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Can US ports handle a freight spike or will they be overwhelmed?
Can US ports handle a freight spike or will they be overwhelmed?

Business Times

timea day ago

  • Business
  • Business Times

Can US ports handle a freight spike or will they be overwhelmed?

ARE Los Angeles and Long Beach heading for another port congestion crisis? Since the United States put tariffs on hold for a 90-day trade war truce with China on May 14, the market has expected a shipping surge driven by Chinese exports. Ocean carriers have re-instated suspended services, restarted vessels lying idle, and introduced new routes – revitalising transpacific lanes. But how much capacity has actually returned to the US-bound trade? Estimates vary. According to maritime consultancy eeSea, total capacity from Asia to North America will reach 2.4 million twenty-foot equivalent units (TEUs) in June – 400,000 TEUs more than May. That figure is projected to climb further in July to 2.8 million TEUs. The majority of this added capacity targets the US West Coast, particularly the ports of Los Angeles and Long Beach. Data provider Sea-Intelligence reports similar trends. Its latest weekly update shows a 17 per cent year-on-year rise in Asia-US West Coast capacity in June, with a projected 19 per cent jump in July. Meanwhile, East Coast capacity is growing more modestly – up only 7 per cent in June but expected to match the West Coast's 19 per cent rise in July. These figures are based on carriers' existing schedules, which remain subject to change. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The big question is whether Los Angeles and Long Beach can handle this influx. Will the port congestion seen in the pandemic era re-appear? Preliminary forecasts indicate that container volumes at both ports will begin rising in the second week of June, topping 100,000 TEUs a week. Volumes will continue climbing in the third week. While fourth-week data is not yet available, estimates suggest traffic will remain elevated. Many extra sailings are scheduled to arrive in late June and early July, suggesting persistently high throughput at least into mid-July. Historically, both ports handled their highest Asian import volumes in 2021 during the Covid-19 pandemic – about 10 million TEUs for the year. The Port of Los Angeles alone processed a record 520,000 TEUs in May 2021, while the Port of Long Beach reached its single-month peak of 400,000 TEUs the same month. Will the same influx appear again this time? Industry opinion is divided. Senior executives at leading carriers and terminals suggest the tariff deferral may not trigger a pandemic-style shipping boom. While June volumes are likely to exceed May's, early expectations may have overshot. Much of the inventory that had been sitting in warehouses shipped out quickly after the May 14 tariff suspension. And even if buyers place new orders, lead times mean many shipments will not depart until late June or July. Moreover, despite the suspension of a 125 per cent reciprocal tariff, the 30 per cent levy added this year – on top of 2018's Section 301 duties – means US-China trade has not returned to normal. The truce may offer temporary relief, but it is unlikely to generate a prolonged surge. Freight rates on transpacific routes have spiked in recent weeks. But does that signal true demand strength? A key indicator is the balance between cargo booked under negotiated contract (NAC) rates versus freight-all-kinds spot rates. At present, many freight forwarders are still able to secure lower-priced NAC slots — suggesting excess capacity remains. While sentiment may push prices upward temporarily, ultimate rate direction hinges on ship utilisation. If vessels sail full, rates will hold firm. If not, the rally will fade. So, will there be port congestion? A sudden and sustained spike in volume could strain operations. However, if elevated cargo volumes last only two to three weeks, the ports can manage. If imports climb more than 20 per cent above normal and stay high through July, congestion risks increase sharply. The bottom line is that Los Angeles and Long Beach are entering a high-alert phase. If disruption comes, it will probably begin to show in late July. CAIXIN GLOBAL Zhang Huafeng is the chief operating officer of Duke Shipping Agency

LA, Long Beach Ports Brace for Potential Record-Breaking Summer Surge
LA, Long Beach Ports Brace for Potential Record-Breaking Summer Surge

Yahoo

time4 days ago

  • Business
  • Yahoo

LA, Long Beach Ports Brace for Potential Record-Breaking Summer Surge

The Los Angeles and Long Beach ports could be in for a busy summer as shippers again rush to get goods into the U.S. before two tariff deadlines in July and August. According to a report from maritime trade advisory service Sea-Intelligence, container shipping lines are planning to offer approximately 18 percent more year-over-year capacity on the Asia-to-North American West Coast trade lane in June and July. More from Sourcing Journal Old Dominion Blames 'Economic Softness' for Revenue, Volume Slips Trump Doubles Duties on Metals, Judge Dismisses California's Tariff Lawsuit Global Economic Growth Will Be Blunted By US Tariffs, OECD Says If the San Pedro Bay ports were to handle that much inbound cargo during the period, records could be set, the firm says. 'The Port of Los Angeles will be faced with volumes in June which are almost at the level seen at the maximum in 2024, but in July 2025 they will face volumes significantly exceeding the pandemic-induced spike in 2021,' said Alan Murphy, CEO of Sea-Intelligence, in a weekly update. 'The Port of Long Beach would see new volume handling records for both June and July.' The potential records are a reversal from both ports' expectations for May, when U.S.-bound traffic collapsed amid President Donald Trump's tariffs, which most heavily impacted goods coming from China. While neither California port has posted official numbers for the month, Port of Los Angeles executive director Gene Seroka confirmed that it saw a more than 30 percent decline in inbound cargo volume in the first week of May. Seroka said the remainder of the month was 'likely to be substantial,' while his counterpart at the Long Beach port, Mario Cordero, projected a 'more than 10 percent' import drop-off for the month. But with last month's truce seeing both the U.S. and China scale back their tariffs for 90 days, American importers have since raced to gobble up space on vessels on the Pacific Ocean ahead of the Aug. 14 deadline. For the Port of Los Angeles, the July import total could potentially result in 585,178 20-foot equivalent units (TEUs), which would mark a 9.2 percent increase over the record monthly total of 535,714 TEUs set in May 2021. The Port of Long Beach would set an all-time import record in June, only to surpass it again in July, according to the Sea-Intelligence projections. The respective 493,481 and 516,578 TEUs in each month would outshine last October's 487,563 containers imported at a pace of 1.2 percent and 6 percent. Across the two months, 397,000 TEUs are expected to be added on the Asia-to-West Coast lane as a whole. In five of the next 11 weeks, Sea-Intelligence expects capacity growth exceeding 30 percent year over year. In June, the lines are increasing capacity 12.8 percent compared to before the May 9 tariff pause. That number will jump to 16.5 percent in July. 'It is of course an open question whether the tariff-induced volume surge will match this capacity injection,' Murphy said. 'However, if it does, it can create a significant issue in the ports of Los Angeles/Long Beach.' Both Seroka and Cordero have insisted that the congestion isn't likely to overwhelm the port systems. The L.A. port director noted in a May press briefing that learnings from the Covid peak helped the port prepare to move 25 percent more empty containers back to Asia in April than the year prior. As trans-Pacific demand is increasing, ocean freight rates on the route continue to skyrocket. Data from Drewry's World Container Index (WCI) shows spot rates on the Los Angeles-to-Shanghai path escalated 57 percent from the week prior to $5,876 per 40-foot container. Over the past four weeks, spot rates have jumped 117 percent on the trade lane. On the trans-Pacific route to New York, rates have risen 39 percent in the past week and 96 percent in the past four weeks to $7,164 per 40-foot container. Freight rate benchmarking platform Xeneta's data reflected a similar reality, with weekly rates up 63 percent on the Far East-to-U.S. West Coast route to an average of $5,082 per container. As of Thursday morning, Far East-to-U.S. East Coast containers shot up 48 percent to $6,160. The rate acceleration doesn't appear to be sustainable, particularly if supply chain imbalances occur closer to the tariff deadlines and demand for cargo falls off again. Drewry's Container Forecaster expects the supply-demand balance to weaken again in the second half, which would cause spot rates to decline again in the second half of this year. Xeneta has similar expectations. 'Right now, it seems carriers are telling shippers to jump, and some are replying 'how high?'' said Peter Sand, chief analyst at Xeneta. 'This will not last because capacity is heading back to the trans-Pacific and the desperation of shippers to get supply chains moving again will ease once boxes are on the water and inventories begin to build up. Spot rates are expected to peak in June before downward pressure returns.'

Despite few tariff impacts to date, SC Ports users fear what might be ahead
Despite few tariff impacts to date, SC Ports users fear what might be ahead

Yahoo

time09-05-2025

  • Business
  • Yahoo

Despite few tariff impacts to date, SC Ports users fear what might be ahead

The OOCL Iris container ship based in China is the largest vessel to visit the Port of Charleston, able to carry up to 16,828 cargo containers measured in 20 foot increments. (Photo by Matthew Peacock/Provided by S.C. State Ports Authority) CHARLESTON — President Donald Trump's erratic tariff policies are roiling global trade, forcing South Carolina businesses and nearly every sector of the state's logistics network to question where they go from here. 'It was like stopping a Ferris Wheel, and you're sitting at the top,' maritime industry analyst Jim Newsome, former president of the S.C. State Ports Authority, said of the frozen future many industries are facing since Trump's 'Liberation Day' tariff announcements on April 2. 'Everybody is bracing for the impact,' he said. Unlike their West Coast counterparts, the Port of Charleston has yet to see any major impacts from the Chinese shipping slowdown resulting from Trump's 145% tariffs on that country's imports. That's because transits to West Coast ports are shorter, and those ports typically have a much greater exposure to Chinese goods. Year-over-year cargo levels measured by the equivalent of 20-foot-long containers — or TEUs in maritime jargon — moving through Charleston's terminals have held steady or even increased this spring as retailers and others frontloaded shipments ahead of the tariffs. That's about to change, analysts say, because cargo that takes weeks to arrive along the East Coast will now be hit with the tariffs. By June, ports in Charleston, Savannah and along the East Coast could see noticeable drops in cargo if tariff policies don't change. On average, about half of the freight bound for Charleston's port either originates in or has major stops in China, which reported Friday that April shipments to the U.S. dropped by 21%. Ocean liners in recent weeks have canceled about 17% of the container ships scheduled to travel to East Coast ports because of cargo shortages, according to Copenhagen-based maritime research group Sea-Intelligence. Flexport, a San Francisco-based leader in supply chain management, says at least one weekly container service calling on Charleston has suspended trips altogether through mid-June. Barbara Melvin, president and CEO of the State Ports Authority that owns and operates the Port of Charleston, declined to comment on tariff impacts. But John McCown, a non-resident senior fellow at Arlington, Va.-based Center for Maritime Strategy, has a bleak outlook. 'I'm thinking a 25% overall (drop in cargo) could be conservative if things stay the way they are,' said McCown, author of the John McCown Container Report. 'I suspect the actual numbers will show reduced economic activity across the entire container shipping supply chain that will touch every port,' McCown said. 'In addition, the tariffs will also result in noticeable inflation.' Some cracks are already starting to show. A few trucking fleets at Charleston's port, particularly those that handle Chinese imports, are seeing as much as 30% to 40% slowdowns, according to Rick Todd, president and CEO of the South Carolina Trucking Association. 'General trucking remains in a 'worst ever' freight and rate trough,' he said. 'Combine that with relentless cost increases and we are finding smaller and more marginal fleets dropping like flies.' About three-fourths of cargo at Charleston's port moves by truck. 'The tariff/trade slowdown, with uncertainty, will exacerbate capacity leaving the market,' he said. Todd's counterpart in Georgia said that state is also 'starting to see some ripples' in trucking volumes. 'But I think probably in another two to three weeks those ripples are going to start to turn into waves,' Seth Millican, president and CEO of the Georgia Motor Trucking Association, told the Atlanta Journal-Constitution. The Georgia Ports Authority has also seen little impact to date from tariffs, posting record volumes in March. Griff Lynch, the authority's president and CEO, said the port is talking with customers about how to mitigate tariff costs and using Savannah's Garden City Terminal West to store containers and manage supply chain fluctuations. Railroads that serve Charleston's port say it's hard to measure future tariff impacts. 'Tariffs could be a headwind to volumes for the rest of the year,' Ed Elkins, executive vice president and chief commercial officer for Norfolk-Southern, told analysts. The biggest risk is an overall economic slowdown due to tariffs, he added. CSX Corp. CEO Joe Hinrichs said near-term demand is 'pretty strong' but 'the keyword you're hearing from everybody is uncertainty.' About half of all imports to the U.S. are parts needed by manufacturers, including the Palmetto State's $27 billion vehicle industry. Most of that cargo is moved by truck. Volvo Cars this week announced layoffs totaling 5% – roughly 100 people – at its Berkeley County manufacturing campus, citing 'challenging macro conditions' including tariff threats. 'The adjustment is due to changing market conditions and evolving trade policies, including tariffs,' a Volvo spokesperson said. 'Our aim is to build where we sell, and we will continue to balance our ongoing investments in the U.S. with the need to optimize costs and drive greater efficiency in the current environment.' Volvo also plans to add new models to its Lowcountry plant, which currently builds the battery-powered EX90 sport-utility vehicle, to offset tariffs on foreign-made cars. BMW – the state's largest automaker and the nation's top vehicle exporter, primarily through Charleston's port – said this week it has been making a case for tariff relief with White House officials but acknowledged the current status would have a 'notable' impact on its second-quarter earnings. Front-line workers at the port will also take a hit if tariffs lead to less cargo. The International Longshoremen's Association supplies thousands of dockworkers in Charleston, and those workers typically are paid only when there are ships to load and unload. The ILA, which supported Trump's election, has not issued any formal statement on tariffs. And Ken Riley, president of the union's Charleston branch, did not respond to a request for comment. Tariffs that are announced one day and paused or canceled days later are adding confusion to South Carolina's trade outlook. 'Nobody has an accurate crystal ball on the effect of these unprecedented catalysts,' McCown told Freightwaves. Some of the biggest import commodities at Charleston's port are Chinese tariff targets, including toys, apparel, footwear, televisions and other electronics. Combined with a 10% universal tariff on goods from most other countries, U.S. imports are projected to plummet. Analysts disagree on how big the drop will be. The National Retail Federation puts the number at 20%. JP Morgan pegs it at up to 80%. Walmart, which operates a 3 million-square-foot import distribution center in Ridgeville that supplies goods to 850 stores, said it is negotiating prices directly with overseas suppliers to blunt tariff impact. Smaller businesses don't have that luxury. 'It's clear this is going to be a severe problem for small businesses because they don't have the capacity to make bulk purchases or change their supply chains,' said Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce. 'You're going to see businesses shutting down.' Scott Bessent, the U.S. Treasury Secretary and a South Carolina native, is in Switzerland this weekend meeting with Chinese officials to talk trade. Bessent has said he doesn't expect a major breakthrough, telling Fox News: 'My sense is that this will be about de-escalation.' Trump preempted Bessent's talks Friday by posting on his Truth Social account that 80% tariffs on Chinese goods 'sounds right' – the first indication that his stance is softening. But lowering tariffs from 145% to 80% tariffs is still unsustainable and unlikely to move the needle on trade. Newsome, the former port director-turned-president of Jim Newsome 3 consultants, said Trump's tariffs are based on the flawed premise that they will bring manufacturing back to the United States. 'Forget about it,' he said. 'You might be able to bring back some high-value manufacturing with a high potential for automation. But it's never going to be the case that you're going to bring a toy made in China back to the United States.' There's also no way to balance trade with China, he said, because that country 'doesn't have the consumption power we do.' The per-capita U.S. income of $43,289 is more than 7.5 times greater than China's. 'How do you balance that?' he said. 'I think that kind of narrative got us off on the wrong foot.' Newsome said he's hopeful that reality is finally getting through to the president, and he thinks there will be too much pressure from retailers and other businesses for Trump's China policy to persist. Retailers need holiday-shopping goods in their warehouses this summer, and they aren't likely to sit by quietly if tariffs interrupt those shipments. 'The best outcome, the hopeful outcome, would be they have a good discussion (in Switzerland) and agree that things got out of hand a bit,' Newsome said. 'Let's push the tariffs off for 90 days to give some time to negotiate. That gets us past the Christmas shipping season.' McCown agrees there will be intense political pressure to end the Chinese tariff war, but he's skeptical that cooler heads will prevail. 'At all times and even before this nonsensical tariff policy went into effect, strong reasoned advice not to go down this path has been largely ignored,' he said.

Port Boss' Advice for Anxious Consumers as Tariff-Related Shortages Loom
Port Boss' Advice for Anxious Consumers as Tariff-Related Shortages Loom

Newsweek

time07-05-2025

  • Business
  • Newsweek

Port Boss' Advice for Anxious Consumers as Tariff-Related Shortages Loom

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The Port of Long Beach moves nearly 15 percent of all cargo arriving in shipping containers and destined for the U.S. It is one half of the West Coast's twin-engine gateway—alongside the Port of Los Angeles—that has powered America's supply chain for decades, a symphony of advanced logistics, industrial might and human labor that's responsible for the buffet of material abundance American consumers have come to take for granted. But in recent weeks, that engine has begun to stall. Mario Cordero, executive director of the Port of Long Beach, told Newsweek a wave of canceled orders and growing uncertainty over the on-again, off-again tariffs is already constricting a key trade artery—and if nothing changes before July 2, when a 90-day suspension on steep new tariffs targeting Chinese imports expires, consumers could soon feel the impact on store shelves and in their wallets. "If you're planning to buy something that could face a high tariff—like electronics—buy it before July 2nd," Cordero told Newsweek. "We're in a moment of radical uncertainty." A Ticking Clock The cause, according to Cordero, is rooted in a sharp shift in U.S. trade policy. A sweeping slate of tariffs announced by the Trump administration has sent shockwaves through the shipping industry, particularly for goods from China. While some products are temporarily exempt, others—like industrial parts, plastics, toys and basic household items—now face levies as high as 145 percent. China responded with a 125 percent tax on U.S. exports. Cordero's concern is far from abstract. A recent report from Sea-Intelligence, a maritime data analytics firm, found that the trade war has led many shippers to pause—or outright cancel—shipments, with the Port of Long Beach already feeling the impact. Shipping containers are stacked at the Port of Los Angeles, California, on May 6, 2025. Shipping containers are stacked at the Port of Los Angeles, California, on May 6, 2025. Photo by Frederic J. BROWN / AFP "We've had 34 canceled sailings through the end of June," he said. "That clearly indicates fewer vessels will be arriving—and that, of course, means lower volume." Canceled sailings—called "blank sailings" in industry terms—are one of the earliest signs that global trade is in the process of a major retrenchment. Each "blank" translates to tens of thousands of containers that will not reach American shores. At the nearby Port of Los Angeles, another 36 sailings have been dropped, bringing the San Pedro Bay complex's total to 70 missed shipments. In a typical week, the Port of Long Beach plans for about 17 vessel arrivals. This week, Cordero said, only three or four were expected. Importers Frontload Data from the Census Bureau showed a spike in imported goods, from $268 billion in October to $343 billion by March, before collapsing in April. Many Chinese firms, attempting to frontload ahead of the tariffs, accelerated exports to the U.S. in the first quarter, surging over 10 percent year-on-year despite mounting geopolitical tensions. "Importers were trying to avoid future tariffs," Cordero said of the early-year surge. "But now, that volume is declining." The uncertainty, which Treasury Secretary Scott Bessent labeled on Monday as "part of the negotiation" the administration is conducting with various trade partners, has left importers wary during what should be the busiest time of year. July marks the beginning of peak shipping season, when back-to-school and holiday merchandise makes its way into the U.S. ahead of fall. But shipments arriving in July need to be booked now, in May. And for many retailers, those decisions are on hold. Mario Cordero, CEO of the Port of Long Beach, speaks on March 5, 2025 in Long Beach, California, one day after US President Donald Trump initiated sweeping tariffs on Canada, Mexico and China. Mario Cordero, CEO of the Port of Long Beach, speaks on March 5, 2025 in Long Beach, California, one day after US President Donald Trump initiated sweeping tariffs on Canada, Mexico and China. Getty Images "If you're an importer in the U.S. planning to bring in cargo from Asia—especially China—you're likely hesitating," Cordero said. "Many are leaving products in warehouses in Asia." Or as Owen Carr, chief merchandising officer for e-commerce firm Spreetail, put it: "You don't want to be the idiot that imported at 145 percent, because you'll never get that money back." While much of the public focus has been on tariffs targeting Chinese imports, Cordero, a former chairman of the Federal Maritime Commission, said the disruption extends well beyond a single nation. "This issue isn't limited to China—51 countries could face high tariffs," he said. That includes Vietnam, which had previously benefited from companies like Nike and Adidas moving their assembly lines out of China. "Now, even Vietnam could face a 46 percent tariff." On the Waterfront At stake, Cordero said, are the jobs and livelihoods that depend on the volume of goods flowing through Southern California's waterfront. "If nothing changes, the supply chain will face job losses," he told Newsweek, listing truck drivers, warehouse staff and dockworkers as those first in line for disruption. Gary Herrera, president of International Longshore and Warehouse Union (ILWU) Local 13, said union members are anxious. "Some of the workforce will not be getting their full 40 hours a week based on the loss of cargo. Job loss is definitely a concern," Herrera told the Los Angeles Times. "This is the ripple effect of not having work at the waterfront." An aerial image shows cargo shipping containers and cranes as semi-trucks carry cargo containers at the Port of Long Beach in Long Beach, California on April 10, 2025. An aerial image shows cargo shipping containers and cranes as semi-trucks carry cargo containers at the Port of Long Beach in Long Beach, California on April 10, 2025. Patrick T. Fallon/Getty Images President Trump has defended the tariffs as leverage to renegotiate trade terms and boost domestic manufacturing. "At some point, I'm going to lower [tariffs on China] because otherwise, you could never do business with them," Trump said, appearing to acknowledge that the current 145 percent rate was not sustainable. But as port officials warn that more than 30 scheduled ship arrivals will be skipped at the ports of Los Angeles and Long Beach in May—taking an estimated 400,000 containers out of circulation and straining an economy that depends on just-in-time logistics—Cordero is nonetheless staying optimistic, believing at least some tariff negotiations will be resolved before the full impact is felt in the consumer economy. "Despite the threats, I hope this policy is being used as a negotiation tool rather than an endpoint," he said.

Why the Panama Canal is a big, long-term prize in Trump's global trade war
Why the Panama Canal is a big, long-term prize in Trump's global trade war

NBC News

time04-05-2025

  • Business
  • NBC News

Why the Panama Canal is a big, long-term prize in Trump's global trade war

The Panama Canal has spent the past few years battling extreme weather, with the El Niño phenomenon and severe drought leading to a water-level crisis. Now, it's President Trump's trade war that is threatening the global trade gateway. A critical passage for U.S. East Coast bound ocean freight container traffic, the Panama Canal is facing a potential business slump as a result of Trump's China tariffs and a rapid decline in manufactured goods being ordered by U.S. shippers. Forty percent of all U.S. container traffic travels through the Panama Canal every year, and in all, $270 billion in cargo annually. The U.S. and China are the top users of the Panama Canal, and its role in global shipping has increased in recent years due to the disruption of global supply chains. The Panama Canal Authority's revenue hit $3.38 billion last year, despite drought conditions, and revenue has increased every year since 2017. The trade war uncertainty and Trump's 145% tariff on Chinese goods — which will start to hit goods arriving from China to U.S. ports on May 27 based on the four to six weeks it takes for ocean freight to reach the U.S. from Asia — has already resulted in a massive pause on U.S. imports bound from China. According to data from supply chain intelligence firm Project44, there has been a 300% increase in blank sailings (cancelled freight vessels) from China to the United States since Trump's so-called 'Liberation Day' tariffs announcement on April 2. West Coast ports in the U.S. are already being hit and the impact on East Coast ports is expected to increase, with the pullback in vessels a result of the decrease in manufacturing orders for Chinese factories: less products manufactured translates into less shipping containers for ocean carriers. For the Asia to North America East Coast trade route, Sea-Intelligence has recorded a cumulative blanked capacity of 261,822 twenty-foot equivalent units (TEUs.) over the last six weeks. This decrease in containers and vessels can impact Panama Canal revenue. The Panama Canal makes its money off of the number of vessel transits and containers moving through the waterway. ″ Since close to 75% of our cargo goes to or from the United States, any recession worldwide or in the United States will impact somehow the Panama Canal,' said Boris Moreno, vice president of operations for the Panama Canal Authority. 'That's for sure. ″ One of the 'Seven Wonders of the Modern World,' according to the American Society of Civil Engineers, the canal has been a lightning rod for controversy in recent years in the battle for global supremacy between the U.S. and China. Trump has claimed the canal's key ports are being controlled by China, and has threatened to reassert U.S. control over the canal, accusing Panama of charging excessive rates. China, along with government of Panama, have denied those claims. Secretary of State Marco Rubio and Secretary of Defense Pete Hegseth both visited with Panamanian government officials in recent months. ″ I think that Panama over the last five years has inched closer and closer to China and away from the United States,' Federal Maritime Commissioner Louis Sola said in an interview with CNBC earlier this year. 'I've seen China and Brazil take away $20 billion with direct contracts. We definitely need to at least have a game there.' Ricaurte Vasquez, administrator for the Panama Canal Authority, tells CNBC that with the U.S. being the world's largest economy, it is reviewing Trump's concerns. 'Whatever is said in Washington has repercussions all over,' said Vasquez. 'We try to stay cool, calm and collected.' He added, 'It is not true that we are run by Chinese. It is not true that we differentiate rates. It is not true that 38,000 people die in the construction of the Panama Canal. Everyone that wants to sail sails through the Panama Canal. And we are open to the world. That is the neutrality treaty. We have to remain open.'

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