To the degree that any deceleration of US shipping growth is cyclical, the supply chain and maritime industries will weather the storm as they have always done. However, to the extent that reduced growth results from the highest US tariffs in 100 years, the supply chain and maritime industries should focus on cargoes with inelastic demand, prioritize markets with lower tariff rates and think long-term.
Here at PhilaPort, we are fortunate to be a major food port. Food, which has an inelastic demand curve, should see less decline due to tariffs than cargoes with elastic demand. People will put off buying products they don’t need — that is not an option with food. Our marketing staff will be prioritizing cargoes with inelastic demand curves.
Brazil is our third-largest trade partner, and high tariffs on Brazil will hurt us. However, Peru, another major trade partner, has relatively low 10% tariffs, so we hope growth from Peru can continue. While we are thankful that wood pulp, one of our major products from Brazil, now has a tariff exemption, we will shift our focus to countries with lower tariff rates. Tariff analysis is now a more important part of supply chain and maritime strategy.
Finally, the supply chain and maritime industries will need to think long-term. The US is still one of the major global trading countries and will continue to be so. US consumers will make sure of that. Once trade growth picks up again, ports, especially, will need to be ready for increased cargo volumes. We at PhilaPort have recently acquired 173 acres of additional land in expectation of future growth. We are also investing in new warehousing, improved roads and better technology. Infrastructure improvements now will pay off in the mid- to long-term.