Count the impact of a deepening trade conflict among the major challenges we will face in the year ahead. As 2018 wrapped up, we saw monthly cargo volumes edging to nearly 1 million container units per month. This is unprecedented, but not unexpected. The onset of 25 percent tariffs on over $200 billion of Chinese imports drove those volumes as industry observers predicted, and now we will likely see a drop-off.
As the policy rhetoric of 2018 yields to the economic reality in 2019, the consequences of these tariffs and retaliatory tariffs will become clearer. It is reasonable to expect higher consumer prices, lower profitability, and even shifting trade routes. And while the force with which these effects hit consumers, businesses, and transportation service providers is hard to predict with accuracy, the uncertainty alone can act as a catalyst to accelerate the change that is gripping the industry.
We were already witnessing extraordinary change before the onset of trade tensions. In the year ahead, change will continue as ports navigate the challenges of industry consolidation, operational inefficiency, environmental regulation, and the emergence of next-generation technology. The only difference may be that the impetus for change will be all the more powerful amid an environment of worsening trade tensions — the way a storm gets more powerful above warmer ocean waters.
Faced with a storm of change in 2019, the reward for decisive action, and the penalty of vacillating inaction, may be even more pronounced. Our response to change: Embrace it. We are committed to actively redefining the role of ports in the end-to-end supply chain by embracing our digital transformation. Starting with the Port Optimizer™, the technology to improve visibility, reliability, predictability and efficiency in the maritime shipping industry is within our collective reach.
However international trade evolves in 2019, we will seize the opportunity to evolve with it.