January 29th, 2025
Written By: Gabe McGann, VP of International Operations at Rogers & Brown
After 2024, a year full of twists and turns, hopes for calmer seas in 2025 are not likely to come true. As we approach the Lunar New Year with softer demand than usual, it is important to look at upcoming changes that will impact your supply chain. Here are a few items we are tracking that are important for everyone to prepare for.
President Trump sent shockwaves quickly after the election, hinting at possible tariff hikes on Chinese goods and threatening new tariffs on products from Mexico and Canada. Other countries have also not been ruled out. Along with the lingering fear another strike would occur on the East and Gulf Coasts of the US, many importers chose to front-load shipments to avoid tariff increases when no specific terms were given. That has resulted in a dramatically softened demand nowhere near the typical lead-up to the Lunar New Year.
However, fears of immediate tariff increases were tempered. After his inauguration, President Trump passed the “America First Trade Policy,” which discussed policies and different trade relationships hindering U.S. commerce. The President assigned departments and officials to collect data and report findings by April to determine what actions the government should take. For now, expectations hold that increases are likely for goods manufactured in China (potentially as much as 60%). What will occur in other countries, like Canada and Mexico, is unclear. Is the President ready to blow up the USMCA agreement he helped design? We will soon find out. Importers are urged to review their supply chain to identify potential products that could fall under scrutiny and continue looking for sourcing alternatives that may alleviate additional tariffs.
In February, the Gemini Cooperation will begin rotations featuring carriers Maersk and Hapag Lloyd. This is the biggest carrier alliance shift in several years and officially ends the 2M Alliance between Maersk and MSC. The stated goal of the Gemini Cooperation is to reduce transit times, improve service reliability, and include shipping schedules more timely.
Any change of this magnitude will bring short-term disruptions to other services as vessels are shifted to include different carriers and allocations. Making such changes at the back end of the Lunar New Year, when blank sailings and adjustments are always made, should help minimize disruptions as much as possible.
Though not new to 2025, reliability in transit times continues to be an issue for supply chains across the globe. Whether delays are due to larger ships taking longer to work in and out of ports along a rotation, slow steaming and focus on lowering emissions, or delays in the intermodal network when containers are moving from ports to rail, everything seems to take longer than it did five or ten years ago. Services that used to run like clockwork are continuously falling behind, and supply chains are being negatively affected.
We do not see this trend changing for the better overnight. It is crucial for everyone to plan better. Buffering lead times is a safe way to ensure stock is not in jeopardy of running out or missing a client’s deadline. We are trying to add days into our systems to estimate more accurate departure and arrival times for our clients and be reflective on our reports and web platforms.