 Trump vow on new trade war ss shockwaves through supply chain, importers scramble to move up orders KEY POINTS |
Source |
American Shipper |
Post Date |
11/13/2024 |
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Logistics companies say that clients from retail to manufacturing are moving quickly to get imports into the U.S. ahead of schedule.
President-elect Trump has vowed to move fast on aggressive new tariffs on imports and said in his speech early Wednesday morning, ?romises made, promises kept.?
The shipping anxiety could fuel freight rates, and shares of trucking and railroad stocks rallied on Wednesday, though international ocean carriers slumped, led by Maersk on fears about lower overall global volumes of trade in a new trade war.
Retailers and manufacturing companies have been increasingly calling logistics partners, both in the days leading up to presidential election and on Election Night, about ?ront loading?shipments ahead of any changes in tariff policy to be pursued by President-elect Donald Trump, who campaigned on an aggressive expansion of existing U.S. tariffs on cross-border trade.
Trump has vowed across-the-board tariffs of 10% to 20% on all imports arriving into the United States and a 60%-100% tariff on Chinese imports.
"his is 2018 all over again,?said Paul Brashier, vice president of global supply chain for ITS Logistics, referring to the year during which Trump first imposed sweeping tariffs in his first term. ?he calls expand beyond shippers who have Chinese imports. The global tariff threat is fueling calls for frontloading from all around the globe," he said.
Brashier expects Trump? election to result in increased container demand and vessel bookings, which will then fuel freight rates, trucking and warehouse rates. Trucking stocks, such as J.B. Hunt Transport Services, Knight-Swift, Schneider National, and XPO, were in rally mode on Wednesday, as were freight rails including Norfolk Southern and CSX.
Among many major market moves on Wednesday as traders and investors digested the Republican wins, the U.S. dollar surged against key international currencies tied to trade on Wednesday, such as the euro and Mexican peso.
Ocean shipping stocks hit on market fears of trade decline The knee-jerk reaction in shares of ocean carriers, was negative, with a big slump led by Maersk, even though consumer demand remains strong in the U.S. and frontloading of imports would raise ocean rates, at least in the short-term. Shipping analysts described the reaction in Maersk and its peers as excessive. But they added it is based on the belief is tariffs increase the costs of trade, in turn lowering demand and volumes. They noted that did not occur in 2018 and 2019, with volumes growing an average of 12% during those two years. ?t speaks to the uncertainty of the situation, rather than the imminent doom,?wrote analyst Ben Slupecki of Morningstar in an email.
Lars Jensen, CEO of Vespucci Maritime, said in the short-term there will be a surge in import demand for containerized goods as U.S. companies stock up ahead of any new tariffs. ?specially related to goods which are not time sensitive, said Jensen. This will upward pressure on freight rates in the coming months.?
According to spot ocean freight rate data tracked by ocean and air freight intelligence platform, Xeneta, the frontloading of freight during the Trump trade war on Chinese imports in 2018 fueled a rise in ocean container shipping freight rates by more than 70%.
Peter Sand, chief shipping analyst at Xeneta, tells CNBC that shippers will be fearing more of the same with this latest tariff threat. ?hipping is a global industry feeding on international trade, so another Trump presidency is a step in the wrong direction, said Sand. ?he knee-jerk reaction from U.S. shippers will be to frontload imports before Trump is able to impose his new tariffs.?
He added that fears of an increase to a 100% tariff on Chinese imports, compared to 25% in 2018, would make the incentive to frontload "even greater."
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