In this special edition of the State of Freight, GPI would like to let you know what we’re experiencing as we book shipments to sail before the end of the year and Chinese New Year. Let’s dig in.
Anticipated Tariffs in January
President-elect Trump has announced his intention to roll out tariffs on US imports on day one of his inauguration day. An anticipated 25% on all Canadian and Mexican imports and 10% on Chinese imports has been implied. While we don’t know the specifics of the rollout or the timeline, the threat of tariffs has already made an impact on those of us who manufacture in these countries.
GPI is already seeing tight vessel space, with bookings already reaching into January. Importers looking to beat the tariffs to US ports are actively rerouting east coast shipments to the west coast ports as the transit time to the west is much shorter, giving them a better chance to clear customs before tariffs take effect. (from southern China, 17 days to the west coast, 32 days to the east coast). This is going to put a strain on the west coast ports over the next month or two as port workers scramble to process and move the higher volumes of imports. Expect delays upon arrival. Vessels may be moored outside port for a number of days before they are even called in to berth. On the bright side, US customs can be cleared while the vessel is still on the water so be sure to talk to your broker and/or freight forwarder about how to get your goods cleared prior to unloading.
The East Coast Strike Looms
In October, the ILA (International Longshoremen Association) went on strike for 3 days to fight for better pay rates and less port automation. The strike was put on hold after USMX (United States Maritime Alliance )agreed to a 62% pay raise for ILA workers. This was only a temporary fix with port automation remaining on the negotiation table. As of today, the strike is due to resume on January 15, 2025, and talks to negotiate have come to a halt as the ILA is not willing to agree to even partial port automation as they fear it will replace many jobs humans currently hold. Now the clock is ticking and January 15th looms before us with no talks resuming to solve the automation issue.
A strike on the East and Gulf coasts for any amount of time could significantly cripple the supply chain for weeks or months and cause vessels and goods to back up at ports, floating in limbo until the strike is resolved. 1 day of strike shutdowns causes 1 week of delays for imports.
In response to the impending strike, importers have started to route east and Gulf Coast shipments to the West Coast. This will add to the congestion on the west coast which is already seeing high volumes due to the upcoming tariffs.
The Current Situation
- Vessel space departing Asia is limited as high volumes of exports are rushing to beat US tariffs and strikes. Book now to secure your space!
- Container pricing to the West Coast is very high and expected to rise in the coming weeks. Routings to the West Coast are already rising in price. Per container, rates to the West Coast have risen thousands of dollars higher than East Coast routings.
- A general rate increase on containers to the US is set to take effect on December 15 with another set on January 1. Although many times GRI’s are mitigated, we’re expecting rate increases to push through on both dates at this time. You can find out more about upcoming GRI’s at https://scarbroughglobal.com/. We have not been officially notified about the December 15 GRI and whether it’s gone through or not.
- Expect delays! With so much import volume descending on the West Coast, you can expect your shipments to be delayed in the coming months. Factor at least 2 additional weeks into your timeline to accommodate the anticipated congestion.
GPI will continue to update you on the port, strike, and tariff situations as more information is available.
Until then, have a happy and safe holiday!
