There has been a surprisingly measured response from international shippers facing potential new tariffs next year from the incoming Donald Trump administration.
Speaking on the latest episode of The Freight Buyers’ Club podcast, Kathy Liu, Dimerco Express Group Vice President, said most shippers and exporters to the U.S. were taking a “wait and see” approach to anticipated new tariff regimes.
“People are not really taking any actions,” said Liu. “Trump talked a lot during the election period, but we never know how much of it will materialize.”
Trump has recently threatened 25% tariffs on imports from Canada and Mexico, along with at least a 10% tariff hike on Chinese imports. Additionally, he suggested implementing 100% tariffs against BRICS countries—now expanded to include nations like Egypt, the UAE, Ethiopia, and Iran—should they try to create a rival currency to the U.S. dollar.
Front-Loading Cushions Impact
One key factor keeping trans-Pacific shipping markets calm is the extensive front-loading of cargo earlier this year. According to Cathy Roberson, Founder of Logistics Trends & Insights, many U.S. shippers accelerated imports ahead of the September 30 expiry of the International Longshoremen’s Association’s (ILA) Master Contract covering U.S. East and Gulf Coast ports.
“Retailers and other shippers front-loaded a lot of imports before the original deadline,” Roberson said on the podcast.
The expiry of the contract led to a three day shutdown of ports before the ILA and the United States Maritime Alliance (USMX) reached a short-term contract extension through January 15, 2025.
This early import activity has left many retailers with higher-than-normal inventory levels, as reflected in Q3 earnings reports. “Inventory levels right now are a little higher than usual,” Roberson said.
Bearish Freight Markets
Despite potential tariffs and the January 15 expiry of the labour contract extension, freight markets remain subdued. Spot rates for Shanghai to Los Angeles and Shanghai to New York routes dropped 5% and 1%, respectively, last week, according to Drewry.
Factory closures in China for Lunar New Year and the possibility of a U.S. East and Gulf Coast port shutdown could still disrupt logistics networks and tighten the supply of ocean shipping capacity. Many shippers are adjusting their strategies.
“There will be a lot more shifting towards the West Coast,” said Roberson. “We may also see increased use of air freight if disruptions occur.”
Source: Freight Buyers’ Club
