Aftermath of tariff war, China → US freight dropped 45%

Los Angeles Port, United States (Source: AFP)

As the tariff conflict between the United States and China intensifies, sea and air cargo heading from China to the United States is sharply declining. Concerns are growing that the trade shock is spreading across the U.S. economy.

The Financial Times (FT) reported on the 28th (local time) that since the American government imposed a high tariff rate of 145% on Chinese imports, bookings for containers bound for the U.S. from China have plummeted. According to supply chain data company Vizion, as of mid-month, bookings for 20-foot containers from China to the U.S. decreased by 45% compared to the same period last year.

The Los Angeles Port Authority predicts that the volume of containers from China for the first week of next month will decrease to about one-third of the same period last year. Air cargo bookings have also shown a significant decline.

John Denton, Secretary-General of the International Chamber of Commerce (ICC), said, "The sharp drop in cargo volume between the U.S. and China shows that companies are delaying decisions while watching the outcome of tariff reduction negotiations." He further noted, "The current cost of accessing the U.S. market has reached the highest level since the Great Depression of the 1930s, and companies are rallying around the idea that at least a 10% tariff must be borne to enter the U.S. market in the future."

Currently, U.S. importers are focusing on exhausting their existing inventory, and some products are being stored in bonded warehouses or imported through detours via nearby countries like Canada, anticipating the possibility of lower tariffs.

With declining cargo demand, cases of shipping cancellations are surging. German shipping company Hapag-Lloyd reported that about 30% of bookings for containers from China were cancelled, and Taiwan's TS Lines suspended some routes from Asia to the U.S. West Coast citing sluggish demand. Shipping analytics company Sea-Intelligence expects bookings for containers on the Asia-North America route next month to fall short of plan by 400,000 units.

The Los Angeles Port also reports that next month alone, arrival cancellations of 20 ships and about 250,000 containers are expected. Compared to this month, with only six cancellations, this shows the situation is rapidly deteriorating.

As the tariff conflict continues, the flow of logistics is rapidly shrinking, and the economic shock within the U.S. is increasingly becoming a reality.