How the US-China trade war is redrawing the rules and structures of global logistics
Date: Friday, June 21, 2019
Source: South China Morning Post
- Import traffic at America’s busiest port, the Port of Long Beach in California, dropped in May, suggesting minimal front-loading to beat possible tariff increase on June 1
- Companies have not been able to make early purchases due to capacity issues in US warehouses and stocked inventories from previous front-loading
Towards the end of 2018, before an American tariff increase on US$200 billion of Chinese goods that was expected to take place on January 1, “floating finishing factories” started popping up off the US West Coast, on which Chinese workers would frantically assemble goods on container ships at sea to get them through customs in time to beat the increased tariffs.
As it turned out, the tariff increase was postponed after a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires in December, but the front-loading of orders still led to a huge surge in shipments, leaving port and logistics operators stretched to their limits.
“I don't know about chaos, but it was extremely busy,” said Don Snyder, acting managing director of commercial operations at the Port of Long Beach in California. “At pretty much all the ports in North America, things like truck capacity and the ability to have the [truck trailer] chassis that go underneath the [shipping] containers, the ability to return empty containers back to the port, were under pressure – there were a lot of challenges there.”
The tariffs on US$200 billion of goods eventually increased on any shipment made after May 10, while this week in Washington public hearings took place on Trump’s proposal to levy a new round of tariffs on nearly all Chinese imports that have so far avoided them.