The escalating trade conflict between China and the USA is beginning to have a broader impact on the American economy, with container port operators and air freight companies reporting a significant decrease in goods from China.
The Zhituo Finance APP has learned that the escalating trade conflict between China and the USA is beginning to have a broader impact on the American economy, with container port operators and air freight companies reporting a significant reduction in goods from China.
Logistics companies have noted that since the USA imposed a 145% tariff on imported goods from China, the volume of container shipments to the USA has sharply declined. The Port of Los Angeles, a major entry point for Chinese goods into the USA, predicts that the number of incoming containers for the week starting May 4 will decrease by 33% compared to the same period last year. Air freight companies have also found a significant drop in order volume.
Data from the container tracking platform Vizion shows that as of mid-April, bookings for standard 20-foot containers from China to the USA have decreased by 45% year-on-year.
John Denton, Chairman of the International Chamber of Commerce (ICC), stated that this disruption reflects that businesses are delaying decisions, waiting for clear messages from Washington and Beijing on whether there will be negotiations on lowering tariffs. Following President Trump's announcement of reciprocal tariffs on April 2, the ICC conducted a survey of members in over 60 countries, revealing that there is a general expectation that irrespective of any forthcoming agreements, trade flows will face long-term impacts.
Denton stated that the cost of entering the USA market will reach its highest level since the 1930s. He indicated that even amidst broader uncertainties, businesses seem to have accepted at least a 10% baseline tariff.
Disruption of the supply chain.
Trump predicts that the 145% tariff rate will ultimately decrease. However, China and the USA have not yet engaged in formal negotiations.
As the first wave of goods affected by tariffs approaches the USA coast, freight managers report significant changes in the supply chain. According to reports, Nathan Strang from the USA logistics company Flexport, which is responsible for marine transportation business, stated that many companies are delaying shipments, anticipating that a trade agreement may reduce the new tariffs.
Company Executives from logistics firms indicate that US importers are digesting existing inventories before importing more commodities from China. Some companies are storing goods in bonded warehouses, while others are rerouting goods to neighboring countries like Canada.
Strang stated that companies have inventories both at the country of origin and the destination in the USA, warning that a sudden drop in tariffs could trigger a surge in transportation costs.
Orders have been canceled.
Shipping giant Hapag-Lloyd reported that about 30% of its outbound orders departing from China have been canceled.
The slowdown in orders is clearly impacting port activity. Analysts from Sea-Intelligence reported a surge in 'blank sailings' (i.e., canceled bookings for vessels departing from China). It was reported that in the four weeks starting from May 5, container bookings on Asia-North America routes decreased by approximately 0.4 million, a 25% drop compared to the plans before the tariff announcement.
The Port of Los Angeles expects 20 'blank sailings' just in May, involving over 0.25 million containers, compared to only 6 in April.
Vietnam and Cambodia benefit.
USA's import volume once surged briefly, as importers rushed to import commodities from Southeast Asian countries like Vietnam and Cambodia, which are benefiting from the USA's postponement of implementing reciprocal tariffs for 90 days.
Container prices reflect these changes. According to logistics data provider Freightosclip, the shipping cost of a 40-foot container from Vietnam to the USA has increased by 15%, while the shipping cost of a container from China to the USA has decreased by 27%.
Freightos' research director Judah Levine stated that with the July tariff deadline approaching, shipping costs from other Asian countries to the USA may continue to rise.
Air cargo volume declines.
Air cargo volume has also dropped significantly. The American Airlines Cargo Association reported that its members found order volume from China has decreased by about 30%. Executive Director Brandon Fried stated that many members have already stopped accepting new orders from China, and prices and order rates fluctuate significantly with Washington's policy changes.
The freight industry is under greater pressure as the USA government plans to terminate the tariff exemption for small commodities under 800 dollars on May 2. This policy change is expected to severely impact online retailers such as Shein and Temu.
Hong Kong freight forwarding company Easyway Air Freight reported that since the tariff increase, business volume between China and the USA has decreased by about half.
The e-commerce business has been hit hard.
Despite efforts by freight companies and retailers in the USA to offset the impact by increasing inventory and shifting supply chains, they are beginning to feel the pressure of reduced imports. Due to tariff uncertainties, one of the largest trucking companies in the USA, Knight-Swift Transportation (KNX.US), has issued a warning about a decline in freight volumes.
The company's CEO, Adam Miller, stated that some major clients are concerned that tariffs will lead to a decline in Order volume in May. He added that many clients have already canceled or suspended Orders from China and are looking for ways to adjust their supply chains to avoid rising costs.
Retail consultants point out that Consumer purchasing behavior is beginning to reflect a decline in the confidence Index for three consecutive months.
John Shea, CEO of online retail consulting firm Momentum Commerce, warned that rising prices and declining Consumer spending could deal a "double blow" to the economy. He noted that as prices have steadily increased, Consumers are beginning to shift towards cheaper products.
