Peaking Too Soon? Peak Season Arrives Early as Uncertainty Still Plagues the Market

The logistics industry went from bleak season to peak season this Spring, as the United States and China announced the suspension of the reciprocal tariffs between the two nations, giving both sides more time to negotiate a long-term trade agreement.

While the suspension of reciprocal tariffs was welcome news among most shippers, it did cause a rush of cargo to the U.S, creating new problems for many in the industry to contend with as they adjust their supply chain strategies. Since the suspension of reciprocal tariffs, shipping rates have risen dramatically; equipment shortages have become more pervasive; and warehousing space has proved increasingly scarce. Additionally, the uncertainty of whether tariffs will be raised, maintained or eliminated continues to wear on the industry.

“Nearly three-quarters of all shippers have reported being negatively affected by the tariffs. While some are hopeful for a trade deal, the reality is that many shippers are not confident that a deal between the U.S. and China will be finalized by the end of the 90-day pause,” said Anthony Fullbrook, president of OEC Group’s North American Region. “This is motivating the vast majority of shippers to take advantage of the reprieve and import their goods as quickly as possible in order to legally avoid paying the high tariff rates.”

As the cargo rush continues to be driven by industry-wide anxiety, many shippers have been importing more cargo than normal and storing it in warehouses across the U.S., which is causing a shortage of available and affordable space. Additionally, some shippers have resorted to air freight as a way to bring their cargo into the U.S. before the pause ends and guarantee that they have something to sell during the holiday season. Needless to say, shippers are doing anything and everything to minimize any possible effect tariffs could have on their businesses.

“The playbook while tariffs are lowered is really simple: ship as much as you can as quickly as you can, because no business wants to miss out on this, or any, holiday season,” said Peter Hsieh, OEC Group North American Vice President of Sales. “Looking ahead, shippers will need to be vigilant and not let fear of the unknown paralyze them from making sound business decisions. In this current environment, they’ll need to be prepared to take advantage of any opportunity to save money.”