Skyhigh U.S. tariffs on Chinese products are roiling supply chains and prompting importers to rethink orders and suppliers. But fewer ships coming into the U.S. means fewer ships going out, and the agriculture industry worries its exports are going to be squeezed in the oncoming global trade reshuffle.
Trade conflict between the world’s two largest economies is making its mark on global shipping. For the week beginning April 27, the Port of Los Angeles had 16 scheduled vessels, around a 13% decrease from the same time last year, and about a third less than the previous week.
This week isn’t looking much better. Just 15 vessels were scheduled Monday, around a third fewer than the same week in the previous year, and traffic the following week is set to be 10% down on the same week in 2024.
“We are beginning to see the flow of cargo to the Port of Los Angeles slow,” Gene Seroka, the port’s executive director, said during a board meeting last month. “Essentially all shipments out of China for major retailers and manufacturers has ceased, and cargo coming out of Southeast Asia locations is much softer than normal,” he added, arguing U.S. tariffs are to blame.
Since taking office, President Donald Trump has hiked duties on imports from China by 145%, and other countries face a baseline tariff of 10%, with the threat of future tariff increases.
“If you're buying a product from China, it costs two and a half times more than it did last month,” Seroka pointed out. Accordingly, importers have “hit the pause button” on shipments from China, Seroka said, while they examine the impacts of tariffs on their bottom line.
China’s export orders for April fell to the lowest level since the pandemic, according to surveys published Wednesday by China’s National Bureau of Statistics.
Ship cancellations at the port of Long Beach have already jumped, from just four in the month of April to 17 for June so far – bringing the total cancellations between April and June to 34, according to port data.
The Port of Oakland has seen a similar trend. A spokesperson for the port told Agri-Pulse it had received 39 vessel cancellations between April and June – known as blank sailings.
Kristi App, vice president of the National Customs Brokers and Forwarders Association of America, which represents U.S. freight companies and customs brokers, told Agri-Pulse the signs were pointing to supply chain disruptions akin to those triggered during the COVID-19 pandemic.
Trump has also seemed to acknowledge impending supply chain snarl-ups. During a cabinet meeting on Wednesday, the president boasted that cargo ships from China are doing a "U-turn and going back."
He even suggested the slowdown in U.S.-China trade could cause some product shortages, particularly in manufactured goods.
"Maybe the children will have two dolls instead of 30 dolls. So maybe the two dolls will cost a couple bucks more than they would normally," Trump said.
But App warned a slowdown in U.S. imports from China will have a knock-on effect for U.S. exporters.
“With the blank sailings and with fewer exports coming out of China into the U.S., it is going to create equipment and vessel schedule imbalances for our exports,” App said. “Trade is based on balance,” App continued, “you load our exports out in the same containers.”
Fewer ships coming in could lead to more competition for space on ships leaving certain ports and, analysts warned, reduce the availability of shipping containers used to move soybeans, animal feed, wine and other food and beverage items.
Any imbalance or supply squeeze affecting U.S. exports will keenly impact U.S. agriculture, according to Peter Friedmann, executive director of the Agriculture Transportation Coalition.
“Agriculture is much lower margin, pays lower freight rates,” Friedmann said. “It's just the backhaul.” Accordingly, if there is a reduction in ship volumes and limited space, carriers are likely to prioritize higher-value export products, he said.
“It's very difficult – now, increasingly difficult – to get space on a ship, even if you can find a foreign customer for your agriculture export,” Friedmann said.
The impacts to the agriculture sector are also set to be more dramatic. Unlike other industries, perishable agricultural products, like many of those that ship out of the Port of Oakland, cannot afford to wait for ships or equipment that may be held up or in short supply, App said, posing a particularly acute threat for ag producers.
With many of the canceled voyages slated for this month, the brunt of the backlogs is yet to fully materialize. But Joe Schuele, vice president of communications at the U.S. Meat Export Federation told Agri-Pulse that meat exporters are already facing challenges because of the lack of communication from ocean carriers on canceled or postponed arrivals.
"These schedule changes result in delayed pickup dates and when communication is lacking, the cargo spends more time waiting for a vessel at the port," Schuele said, incurring additional costs for exporters and heightening congestion at terminals. “Timely departures from the West Coast are especially critical for higher-value chilled shipments of U.S. red meat to destinations such as Japan, South Korea and Taiwan,” Schuele added.
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Securing space on outbound vessels, while not an issue yet, is also a “growing concern” for his members, Schuele said.
Shipping in flux
App and others pointed out that much remains up in the air – both for U.S. trade policy and how carriers will respond once the downturn in ship arrivals comes to pass.
The Trump administration says it is aggressively pursuing trade deals to eliminate some tariffs and Treasury Secretary Scott Bessent has suggested that the current tariff rates on Chinese products are “unsustainable.” If deals materialize, as officials say they will, vessel reductions at U.S. ports may be limited or short-lived.
Shipping carriers could also reposition shipping equipment to mitigate some of the impact of lower inbound vessels on exporters, particularly given the voyage cancellations have been limited to Pacific Coast ports so far. Although Craig Fuller, CEO and founder of FreightWaves told Agri-Pulse he expects the issue to spread to East Coast ports as well if U.S. tariffs are maintained and the 90-day pause on country-specific reciprocal tariffs ends.
Fuller said, however, that once companies see a stronger indication of where U.S. tariffs will end up, supply chains will be able to adjust to find the most efficient and economically viable trade routes to serve the U.S. market.
“There's a fog of war problem right now on the ground where nobody really knows where this is going to end up,” Fuller said in an interview. “The escalation has happened so quickly, so fast, so unexpectedly and without clarity as to what it all means – it is causing an enormous amount of stress for everybody.”
Asked about the drop in shipping orders during a press conference last week, Bessent downplayed the early signs. He said that during his decades on Wall Street he learned to “ignore the survey data” and look at the actual, real-time data.
“The actual data has been quite good,” Bessent told reporters, pointing to indicators that Americans are still spending on consumer goods.
Analysts argued that any supply chain disruptions should be temporary; global trade flows always right themselves eventually based on the new market landscape, as they did after the pandemic. But that doesn’t mean there won’t be short-term pain for U.S. exporters in the interim, they warned, and emphasized that once the dust settles on U.S. tariff policy, global trade could look very different.
“I think the mega-ship era of building these massive, massive, large container ships is largely over with,” Fuller said.
If the U.S. and China continue on the path of trade decoupling, he argued, larger vessels built with the objective of moving as much product as possible on single trade routes between the two countries become less attractive.
“I'm not moving 20,000 containers at a time from China or Shanghai to Southern California or to Rotterdam. I am moving 5,000 containers from India to Rotterdam,” Fuller said. “This fractured environment means that the larger ships are less favorable.”
App acknowledged that where global trade flows will settle is still an open question.
“We don't really have great control in in how this will turn out,” App said. “It's not simply logistics based, it's reforming U.S. trade policy… it requires patience to see how the administration is going to handle their negotiations.”
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