“Never been so happy because of a 30% increase in cost”! US companies start a new 90-day

Source: Wall Street News

China and the United States have reached a 90-day tariff reduction agreement, and US companies quickly restart the supply chain of Chinese companies, which may trigger a new round of shipping squeeze and cost increase.

According to media reports, American companies are trying to use the 90-day window to hoard products in the United States in case tariffs surge again after the 90-day period.

Previous tariffs have resulted in a significant reduction in shipping demand. According to Richard Davey, CEO of the Massachusetts Port Authority, tariffs have reduced demand to EVA last week's notice that its ships departing from China will be reduced from once a week to twice a month. However, by Monday morning, the Port Authority had begun receiving requests from customers that they hoped to increase imports over the 90-day period.

David Chitayat, CEO of contract maker Genimex, predicts that the temporary tariff reduction means that U.S. companies will try to ship products that were previously stranded in Chinese factory warehouses.

"In the short term, shipping will be 'a mess' because everyone is fighting for space," Chitayat said. He expects container prices to rise, but they are climbing from lower points. ”

Enterprises race against time: resume production, cancel price increases, and streamline product lines

According to media, Therabody, a Los Angeles-based health products manufacturer, has restarted its production lines in China and accelerated production. "In my 40-year career," said Monty Sharma, the company's CEO, who has never been so happy about "the cost increase of 30%" as he is now.

Bogg Bag, a well-known handbag company, has revoked its previous price increase decision and resumed production that was suspended earlier this year. However, Bogg plans to cut 45 projects in the fall and holiday product lines — almost half — to avoid hasty production to make up for lost time.

"Let's get the production done quickly, load the goods and ship them overseas," said Kim Vaccarella, CEO and founder of Bogg, because the port will start to become crowded.

Chuck Gregorich, CEO of household goods company Net Health Shops LLC, said the window for lowering tariffs will help in the short term. The company is considering shipping dozens of containers suspended in March from China. Gregorich expects this to increase its overall inventory and alleviate supply shortages.

He also added that the decision to ship these containers will also depend on the shipping rate. He expects rates could rise as other businesses also seek to deliver more items in the coming weeks and months, with demand curbed.

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