LA Port Chief on Shipping Demand Under China Trade Deal

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Transcript

00:00Let's talk about what you are seeing now. What do you see now compared to what this looked like,

00:04say, 12 months ago, a month ago? Yeah. Last time we visited, I talked about a quick drop in cargo.

00:10We saw that last week down by more than 30 percent. The balance of the month seems to be

00:15holding, unfortunately, to be down maybe 25 percent compared to year on year stats.

00:22Cancelled sailings, 17 out of a scheduled 80 still off the books.

00:28So you've got a 20 to 40 day forward look just based on shipping times. What leaves China now

00:33arrives in 20 to 40 days. How has that changed in the last few days off the back of,

00:38let's just say, the easing tensions over the weekend?

00:41Just last night, talking to some of my friends in Hong Kong and Singapore,

00:44bookings or reservations have ticked up. But it's going to take the liner shipping companies a few

00:50weeks to reposition vessels in places like Qingdao and Shanghai, Xiamen, Yantian,

00:56pick up some of the products that have been manufactured and sitting, and then another

01:01two weeks to get to Los Angeles before we try to distribute throughout the country.

01:05So while we're starting to see some momentum, a lot of what's taking place here in the States

01:10is the finance game. Does it make sense at an average of averages, 30 percent tariff to start

01:19bringing in products? And what will the American consumers' willingness be to buy?

01:23So Ryan Peterson of Flexport came out and said there's going to be a shipping boom with all

01:28these ships coming to the fore that have been waiting to come to get some clarity on tariffs.

01:33It sounds like you disagree. Why do you think that it's not going to result in a shipping boom

01:37to make up for that month with the fact that it's going to be more expensive to make it,

01:41say, in the U.S., rather than just pay the 30 percent tariff from China?

01:45There's a lot there, Lisa, as we've talked about before. Number one, let's pick up some of the product

01:49that's already been manufactured, sitting on factory floors, warehouses, and in containers.

01:54Get that flow going again. The manufacturers in China have got to get their folks back to work.

02:00And there'll be a considerable look at Southeast Asia, albeit at 10 percent tariffs is where we can go.

02:06But this 90-day reprieve, as you know, is not a long runway. That's typically the amount of time

02:12it takes for a procurement person here in the U.S. to put an order in, get the goods made,

02:18and get them on a ship in Asia.

02:20Which raises the question, does that 90-day pause do enough to make sure that shelves are not empty,

02:26say, when back-to-school sales period comes around?

02:29We're cutting it so close. Spring fashion has already passed us by.

02:33Now you're talking summer fashion, back-to-school.

02:35May is typically the month where purchase orders go in to Asia for the year-end holidays.

02:43So now folks are kind of rolling the dice a little bit. Do I buy now at these kind of prices?

02:49And remember, when I say an average of averages, not every commodity is a 30 percent tariff.

02:54There are some that are extremely high compared to that.

02:57And this is cumulative on top of tariffs that have already been put in place.

03:02So once again, what's consumer sentiment? How much do I buy? And how much stock do I get out there?