From the decreased freight into California ports to Panama Canal reroutes, global logistics is facing mounting pressures. In this Supply Chain Byte, Lisa Anderson breaks down the realities of real-world disruptions affecting freight movement—and how supply chain leaders must respond.

Global logistics leaders are concerned about the drop-off in volume at the ports, due to the uncertainty related to tariffs. This is especially true in Southern California because the L.A. and Long Beach ports are 70-80% dependent on shipments from China. After the tariffs went into effect, ocean sailings were cancelled as companies couldn’t afford 145% tariffs. It is estimated that there will be a 35% reduction in May’s volumes and perhaps June as well. On the other hand, this was to be expected since imports surged during Q4 and Q1 in preparation for the tariffs, and so companies are depleting inventory over the next few months. 

Our estimates are that ocean sailings will increase again after inventory declines, probably in 60-90 days. Of course, some companies will change sourcing, reconfigure supply chains, or avoid ordering because it will be unprofitable. Thus, it will depend on each company’s response as to whether ocean sailings will remain lower. If they change sourcing to the U.S. to mitigate tariffs, Latin America to pursue regional supply chains, or a country like India, it is likely the East Coast shipments will go direct to East Coast ports, thereby reducing volumes at the West Coast ports. Of course, companies will re-route to where it is most competitive. Thus, if the West Coast ports pursue automation and efficiencies, they can maintain the volume.

 Companies should immediately look for backup sources of supply, diversify their sources of supply, invest in U.S. manufacturing, and reconfigure end-to-end supply chains. Regional supply chains are the focus for the future. To learn more about these strategies, refer to our article, “Resilience in Supply Chain of Paramount Importance“. 

Discover how to mitigate risk, improve visibility and redesign logistics strategies to stay resilient in today’s volatile environment.

If you are interested in reading more on this topic:
Supply Chain Volatility and Vulnerabilities: Resiliency, Regional Manufacturing, and Robotization