A global supply chain shrinks dramatically

Winnipeg Free Press

03-05-2025

Opinion
You could call it reading the TEU leaves.
OK, that's a poor attempt at a joke.
TEU is the abbreviation for a 'Twenty-foot Equivalent Unit' — in other words, a standard-sized shipping container.
Yuri Gripas / Abaca Press
U.S. President Donald Trump
And the tale of the TEUs is a fascinating one. The question of how many TEUs are making their way through global supply chains has an interesting inflection point — in 2024 and into the first few months of 2025, you can find many stories about shipping volumes in TEUs being at record levels as sales boomed and wary importers stocked up on extra supplies, concerned about U.S. President Donald Trump's talk of impending tariffs.
Then came Trump's so-called 'Liberation Day,' in early April, when he announced tariffs basically worldwide, with an extraordinary 145 per cent levy on China.
Supply lines are long, with containerized products having to reach ports for shipment, and then, a 20- to 40-day ocean transit from China to North America. That means a tariff kick can take some time to land — and more time to sting.
But it has now come ashore; post Liberation Day, the stories are about how container traffic, especially into the United States from China, is virtually flatlining.
Just over a week ago, the Port of Los Angeles' executive director, Gene Seroka, had some harsh news for a meeting of the port's board of harbour commissioners. Los Angeles is a major point of entry for Chinese products.
As a result of U.S. tariffs, 'essentially all shipments out of China for major retailers and manufacturers have stopped,' Seroka said. That meant, for last week, shipments into the port had fallen by 31 per cent in a week, a 14 per cent decline year over year.
This week, shipments arriving at the port are expected to be even worse: total shipments are expected to be off by 35 per cent compared to the same week in 2024. When you look beyond Los Angeles, logistics firms say 50 per cent of shipments from China to North America have now been cancelled.
That hurts U.S. businesses in a lot of ways: trucking, rail and logistics companies have nothing to ship, ports have nothing to unload, retailers have less to sell and hard decisions have to be made about layoffs. Labour is still among a business' highest cost, and you can't keep people working if there's no money coming in.
Some estimates are that US$600 billion in Chinese imports turns into U.S. retail sales of US$2 trillion. With U.S. tariffs having hit around Easter Monday, retailers have to deal with the twin problems of taking the tariff hit and passing it on to their customers in increased prices, or turning cargos back, resulting in shortages on American shelves. (And then, most likely, price increases due to product shortages as well.)
Weekday Mornings
A quick glance at the news for the upcoming day.
Donald Trump has been saying that backroom negotiations have been going on with China to reach some kind of a tariff deal: China steadfastly denies that has been taking place. But what is clear is that, tariffs or not, a reckoning is coming, especially for small U.S. businesses whose pockets aren't deep enough to absorb massive tariffs.
Scarce and expensive products, or empty shelves?
Before too long, American consumers could be finding out a lot about both of those. Will Donald Trump accept responsibility for that? No. He'll blame Joe Biden or the Chinese or whoever else happens to pop into his head. (Complicating things, Trump said Thursday the U.S. would halt all trade with countries buying Iranian oil. China buys Iranian oil.)
By the end of May, shortages of stock and hikes in prices should be well underway in the U.S.
And we'll have a very, very cranky neighbour to the south of us.