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Shipping demand set to explode as firms rush to exploit US-China tariff pause
Shipping demand set to explode as firms rush to exploit US-China tariff pause

South China Morning Post

time13-05-2025

  • Business
  • South China Morning Post

Shipping demand set to explode as firms rush to exploit US-China tariff pause

Transpacific shipping routes are set to witness a dramatic uptick in container traffic over the coming weeks, as businesses rush to front-load shipments to take advantage of a temporary reduction in US and Chinese tariffs, analysts said. The 90-day truce announced by China and the United States on Monday is expected to trigger an immediate surge in demand for container shipping, with some analysts warning the increase in shipments could be so large that it creates bottlenecks at American ports. The de-escalation of the trade war came earlier than many expected, container shipping intelligence firm Linerlytica said in a note on Monday, which is 'setting the stage for a surge in transpacific cargo volumes in the next three months'. The wave of demand will be even more intense due to the fact that many companies already have significant backlogs of goods ready to ship, with US importers adopting a 'wait-and-see' strategy in recent weeks as they watched for any potential move to roll back tariffs, said Lars Jensen, the founder of Vespucci Maritime, in an online post. Following trade talks in Switzerland over the weekend, the US has agreed to reduce its recently imposed tariffs on Chinese imports from 145 per cent to 30 per cent, with 91 percentage points of those tariffs scrapped and 24 percentage points suspended for a period of 90 days. China, in turn, has agreed to cut its retaliatory tariffs on US imports from 125 per cent to 10 per cent. The deal will come into effect on Wednesday.

Importers Turn to Bonded Warehouses and FTZs to Dodge Tariff Costs
Importers Turn to Bonded Warehouses and FTZs to Dodge Tariff Costs

Yahoo

time08-05-2025

  • Business
  • Yahoo

Importers Turn to Bonded Warehouses and FTZs to Dodge Tariff Costs

As U.S. brands and other importers navigate through today's tumultuous trade environment without spending a boatload on tariff costs, bonded warehouses and foreign trade zones (FTZs) have rapidly become en vogue. Both options represent a means for companies to defer duty payments to a later date, while maintaining their imported goods on U.S. soil and allowing them to preserve cash flow that they can use to better allocate when necessary. More from Sourcing Journal A customs-bonded warehouse enables companies to store inventory for up to five years, without having to pay tariffs until they are transferred elsewhere. This can enable the business to save money through the storage period. Shippers can also re-export the goods to another country duty-free. Upon withdrawing the inventory, businesses will pay the tariff corresponding with the goods at the time of withdrawal. If a tariff is lowered or a product exclusion is announced while goods are in bond, the importer can benefit from the lower rate when they do import them. FTZs are designated zones considered outside of U.S. Customs and Border Protection (CBP) domain, often located near American ports of entry. Unlike bonded warehouses, there's no time limit to how long inventory can be hosted. These zones can also enable a host brand to carry domestic duty-paid merchandise in the same activated building they hold foreign non-duty-paid goods, while the bonded facilities exclusively serve foreign-imported merchandise. FTZs lock in the duty rates at the time of admission for goods, so the importer will not benefit from a potentially lower tariff rate in the future. However, this could also serve as a hedge for companies in the event the 10-percent baseline tariffs on most imports escalate again after the end of the 90-day tariff pause in July. 'The main difference is the intensity and need for this as quickly as possible,' Scott Taylor, leader of the FTZ practice at law firm Sandler, Travis & Rosenberg, P.A. 'A lot of the companies that we work with are interested in a Foreign Trade Zone first, especially with a lot of 3PLs setting up activated space as quickly as they can to service all these companies that traditionally haven't really had to pay much attention to duties,' Taylor told Sourcing Journal. 3PL giant Geodis, which operates 10 different FTZs across 20 different customers, is starting to feel the pressure of high demand for the space.

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