Retail giants in the US want their Chinese suppliers to chip in on shipping their goods across the Pacific, with some even demanding they foot the full freight bill.
This was not the case up until recently, exporters have told the South China Morning Post. It used to be standard practice for US firms to pay the full cost of shipping, as they could leverage long-standing relationships with freighters to keep costs in check – according to a sales representative from one of Zhejiang province’s leading garment exporters, Stage Group. Now, the company is paying 60 percent of shipping costs for US-bound freight.
According to an editorial from China Daily, US retailers’ behaviour is “unreasonable” because “it is the US’ ill-advised tariff policy that has pushed up their cost.”
Washington’s tariff war on China began in April, when US President Donald Trump made his so-called “Liberation Day” tariff announcement – imposing steep rates on many of the US’ trade partners.
[See more: Presidents Xi and Trump attempt to preserve fragile trade truce with a phone call]
Beijing’s retaliation sparked a rapid escalation, with most Chinese exports to the US ending up slapped with a 145 percent duty rate (US exports to China faced 125 percent). Such rates all but halted trade between the world’s two biggest economies.
Washington quickly backed down and temporarily slashed its tariff rates last month, prompting Beijing to follow suit. But the cost of shipping goods from China to the US climbed significantly as the industry bounced back from limbo. According to Bloomberg, pent-up demand for shipping coupled with the start of the sector’s busy season meant prices were bound to go up.
Xeneta chief shipping analyst Peter Sand said that a massive increase in demand for spots on container ships showed businesses were eager to ensure their goods would travel during the 90-day tariff pause negotiated by representatives from Beijing and Washington, CNBC reported.
However, he noted that the trend was expected to peak this month because “capacity is heading back to the Transpacific 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.”
