Ocean shipping disruptions are no longer rare—they’re the new normal. From geopolitical unrest to port congestion and tariffs, global ocean freight is under constant pressure. In this Supply Chain Byte, Lisa Anderson breaks down how manufacturers and distributors can build resilience into their ocean freight strategies and plan ahead. If you rely on ocean shipping, this one’s for you.

The United States trade representative announced duties / fees on ships owned, operated, or built in China to stimulate the U.S. shipbuilding industry and mitigate national security risks. Almost 60% of the general cargo ships that enter the United States are built in China, and 90% of the project cargo (larger and heavier items) vessels are built in China. Since the fees can add up substantially in addition to the China tariffs, if no actions are taken, costs will increase dramatically. Beyond China, the other 40% of general vessels are built in Japan and South Korea. 

These actions come on the heels of a major overhaul within the ocean shipping industry. The significant partnership of Maersk and MSC dissolved, stirring up significant transitions in the global alliances. Maersk and Hapag-Lloyd formed the Gemini Alliance, and MSC decided to go independent and has a slot-sharing agreement with the Premier Alliance. The Ocean Alliance is largely dependent on China and stayed intact. Since China is prevalent in all aspects of the ocean shipping industry, these alliances will need to pivot.

What actions can beneficial cargo owners (BCO) such as manufacturers & distributors take?

Forward-thinking companies will pursue multiple strategies to ensure resiliency:

1. Change alliances: Some BCOs might shift alliances to mitigate exposure to China.
2. Reallocate routes: Within the alliance, a company might reallocate routes. For example, the alliance member with ships built in Japan will take the route to the U.S., and the alliance member with ships built, owned or operated in China will go to Europe. Of course, it is not that simple as there is a complex network of routes, ports, and reallocation and resiliency is required.
3. Smaller ships: The fees are far better for smaller ships (< 4000 TEUs), and so in some situations, alliances will pivot to using smaller ships to serve the U.S. market.

Duties on cranes produced in China are another sticking point. 70% of cranes are produced in China which creates high risk and will increase the cost substantially in the interim as the U.S. manufacturing capabilities ramp up. There is software used in cranes, creating cyber risk to key infrastructure. Industry groups are quite concerned about the cost as the time to ramp up from a standstill won’t be quick. On the other hand, in thinking about supply chain resiliency and mitigating risk, immersive focus should be placed on this topic. We should encourage investments in shipbuilding, the ports and related infrastructure. Refer to our Supply Chain Byte on revitalizing maritime power.

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