A sharp decline in shipping containers arriving at Los Angeles-area ports is a warning sign for slowing US economic activity and rising inflation. Despite recent tariff pauses, port activity is unlikely to ease soon.
Imports from China have plummeted 10% since the April tariff announcement, with further declines expected. Empty containers are piling up, disrupting trade between Asia and North America. This backlog is affecting production centers in China, India, and Vietnam, ultimately impacting American consumers.
Leasing costs for exporters are rising, and shipping premiums are increasing due to the lack of available empties from US ports. The global supply chain will not quickly recover without time to return empty containers and rebuild producer confidence in just-in-time ordering. This is a lesson learned during the pandemic era that some appear to have forgotten.
The decline in port activity is expected to become apparent in the real economy within the first two weeks of July. Monitor this development for insights into the US economic outlook and middle market trends.
Source: https://realeconomy.rsmus.com/market-minute-empty-containers-are-piling-up-at-la-ports-they-are-a-red-flag-for-the-economy