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US ports in southeast benefit from sourcing shifts triggered by trade war

US shippers are using other low-cost nations to replace Chinese manufacturing as a result of the ongoing US-China trade war

US ports in southeast benefit from sourcing shifts triggered by trade war

US shippers are using other low-cost nations to replace Chinese manufacturing as a result of the ongoing US-China trade war

28 August 2019 - 19:00

US shippers are using other low-cost nations to replace Chinese manufacturing as a result of the ongoing US-China trade war. Greater volumes of goods from those countries are being transported to the US via smaller seaports, particularly southeast seaports, as shippers opt for lower costs.

An average tariff rate of 18.3 per cent is now being imposed on goods made in China, according to the Petersen Institute for International Economics, compared to an average of 3.1 per cent in 2017, reported American Shipper.



'We are seeing a realignment of steamship service strings from China to other exporters like Vietnam, Indonesia and Cambodia,' RoadOne chief executive officer Ken Kellaway told New York's FreightWaves in an interview. 'Some of the inbound containers are shifting a little because the ports might not have the right string to service those new sources.'



Savannah is one of the major beneficiaries of that service change. Savannah port overtook the port of Los Angeles as the main gateway for goods from Bangladesh in April, with the value of goods imported from that country reaching US$162 million in June, up 24 per cent year on year.



Savannah is also looking to attract more cargo from Thailand. Los Angeles saw the value of container imports coming from Thailand decline 21 per cent year on year in June to $517 million. Conversely, the value of container imports coming from Thailand through Savannah rose 43 per cent in June to $187 million.



Mason George, president of national accounts at drayage and intermodal carrier IMC Companies, said IMC's southeast market unit Atlantic Intermodal Services 'is still growing pretty well' amid the uncertain trade outlook hitting volumes at other ports.



Part of the reason for the growth comes from the sourcing changes taking place in the US shippers' preferred ports of entry, which are switching, as southeast ports add vessel services from more Asian origins.



Mr Kellaway at RoadOne also said the company is registering better growth in its southeast business compared to its west coast business. The lower cost of shipping through the southeast is not the only reason for this emerging trend.



'For a steamship line, you have options on these Southeast Asia ports through the Panama or Suez Canal, and the east coast ports are more reachable through the Suez Canal. The impact is the need to realign drivers and have the capacity when steamship services realign.'



The value of China's exports to the US fell 12.3 per cent in the first half of the year to $219 billion.


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