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How Tariffs on Chinese Imports Affect Trade at the Port of L.A.

Categories: Port Drayage.

The trade war between China and the U.S. has had an outsized impact on the nation’s largest west coast cargo destination. The U.S. continues to place tariffs on incoming goods from China, and China is planning tariffs on a staggering $75 billion in U.S. products.

These tariffs mean the cost of importing many of the goods coming to the U.S. from China will greatly increase, putting a strain on both retailers and consumers who will have to foot larger bills for everyday items. To work around this looming reality, many U.S. companies are currently increasing imports ahead of the holiday season in anticipation of the coming tariffs.

Unfortunately, this move puts the Port of Los Angeles in the line of fire as most U.S. retailers move their goods through the Port each year. In light of the trade war, the volume of imported goods the Port typically processes has been increasing significantly, reaching a fever pitch in August of this year.

Retail imports growing as more tariffs loom

Compared to last year, China’s exports to the U.S. fell by 16% in August to $44.4 billion. Though both countries are currently in talks about how to move forward, the trade war continues to escalate, with September 1 marking the latest change: the U.S. placed 15% tariffs on about $112 billion of Chinese imports, with further increases planned for October and December.

As mentioned, many U.S. companies have been increasing their imports ahead of the holiday season to avoid the increasing fees. With imports flooding in, the Port of L.A. has seen an unprecedented increase in cargo received. In fact, August was the 5th consecutive month that the Port of L.A. set a new single-month cargo record, making this past August the busiest one in the Port’s 112 years of operation.

Looking toward the near future, Eugene Seroka, the executive director of the Port of L.A., offered his thoughts about the possible effects the trade war may have on operations: Business may slow with China soon —  an alarming thought when considering China was the Port’s largest foreign trading partner last year with $153 billion in cargo value.

With costs increasing and no end to the trade war in sight, anxiety is running high about further effects these tariffs may have on trade. Holiday season fulfillment has proven itself to be the ultimate challenge for the logistics industry — a window during which expectations are high and failure can have lasting effects. Luckily, there are ways to alleviate some of the pressure created by this increased pressure as we approach the end of the year.

How shipping fulfilment services can further prepare for the holiday season

As pre-holiday season imports continue to increase, it’s important to find a way to offset some of the mounting tension. As we wrote about a few years ago, shipping fulfilment services can get ready for a smoother holiday season in a few useful ways. These include:

  • Strengthening your current systems: Automated systems make operations faster, but they also require a lot of maintenance. Strengthen your systems and lower maintenance needs by updating fulfillment software. You can do this by adding different integrations to your existing system to fill in gaps and enhance overall use.
  • Taking stock of your resources: Taking a good look at what you have and what you’ll need in the near future is a great way of saving yourself from making any unnecessary moves. This means thinking about everything from hiring and training seasonal staff to ensuring you have the right equipment ready for the coming months.
  • Working with carriers for more delivery options: Having shipments fulfilled quickly and efficiently is a must during the holiday season. With this in mind, working with carriers for more delivery options can make a big difference ahead of the holiday rush. These can include partnering with new distribution hubs, more collaboration with Less-Than-Truckload (LTL) services, and interfacing with different carriers on rates for services.

With the trade war between the U.S. and China escalating, tariffs are growing and the Port of L.A. is swamped with rush cargo. Fortunately, there are ways to manage the costs associated with imported goods even after new tariffs go into effect. With a seasoned 3PL partner by your side, you can reduce supply chain management costs and improve overall service.

Let the experts at Globecon help you navigate the complexities of the port system.