Significant bottlenecks are continuing to occur in Asia for U.S. imports, especially in Southeast Asia. For transpacific trade lanes being shipped to North America, the lack of vessel space and container availability continues to increase spot rates by almost 10 times from earlier this year. The recent closure of Ningbo Beilun’s Phase III Terminal due to an explosion on Aug. 9 is also expected to have a significant impact on the main transpacific trade lanes out of Asia as well as the overall supply chain globally, according to research released by ITS Logistics.
“This lack of vessel space and container availability is creating the potential for a significant wave of container traffic on the back end of Q3 and early Q4, as more capacity is deployed and rates lower within a range to keep shippers profitable,” says Paul Brashier, VP of global supply chain for ITS Logistics. “There is also anecdotal evidence that some shippers are concerned about potential tariff increases due to the potential of a second Trump presidency.”
Key takeaways:
- Just last month, former President Trump confirmed in a Bloomberg interview that if elected for a second term as president, he plans to propose a new 10% tariff on all imported goods with a 60% tax on all goods from China. These goods specifically accounted for about 15% of all U.S. imports last year.
- While China was the main priority for tariffs during Trump’s first term, the interview confirmed that a new term may place more emphasis on the European Union and the UK. Regardless of which countries become the focal point should Trump become president again, economists are warning that such actions could very likely become inflationary.
- This month’s forecast also reveals that strike activity, or the potential of it, will affect the West Coast and inland rail legs of ocean container traffic entering Canada. Due to last week’s ruling by the Canada Industrial Relations Board (CIRB), a rail strike or disruption is more likely to occur. As a result, the West Coast ocean region has been categorized as a SEVERE concern, and inland rail ramps are an ELEVATED concern.
- Lastly, an increase in revenue per outbound containers is causing them to be expedited back to Asia, which is starting to adversely affect exports.
“To avoid a similar situation to Q4 2018, some shippers may increase inventory in the back half of 2024, especially if transpacific trade lane shipping rates decrease,” adds Brashier. “Shippers may also want to get ahead of increased consumer demand, which could be influenced by potential interest rate cuts by the Federal Reserve. Perception usually drives reality in shipping, and just the potential of changes in the economy can shift freight activity.”
