Container Lines Warn Port Congestion Inevitable when Asian Imports Rebound

Container line executives are warning that a rebound in Asian imports could overwhelm major U.S. ports. Import volumes from China are down by as much as 50% due to tariffs, but retailers like Walmart and Target have started shipping again, signaling a potential rebound.

The timing and scale of the rebound remains uncertain. Import volumes from Asia are expected to recover at some point if tariffs are eased, or cargo owners decide to absorb higher costs to rebuild inventory. When this happens, ports may not be ready. “The system is not fundamentally better than it was five years ago,” said Charles van der Steene, president of Maersk North America. “The sheer surge will test the system and disruption cannot be avoided.”

The biggest choke points may lie outside the ports. Importers and consignees could face warehousing and chassis shortages. A rush of international intermodal would strain rail car supply, executives warned. “If terminals run at 70% to 90% capacity for weeks, the system will crumble,” said Fabio Santucci, MSC’s U.S. president of operations, adding that containers sitting more than 10 days could trigger widespread backlogs.

Abandoned cargo is another risk. Hapag-Lloyd’s North America president, Stuart Sandlin, said some exporters are walking away from Chinese contracts following retaliatory tariffs imposed by China on low-value U.S. commodities. If importers follow suit for high-value cargo, it could potentially lead to bankruptcies.

Santucci said uncertainty is driving shippers to rethink routes out of China, even as containers are mid-transit. “Sixty to seventy percent of customers are reevaluating shipment out of China. They’re either pausing [or] they’ve asked for shipments to be brought back to China.” He added that requests to hold cargo at transshipment ports before being loaded onto U.S.-bound vessels have spiked.

Source: Journal of Commerce

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