The Trump Victory and Shipping What We Know

Business, including the shipping container sector, hates uncertainty. With the victory of Donald Trump much of that uncertainty has ended.

For instance, we in the shipping container industry already know from Trump’s previous term as US president data about his tariff strategies, implementations and the impacts. That means we have a handle on projecting what is probable in the days before the inauguration and when the Administration gets rolling. We were there, right on the front lines of world trade.

Predictability of Surprises

Of course, there will be surprises but rule out Black Swans, that is unpredictable phenomena which have unprecedented consequences. Trump 2.0 won’t be the same as the first Administration. The world has changed. This leader is more experienced in how Washington works. Those who voted for him have different concerns and mandates.

But what will be different from what we experienced before will be directly related to, yes, the factors we already have dealt with.

For example, there could be a significant drop in US trade activity. Along with that –given Trump’s anticipated deregulation of energy – could be slashed investment in environmental measures such as green menthol-enabled vessels and eco-friendly containers.

Another possible curve ball could be – as some contend the Smoot-Hawley traffic of 1930 caused – a global economic downturn triggered by the trade war over tariffs. Such an economic hit results from the kinds of retaliation among trade partners enraged byhigh tariffs. Incidentally, already the EU has threatened a 10 percent retaliatory tariff if that level is imposed by the Trump Administration. Suppose that increases to 20 percent on both sides? Well, the Institute of the German Economy forecasts a decrease of Germany’s GPD of 1.5 percent by the end of Trump’s second term.

None of this is really unanticipated.

Nothing New about Protectionism

The second Trump Administration merely continues the protectionist trend. Even before Trump’s first term there has been a trend of US economic nationalism. That “America First” had continued beyond the first Trump Administration with the Biden Administration and had been part of the Harris platform.

It particularly targeted the Chinese shipping industry. In addition, the Biden Administration raised tariffs on Chinese goods ranging from steel to e-cars and broadened the powers of the Federal Maritime Commission.

Some of this could have been mere political posturing about keeping the manufacturing sector and jobs in general in the US. For some industries such as footwear that has not panned out. Footwear Distributors documents that 99 percent of shoes are imported. The National Retail Federation positions tariffs as a kind of “tax” on imports, hurting consumer buying power and weakening employment security,

Other Variables in Shipping

Tariffs provide just one factor shaping the business of shipping and world trade. Other major ones include:

Pandemics. Covid had been a major disruptor of supply chains. In the first half of 2020 US maritime container imports plunged seven percent in volume compared to 2019. In response – and this could be what happens in Trump 2.0 – players in the loop went to the drawing board and created fresh strategies. One was for boosting cost efficiency.Another was to diversify sources for importing goods.

Geopolitical Tensions. More and more there is the fear of a World War III. While that might be hyperbolic the recent intensity of conflicts and their duration have escalated, having dramatic impacts on shipping.

During the time of the Houthi attacks on shippers in the Red Sea the demand for shipping containers escalated because of the longer routes as well as the berthing times. What also increased had been the average spot rates. For example, per 40-feet containers shipped to the US West Coast the surge was 167 percent – that is, to $5,210. In addition, there has been port congestion.

Labor Unrest. The October 1 work stoppage by dockworkers on the US East Coast played havoc with cargo entering 36 hubs across the US. There has been a temporary return-to-work with the situation to be reviewed in January. At that time a strike could be resumed.

The Past as Not Past

Essentially Trump has introduced radical ideas and implemented them during his first term to Make America Great Again. But in his campaign talk about tariffs, the positioning and the packaging seem to replicate much of the past. For instance, he proposed blanket tariffs of 10 percent to 20 percent and 60 percent or more on goods from China. The objective is to strengthen US manufacturing.

Back in 2018 Trump did put a “trade war” in play with his tariffs, as is anticipated to occur again 2025. Data from shipping analyst Xeneta documents that ocean freight rates surged more than 70 percent. The off-contract spot rate for a 40-foot shipping container on popular routes from China to the US West Coast increased to $2,604 within about 11 months. Consumers experienced higher prices.

Since that shock businesses have diversified import sources. Those include Vietnam, India and Mexico. Meanwhile China’s share of the dollar amount of container imports fell from 40 percent to 24 percent during the first three quarters of 2024. The diversification is bound to continue.

Since Trump is now experienced in how a US President gets things done and his victory demonstrated he knows how to “read” the American people, he could be more skillful in managing his tariff policies so not to become unpopular. That could mean configuringthem out to stir up the least domestic negative consequences.

In addition, Election 2024 was about the economy. Therefore, a sitting US President would be hesitant to pull the rip cord on tariffs which could trigger a global economic depression. A measure that was intended to mitigate The Great Depression, the GOP in the US House in 1930 passed the Smoot-Hawley tariff which raised duties on manufactured and farm goods up to 40 percent. There was widespread retaliation which further curtailed US economic activity.

However, despite caution by Trump, the consequences of tariffs could spiral out of control. His Administration could be perceived as functioning as another Smoot-Hawley trigger.

Frontloading

A temporary intervention is to leverage the time before the Trump Administration gets under way and before a dockworkers’ strike might resume to import goods. That, of course, requires adequate warehouse space. The tradeoffs include dealing with the existing disruptions in the Red Sea and possible higher freight rates.

Opportunities for Breakthrough Strategic Thinking

The shipping container industry came into its own when in the 1950s entrepreneur Malcolm McLean had an Ah-Ha moment. He got it that transportation vehicles, including ships, could carry more and reduce damage if the containers were standardized in shape and size. They could be packed vertically, one on top of the other. That ensured efficient use of space and stability.

Those throughout the whole continuum of trade could be just as open as McLean to fresh approaches. Overall, 2024 has been a difficult year for US shippers. There have been the perfect storm of Red Sea disruptions, surging freight rates, a dockers’ strike and the fear of what a second Trump Administration can mean for global trade. That can be motivation for out-of-the-box strategies to gain more control over every aspect of world trade.

STEELSTORED – YOUR LEADER IN STANDARD USES/REPURPOSING OF SHIPPING CONTAINERS

We at SteelStored have the answers you need about shipping containers. And we take the time to explain them in detail. We even come up with questions you should be asking. Then we are with you every step of the way on your purchasing journey: Price, new or used, size, shipping, delivery and setup. Of course, quotes are free and done promptly. Please connect with us at contact@SteelSTORED.com or 203-705-8251.