The US-China Trade War has been on the minds of most US citizens since the end of 2018. Specifically, those in the shipping and logistics industry have felt significant impacts. The talks of tariffs on Chinese imports spurred a major spike in freight volumes.
Large ports across the country are facing uncertainty when it comes to predicting volumes because a spike in shipments could easily turn into a major decline. Currently, retailers are reacting to the government’s trade talks by increasing orders to stock inventory. The alternative to that trend would be retailers slowing down orders due to fear of what’s next. Some industry leaders predict that freight volumes will continue to increase through the summer of 2019, while others are unsure.
Trade War Volumes Will Impact Carrier Revenue, But Not Port Revenue
Declines in container shipments, which would impact business and revenue for freight carriers and 3PLs, would likely not affect the revenue of major ports. Because ports like the Port of Los Angeles have varied business contracts, their overall revenue is insulated from fluctuating freight volumes.
The increase in imports and the relatively steady volume of exports is also causing a jam of empty shipping containers. Many drivers have not been able to offload the “empties.” Ports are finding some relief with drayage providers who offer essentially free storage for containers.
While China is not universally the number one trade partner for all major ports, the country’s US Import numbers are undeniably significant. In South Florida, China makes up 13% of PortMiami’s trades ($1.09B), with the Dominican Republic being the port’s number 1 trade partner at 13% ($1.1B).
US-China Trade War Only Grows Uncertainty
When it comes to the trade war and its impact on the logistics sector, the only certainty is uncertainty. Ports across both the east and west coast of the US are doing their best to keep up with the volume. Third-party logistics providers are doing the same, and hoping the industry is not on the brink of a recession.
There is much debate about the accuracy of predictions around a freight recession. The surge in shipments made for record numbers. While the surge may be slowing down, many say that it is not an indication of a recession, it is simply the market stabilizing after a boom.