USA's busiest ports continue to face challenges as trade war with China intensifies
Updated: Jul 2, 2019
The Ports of Los Angeles and Long Beach, the USA’s two busiest port facilities, continue to suffer declines in import and export volumes due to the intensifying trade war with China.
A CNBC article published on Tuesday stated that this is the 7th consecutive month that LA has faced declining export volumes. According to CNBC, the number of loaded exports decreased by about 1% in May, following a reported 6% decrease in April. A spokesman for the Port of LA said that nearly 60% of the port's trade volume is attributed to by China.
Meanwhile, the Port of Long Beach’s import and export volumes have been hit with double-digit percentage declines. The port issued a press release on Tuesday, registering a 19.5% drop in imports and a 15.5% drop in exports in comparison to May of last year. Warehouse capacity in the area also continued to tighten, as a result of increased inventory demands caused by rushed import orders from US retailers in an attempt to beat the rise in tariffs.
On Monday, President Trump threatened that additional tariffs will be levied on Chinese goods if Xi Jinping does not attend the G-20 meeting this month.
What does this mean for companies?
Due to the rise in warehouse congestion, companies may face difficulty finding space to store their goods on arrival at the ports. Consequently, the higher demand for inventory space can be expected to lead to higher storage costs.
Transit times may also be negatively affected as railways are forced to transport higher cargo volumes to alleviate the congested ports and warehouses in the LA region.
The trade war has caused a multitude of problems for businesses, from disrupting supply chains to increasing the overall costs of shipments associated with Asia's largest economy.
More than a year has passed since the conflict began, and it is still uncertain when it will end.
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