Ask Ahab

Issue 81

Dear Ahab:

I was unable to import my cargo ahead of the original tariff increases. Now that there is a pause in tariff increases, do you think it is worth it to try and rush some cargo now?

– Timid About Tariffs

Dear Timid:

If you don’t have enough inventory in your warehouse right now, and you’re sourcing from somewhere other than China, it might make sense to rush cargo in over the next few months.

Now, regardless of how much cargo you bring in in the next few months, it won’t last you forever. With that in mind, take this opportunity to reshape the way you think about your supply chain and its reliance on goods sourced from China and Chinese manufacturers.

The current administration appears keen to continue to decouple from what has been a very consistent—if not too consistent—economic partner over the past 20 years. Work with an experienced, knowledgeable logistics consultant with a global network of connections; they’ll be able to help you navigate new markets and craft logistics strategies that are tailored to your needs.

Your competitors are having the same conversations you are—they’re trying just as hard as you are to minimize their “tariff exposure”—so why not enlist an expert to give you the upper hand?

Dear Ahab:

I’ve recently been reading the news coverage of the logistics industry and see that there have been some new flareups around the Red Sea. With that in mind, how soon do you think the Suez Canal might open back up for shipping vessels?

– OK Canal

Dear OK:

I wouldn’t hold your breath about merchant vessels travelling through the Red Sea anytime soon. Originally, carriers were hopeful that the Suez Canal might open as early as June. As issues continue coming up, it’s likely that the timeline will be extended.

However, once the situation is resolved, we won’t suddenly be out of the woods. Ports across Northern Europe and the Mediterranean will see months of congestion as soon as it opens, as the first ships to traverse the Suez Canal will overtake the last ships to traverse the Cape of Good Hope.

There’s also a vessel capacity concern looming; if you recall, global vessel capacity contracted by 10% when the Canal first closed. Even with all the vessel capacity hitting the market this year, the Suez Canal reopening is going to free up a lot of vessel capacity all at once.

That sudden “loosening of the belt” is going to have repercussions for the Northern Europe and Mediterranean markets.