Shipping costs double as US rushes to buy Chinese goods ahead of tax deadline

 

Shipping costs double as US rushes to buy Chinese goods ahead of tax deadline

Before the tax breaks ended in August, American businesses rushed to import goods from China to avoid tariffs. However, the sudden surge in demand is causing container shipping rates to double.

American companies are rushing  to import   goods from China before a 90-day tariff break ends, but will face a shock of higher shipping costs that could lead to higher prices at stores, the  New York Post  reported  .

Several major shipping lines, including Hapag-Lloyd, have announced plans to raise rates for shipping 40-foot containers from China to U.S. West Coast ports from $3,500 to $6,500 starting June 1, according to multiple affected companies.
Shipping costs to East Coast ports will also increase from $4,500 to $7,500.

“This price increase will reduce profit margins and lead to higher prices for consumers,” said Jay Foreman, CEO of Basic Fun, a toy company in Florida that makes Tonka Trucks.

Shipping typically accounts for only about 3 percent of a manufacturer’s product cost, Foreman said. But the price hike will nearly double Basic Fun’s shipping costs, he said.

Walmart has previously warned that import tariffs would raise consumer  prices   , despite calls from former President Donald Trump that the retailer should “take the tax rather than pass it on to consumers.”

Another shipping price hike — possibly as high as $8,500 per container — is expected to take place on June 15, according to a report in  the Journal of Commerce .

Shipping companies are accused of “extortion” to make up for lost revenue as US companies cut back on imports to avoid the 145% tariffs imposed by President Trump on imports from China last month.

However, on May 12, the White House and Beijing reached a trade truce, temporarily lowering the tariff rate to 30% until August 10.

“Shipping lines are taking advantage of the backlog of cargo sitting at ports and factories in China,” Lou Lentine, CEO of sports equipment company Echelon, told  The Post .

Lentine said shipping companies have quoted up to $6,000 per container to ship treadmills and other equipment made in China and Vietnam — double the usual cost.

“That number is huge,” he said, admitting: “We have to ship the goods, there is no other way.”

Although most importers have contracts with fixed rates, carriers may still apply additional surcharges during peak seasons or adjust to market rates when demand spikes.

“Some of the ports in China are so congested that they’re having to push their cargo out of the country,” said Bobby Shoule, a customs broker at JW Hampton Jr. & Co., a logistics firm in Queens, New York, that has been in business for more than 160 years.

He also noted that large businesses like Home Depot can negotiate to reduce price increases, but small businesses do not have as much leverage.

“We have no choice but to pay that price,” Mr. Foreman lamented.
“There are no regulations or limits on how much carriers are allowed to charge.”

While container prices are still well below their peak during the pandemic — when they soared to more than $20,000 per container in 2021 — port congestion expected in the coming weeks could put supply chains under pandemic-like strain, Shoule warned.

“As the mass of cargo ships stuck in Chinese ports begin to leave and cross the Pacific, the ripple effect will begin to emerge,” Mr. Foreman added.

“This includes congestion at US West Coast ports, misplaced containers, and delays in returning ships to China to resume shipping for the second half of the year.”

According to VietnamBiz.