China Tariffs: Import Surge Filling Warehouses to Capacity
August 23, 2019
As importers are finding ways around the tariffs, warehouses are now filling up to capacity, posing a new problem for importers, according to this article from The Supply Chain Brain, Tariff Fears Caused US Import Surge. Now Warehouses Are Full.
One of the largest warehouse complexes near the Long Beach Port near Los Angeles is finding itself reaching only 1-2% available space. This is due to the fact that importers have pushed for early deliveries, causing an import surge, and now warehouses are nearly full.
The import surge has been caused by many having imported their goods early to avoid paying impending tariffs, which means warehouses are now filled up, holding stock until is time to stock the shelves with these seasonal items. E-commerce has also contributed to the scarce space as it continues to grow.
Many are running out of options as the December deadline approaches, when the next wave of 10% tariffs take effect on $300b worth of imports from China. Because storage space is strained, importers are now concerned that they are running out of options. According to the article, sellers have accumulated inventory at an increased rate of 7.9% annually. The quickest in 6 years.
While stockpiling inventory and “front-loading” shipments in order to avoid tariffs has saved many importers a lot of money, millions even, it’s proving to be only a short term solution. A slow-down in trade with China has made way for an increase in imports from other Asian countries, like Vietnam. This was the case before this administration and the imposed tariffs, but these circumstances may accelerate the increased imports from other countries as a long term solution. Now that importers are running out of room to bring in their imports early and store them, they are asking themselves the real questions – Like “Can we import from other sources?”
Stability and predictability make it easier to have “just in time” inventory, but the tariff disruption has forced importers to play it safe and increase inventory.We’ve offered many solutions to avoid or soften the blow of tariffs in the past. And we maintain our stance on this US-China trade issue – China will continue to be the world’s factory.
However, the issue of tariffs creates an opportunity for the strong importers to thrive and strengthen their supply chain because of these tariffs; Those that are smart will use them to negotiate better pricing, secure their competitive edge, and explore other options to offset the cost of tariffs.
By Jocelyn Trigueros