The escalating trade war between the United States and China is now impacting global logistics, leading to important disruptions in shipping routes. International shipping companies are canceling cargo ship voyages from China to the U.S., a direct result of declining order volumes and import tariffs imposed by the U.S. administration.

Canceled Voyages and Capacity Adjustments

• Data from the HLS Group logistics company indicates that at least 80 shipments from China have been canceled recently.
• Shipping companies are adjusting transport capacity to align with decreased demand for goods being shipped to the United States.

Route Suspensions and Port Impacts

major shipping alliances, such as Ocean Network Express (ONE), are taking drastic measures. The “alliances” of large shipping such as the Ocean Network Express (One) even decided to suspend one of the routes that included Qingdao, Ningbo, Shanghai, Pusan, Vancouver, and Tacoma ports. Other routes have seen port visits canceled, including Wilmington, North Carolina.

Supply Chain Disruptions

The reduction in container shipments from China to the U.S. is expected to have a cascading effect on supply chains. This includes:

• Port operations
• Truck and train transportation
• Warehousing

Each ship can transport between 8,000 and 10,000 TEUs (twenty-foot equivalent units).With 80 canceled shipments, this translates to a potential loss of 640,000 to 800,000 containers.

Expert Analysis

Alan Murphy, CEO of Sea-Intelligence, notes the uncertainty in predicting the full extent of the decline. However, he anticipates more “blank sailing”, or the cancellation of shipping, in the near future.

Decline in delivery Bookings

Data from late March to early April reveals a significant drop in international delivery orders, notably for:

• Finished clothing products
• Accessories
• Textiles
• Toys

These categories are heavily imported from China and are now subject to high tariffs. Orders for textiles and finished clothing products have decreased by more than 50 percent.

Retailer caution

Bruce Chan, global Logistics director at Stifel, explains that tariff policies are causing retailers to be more cautious with inventory. This uncertainty is now reflected in the cancellation of container shipping,especially on the transpasive route from Asia to America, Chan said.

He added that retailers are wary of excess stock after experiencing challenges during the COVID-19 pandemic.

Shipping Operator Strategies

To mitigate losses from underutilized ships, shipping operators are implementing various strategies:

• canceling voyages (blank sailing)
• Eliminating certain shipping routes (vessel strings)
• Using smaller ships
• Slowing ship speeds (slow steaming)

These strategies were also employed during the COVID-19 pandemic, which led to a surge in container rates.

Vietnam’s Opportunity

As Chinese exports decline, Vietnam is emerging as a potential beneficiary. Sea goods shipping rates from Vietnam have increased by 43 percent as the end of March, indicating a surge in demand.

The increase in market tariffs in the lower segment shows that the demand pressure is high, said Peter Sand, the main analyst at Xeneta.

Sand also noted that the decision to postpone additional tariffs for countries other than China for 90 days has further boosted shipping demand in the short term.