Despite the 90-day suspension of tariffs on China by the United States, Chinese factories still face significant uncertainty. American retailers are worried that tariffs may be raised again after the 90-day pause, leading to a decrease in overall order volume.
On Tuesday, May 27th, the National Public Radio (NPR) in the United States reported that a freight forwarder in southern China was interviewed hours after the suspension of tariffs was announced on May 12th.
When asked about business, he quickly replied with two words: “very busy.”
Just last month, Chinese goods entering the United States faced astonishing tariffs of up to 245%. With the announcement of the 90-day suspension of most tariffs by the US and China, there was a surge in demand for Chinese exports to the US.
This resulted in severe congestion in the logistics line from China to the US, causing increased freight rates as customers frantically diverted capacity back to China.
Tian Xin, a freight forwarder from Shenzhen, stated that everyone is now rushing to ship out as many goods to the US as possible in these months.
She is responsible for arranging logistics for large cargo and coordinating export customs clearance procedures. She mentioned that the current biggest issue is the insufficient transportation capacity.
“We may soon encounter ‘container rollovers,’ where even if you have paid for the container space on a ship, your container may not be loaded and will have to be rolled onto the next ship,” Tian Xin said. The transportation cost for each container to the US West Coast has already increased by $1500.
Joyce Tian, a sales manager for a fan and heater manufacturer in Dongguan, Guangdong, mentioned that typically US importers place orders in recent weeks to prepare for fall sales, but this year overall sales have been low so far. Export to the US accounts for about half of their company’s business.
Ivy Lee, a sales manager for a manufacturer supplying home goods to retailers like Walmart, revealed, “Some American retailers have not yet decided whether to procure from us. They have not replied to our emails. Perhaps they are still observing.”
Lee believes that demand will eventually rebound and added, “I try not to worry too much about sales. Policy changes are beyond our control.”
Amid expectations of high tariffs, China has seen a significant increase in exports to Southeast Asia and Europe in recent times to compensate for losses in US business. Many ships on routes between the US West Coast and China have been redirected to other regions, causing Chinese exporters to now wait for the ships to return to domestic ports, leading to severe delays.
Eric Martin-Neuville, the Executive Vice President of GEODIS, a French logistics company based in Singapore, mentioned that exporters have to wait for the ships to return to China and currently there is a shortage of empty containers, all exacerbating the delays.