are right now facing a massive drop in cargo volume, will in three to six weeks switch to face a surge of cargo with a substantial risk of bottleneck issues and delays as a consequence,” Jensen said.
The outlook for U.S. ports through the early fall looked bleak, according to data from the monthly Global Port Tracker released Friday by the National Retail Federation (NRF) and Hackett Associates.
In May, forecasts for inbound cargo volume were down 12.9 percent year over year to end 19 consecutive months of year-over-year growth, at 1.81 million 20-foot equivalent units (TEUs).
But the TEU numbers were expected to tank even further once summer fully kicked in. June had a 20.2 percent year-over-year drop projected, while July cargo was anticipated to tank 23.4 percent.
In August, inbound cargo volume forecasts were down 21.5 percent, while September’s container declines were estimated at 21.2 percent.