Shipping costs set to double as companies rush to import goods before China-US trade truce ends
US Companies Face Spike in Shipping Fees from China
US companies rushing to import their goods from China before the 90-day reprieve on stiff tariffs expires will be hit with an unexpected increase in shipping fees, leading to higher prices on store shelves. Major carriers, including Hapag-Lloyd, have announced plans to raise shipping rates for a 40-foot container between China and West Coast ports to $6,500 from $3,500 starting June 1.
The cost for shipping to East Coast ports will also increase to $7,500 from $4,500. This hike in rates will impact profit margins and result in higher prices for consumers, according to Jay Foreman, CEO of Florida-based toy company Basic Fun.
Walmart has already warned of higher consumer prices due to tariffs, despite President Trump’s suggestion that the retailer should absorb the costs. Another shipping rate hike to as much as $8,500 per container is expected by June 15.
The carriers have been accused of price gouging to make up for lost revenue after US companies reduced shipments to avoid the tariffs imposed by President Trump. The trade truce reached on May 12 between the White House and Beijing has reduced the tariffs to 30% until August 10.
Lou Lentine, CEO of fitness equipment maker Echelon, stated that the shipping costs for their products made in China and Vietnam will double. Despite negotiated fixed shipping rates, carriers can add fees for peak season surcharges or spot rate increases.
The anticipated rate hikes could cause a strain on the supply chain, with ports already behind schedule by seven to 10 days. The bottleneck at ports is expected to worsen, impacting the movement of containers onto rail systems.
Foreman warned of potential challenges such as too many ships arriving at ports simultaneously, container disarray, and lag in vessel turnaround times. The current situation may lead to disruptions in the supply chain similar to those experienced during the pandemic.
