In the ongoing trade dispute between the US and China, US exporters may now be facing new challenges as some Chinese importers reportedly cease to accept cargo. According to Pat Fosberry, the director of export compliance at US forwarder John S James Co, the focus in the US has been on the impact of tariffs on importers, but now US exporters are starting to feel the consequences as well. Some US exporters have reported that many buyers in China are canceling orders due to the escalating landed costs caused by China’s import tariffs, making it unviable for them. However, the main concern is that some Chinese buyers have informed US exporters that they will not accept shipments upon arrival.
Sara Dandan, the founder of D&D and maritime dispute company FourOneOne, explained that the prevalent thinking for US importers was to hold containers at in-bond warehouses in the US after they arrived and then re-export them back to China to avoid customs fees, duties, and demurrage and detention fees. She suggested that the Chinese are likely heading this off to prevent themselves from being stuck with shiploads of products and as a response to rising US tariffs.
Fosberry also raised concerns about how ocean carriers will handle the increase of containers sitting at ports if cargo is not collected. It is uncertain whether they will assign all the liability and costs to the US exporter if containers are not claimed and entered. Possible consequences for US exporters include demurrage, detention, destruction of cargo, return to the US, and US domestic costs.
Dandan mentioned that due to Federal Maritime Commission rules, even though the containers would be at a foreign port, it is probable that they would follow the guidelines of billing the consignee on the bill of lading to make their lives easier. When asked if it was likely carriers would waive D&D charges during all the uncertainty, she laughed but advised that if one hasn’t sent anything yet, the best way to mitigate it is to not send anything if there are claims that they will refuse cargo and turn it away. Otherwise, she thought we would see a lot of abandoned cargo. She added that it seems to be speculation for now, but companies could re-export it back into the US or see if they can export it elsewhere, depending on their business models.
Dandan also suggested that she highly suspects we’re going to see a lot of companies buying out of countries other than China, and she can all but guarantee that if you looked hard enough, there’d be a Chinese buyer and company there. She concluded by saying that as for how comfortable companies feel doing that, since laws and regulations vary according to country, it is up to them.
