For months, Port of Los Angeles Executive Director Gene Seroka warned of slashes to shipment arrivals from China and reduced hours for dock workers and truckers as a result of President Donald Trump’s aggressive tariff threats.
As the busiest port in the U.S. saw record-setting shipping volumes last month, Seroka still isn’t breathing a sigh of relief. The Port of LA reported its busiest-ever June in its 117-year history with 892,000 container units, an 8% increase from the year before and a turnaround from the precipitous 9% year-over-year drop in May. Still, Seroka sees this improvement as a sign of businesses bracing themselves for the next round of tariff uncertainty.
“While record-setting volume is welcome news, it also highlights the tariff whipsaw effect that we’ve mentioned before,” Seroka told reporters in a press briefing on Monday.
Supply-chain platform Project44 has seen similar trends globally, with “higher-than-normal imports from China” on a global scale, Eric Fullerton, Project44 senior director of product marketing, told Fortune.
The pull forward in shipping volumes is likely a result of Trump’s 90-day tariff pause in April and a deescalation of a trade war with China in which tariffs on the country’s exports fell to 30%.
Seroka said he expects the wave of shipments to ease again in August. Not only does the late summer represent the conclusion of a flurry of shipment orders in preparation for the busy holiday shopping season, but also the latest trade deadline. Trump has doubled down on an Aug. 1 cutoff, threatening to impose flat 25% tariffs on Japan and South Korea unless a deal is reached.
“We’re going to probably get one last push on imports coming to the United States, and [businesses are] doing as much as they can to sneak in under that new Aug. 1 deadline,” Seroka said. “While it’s good news for our waterfront workers, truck drivers, warehouses, and our marine terminals…shifting timelines simply means shifting volume and more uncertainty here at the Port of LA.”
Tariff doomsday prepping
June’s shipping volume spike resembles one supply chain experts saw in March, when companies pulled forward shipments to dodge higher costs before Trump’s first round of tariffs went into effect. Project44 reported that ahead of Trump’s April 2 announcement tariffs on China would balloon to 145%, import volumes from China to the U.S. increased year-over-year for a successive three weeks.
The trade environment “is still really uncertain, which means you’re going to stockpile, you’re going to put as much inventory as possible, because you control the cost and either pass it on to consumers or put it on your supplier,” Fullerton said.
“But the risk of stock-ups is still way, way, way too great,” he added.
In order to pull forward shipments, companies may have to dip into cash reserves or take out loans with favorable terms only to potentially slash prices to get rid of excess inventory.
While businesses may be reprising their pull-forward strategy, they have made noticeable supply chain shifts. Some Fortune 500 companies are “able to push their size and their relationships with their suppliers to their advantage” by asking suppliers to switch manufacturers, Fullerton said. Others are pulling back from China in favor of doing business with manufacturers in Vietnam, Indonesia, Thailand, and Bangladesh where operations could be cheaper, Fullerton said.
To be sure, shipping data will likely continue resembling peaks and valleys as businesses try their best to remain nimble amid continued trade turmoil, according to Rebecca Homkes, lecturer at the London Business School and faculty at Duke Corporate Executive Education. Trump has yet to unveil the details of a framework trade agreement with China, and there’s no sign of trade deals with Mexico, Canada, or the European Union following Trump’s latest tariff blitz.
“The only way that we’re going to get more steady [shipping norms] that we’re used to is if we have clarity on the actual tariff level that will remain mid- to long-term,” Homkes told Fortune. “And we are far from having that level of clarity.”
