US China Trade War’s Impact On Logistics: Part 1

Tariff War’s Effect On Port Logistics 

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, but 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.  

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 diversified 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, with many drivers not being able to offload the “empties.” Ports are finding some relief with drayage providers who offer what is ultimately 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 the most significant. Locally, China makes up 13% of PortMiami’s trades ($1.09B), with the Dominican Republic being the port’s number 1 trade partner with 13% ($1.1B). 

When It Comes To Tariffs Uncertainty is Only Certainty

When it comes to the trade war and its impact on the logistics sector, the only certainty is uncertainty.  Ports throughout the United States, across both the east and west coast, are doing their best to keep up with the volume. Third-party logistics providers are doing the same and hoping that 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, and while that 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. 

In part two of this multi-part series, we will take a look at the US-China Trade War’s impact on the supply chain, and how that affects American and Chinese business owners. 

At DGD Transport, we pride ourselves on disrupting the ever-changing logistics industry by developing tools and solutions that meet our customer’s needs. Through our on-demand proprietary technology, DGD Transport offers cost-effective and eco-friendly solutions. As the premier 3PL company in South Florida, our team is comprised of forward-thinkers who value efficiency and doing things differently.

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