Shifting tariff policy in the U.S. is harming the nation’s shipping and logistics industry, supply chain and logistics expert Sunderesh Heragu told SeafoodSource.
Though the Trump administration paused its planned tariffs on most U.S. trading partners on 9 April, Heragu said that the “chaos and uncertainty caused by the imposition and partial rescinding of tariffs has already made a dent in the shipping industry.”
Heragu, who serves as a professor at Oklahoma State University and is the President-elect of the Institute of Industrial and Systems Engineers (IISE), said that a pause on tariff implementation will not provide immediate relief to the sector thanks to the downstream effects of any change to tariff policy.
There are worrying signs of a downturn in the industry, he said, that could have long-term consequences.
“For example, the U.S. to China daily container bookings are down 25 percent,” Heragu said. “Shipments previously negotiated but now slapped with additional tariffs ranging from 10 to 125 percent (depending upon the country) means freight receivers who operate on thin margins may not be able to pay the increased cost and simply not receive their shipment. This will cause shippers to haul back the goods or simply abandon/dump their shipment.”
Seafood industry stakeholders could be doubly affected, he said.
“The impact on shippers who transport perishable items is even more severe," Heragu said. "Shippers may not be willing to accept new consignments unless they can be sure they will be received and paid for at the other end. The uncertainty will mean that the shipments will be put on hold or drastically reduced for another 90 days and beyond.”
Heragu explained that the shipping and logistics industries operate because of the cooperation of many people.
“The on-again, off-again tariff whiplash may already be doing long-term damage to businesses in general, but shippers as well,” he said. “If the trust that has been built up by all parties in a logistics chain (from manufacturers to shippers to consumers) is eroded, the production and distribution of goods will be in serious jeopardy.”
“Tariffs are not like a switch that can be turned on and off at will and not have any short- or long-term consequences,” he added.
Part of the U.S. economy’s strength, Heragu said, lies in the belief its trading partners have in the stability of its government.
“Much of the world has put most of their trust in the U.S. for decades by negotiating long-term contracts knowing there is a legal system behind it for enforcement purposes, Heragu said. "Foreign players also have extensively used U.S. Treasury bills as a haven to park their monies. When a trust that has been built up over decades erodes, there could be utter chaos for producers and consumers. Because [producers and consumers] …are not always co-located and goods often have to be shipped from one country or continent to another, the chaos for the shipping industry could be magnified.”
