Tariffs help ports reach record volumes but slowdown looms

Date: Thursday, December 13, 2018
Source: American Shipper

“We’re seeing record volumes right now because where a retailer could advance shipments, they have to try to get ahead of the tariffs,” he said in an interview with CNBC. “So we had a busy November, we had our busiest week ever last week.

   “We think post-Chinese New Year though, that’s going to slow down because a lot of the shipments have been advanced. Normally, you’d be in a slack season right now and it’s busy.”

Newsome noted, however, that because of uncertainty surrounding ongoing U.S.-China trade negotiations, it’s much more difficult to predict exactly when the slowdown will occur and how severe it will be.

   “What we’re hearing from people sourcing in Asia is that they shipped as much ahead of time as they could,” he said. “Typically, this would be a slow season right now; we think we’ll see that slow season in the February to April time frame. We don’t know exactly what that means because we’ve never dealt with this before.”

   As a result, Newsome said it’s almost impossible for ports to plan for what could be a sudden downturn in import volumes, and ports are being forced to take a “wait-and-see” approach when it comes to international trade relations.

   “If you look at our investments, we build long-cycle assets,” he said. “You can’t really time anything based on [the current tariff situation], so we’re curious about what it will be. We think it will have a short-term impact, and we have to hope the trade uncertainty is removed in time.”

   On the export side, retaliatory tariffs put in place by several U.S. trading partners in addition to China could have an impact on automotive volumes. German automaker BMW manufactures its X5 model SUV in Greenville, S.C., and then exports through the Port of Charleston all over the world.

“People have to remember that BMW exports 70 percent of what they make, so it’s truly a global manufacturing story,” said Newsome. “That will continue, but I think long term, one has to watch automotive because you can make expensive cars anywhere in the world and ship them relatively cheaply. I think the major impact could be with uncertainty from automotive manufacturing. They’re going to be busy right now [because] they just launched a new X5, but we’ll see if trade slows down in cars. We just don’t know yet.”

   But it’s not just the Port of Charleston that could see significantly slower growth in the new year.

   According to the latest Global Port Tracker report from the National Retail Federation and Hackett Associates, container imports at major U.S. retail ports — including Charleston — set yet another record in October, handling more than 2 million TEUs in a single month for the first time ever, “as retailers continued to bring merchandise into the country ahead of a now-postponed increase in tariffs on goods from China.”

   The 2.04 million TEUs handled by major U.S. ports represented a 9 percent increase from September and a 13.6 percent year-over-year jump.

   The heightened growth in imports is likely to continue through the end of the year, but the NRF expects both year-over-year growth and total volumes to slow “considerably” in January.

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