Thread by @typesfast

In the 3 weeks since the tariffs took effect, ocean container bookings from China to the United States are down over 60% industry wide. 🧵

The U.S. imports $600B worth of goods from China every year, 95% of that via ocean freight. Those goods sell at retail for ~$2T.

If the tariffs on China continue at this level w will we see a $2T hit to economic activity in our country, the failure of tens of thousands of American businesses, and the laying off of millions of employees.

We will also have mass shortages this summer as the goods don’t show up. The first ships carrying goods paying the duties arrived on Monday. And the decline in freight arrivals will hit in the coming weeks.

Companies stocked up on inventory in anticipation of April 2nd, so it will take a while before shortages hit. If Trump reverses course very soon, he can head off the worst of this catastrophe. But everyday it gets worst.

With bookings down 65%, ocean carriers canceled 25% of their sailings from China the last two weeks. Those ships are already being repositioned to other trade lanes.

Soon we may find ourselves in a bullwhip scenario where Trump relaxes the tariffs, all those cancelled orders get rebooked creating a huge surge. And with all the cancelled services and repositioned vessels, there won’t be enough throughput in the ocean network to keep up.

The result will be surge pricing on ocean, perhaps higher than we saw in 2024 with the Red Sea being cut off, and approaching levels from 2021-22 when container rates from China to the U.S. hit $20k.

Air freight rates also surged that year, as just 1% of ocean freight volume being converted to air is enough to send prices back above $10/kilo as we saw during Covid.

It’s a strange time in the logistics world as we have to plan for the unimaginable (autarky in the United States) while hedging for regression to the mean (relatively normal trade relations).

Thankfully we are well versed in operating in crisis mode at Flexport. It’s why we like working in this industry. We have learned to run tight Observe-Orient-Decide-Act Loops so we can outcompete any other company in ability to respond to new developments.

We’re operating on a simple set of principles to come out ahead:

Preserve Cash
Be Decisive
Take Market Share
Be the Hero of the Crisis

Our customers are suffering right now, and desperate to see the Trump administration step back from the cliff before these policies destroy their businesses completely.

Everyone breathed a sigh of relief yesterday when Trump said tariffs on China would be much much lower than 145%. Now we just need him to act quickly to avoid creating insane surge pricing and covid level logistics bottlenecks as this bubble of cancelled orders gets rebooked.