Jun 10

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US China Trade Agreement?

2 minute read
Brian Kempisty

What happens WHEN there is finally a trade agreement? My opinion is that there will be an agreement at some point, but we really don’t know when. I believe the cat and mouse game will stop. Both economies are too important to each other.

The US input cost to manufacturers and retailers is going up significantly.

US farmers are getting crushed. Uncertain how and where to market their goods

US exports are going down

China’s economy is on the verge of zero growth

BCO’s will start to look at all options such as changing to vendors in Vietnam, India, and elsewhere, but reality is this will take a long time. Everyone will panic, but at the end of the day my bet is a deal will get done. Everyone is doom and gloom right now. We have even had BCO’s just tell us not to pick up containers from port because they are sending the product back to China. That may even worsen, but I think before labor day a deal is done.

What happens WHEN there is a deal?

BCO’s will once again take it on the chin. If this hits in late summer and early fall, the peak season demand is going to be crazy. Steamship Lines will have already taken away capacity and volume will blow up. It will take them some time to react. Once imports hit the shores here in the North America congestion will be crazy, and everything will be hot. Will there be demurrage and per diem 2.0 just like last year? It very well could happen.

What’s the plan?

To this point I have heard almost no talk of contingency plans. Is anyone thinking about how they will react to this situation? If you just take it as it comes with NO planning supply chains will get crushed with extremely long delivery times and a great chance of significant accessorial costs just like last year.

Port X Logistics is planning the best we can. Additional yard space on the west coast, in order to facilitate pre-pulls and eliminate demurrage. We are also adding chassis in order to avoid some of the congestion at the ports. Nothing worse than waiting 3 hours for a chassis and then missing a pick up appointment. That empty situation will once again rear it’s ugly head and I suspect terminating containers will be an issue, once again a reason for more chassis and larger yard storage. We are even looking into inland empire yard options in Southern Cal, when things get really bad.

If you need a plan, want to talk solutions, and get some priority status let us know. We are here to help you and your clients so they have a solid plan. We are hoping that awareness will help stimulate some proactive collaboration.

Brian Kempisty