West Coast vs. East Coast: The Impact of the New Tariffs on Different Ports
On July 24th, the Section 122 tariffs that had been in place since February of this year expired, and Section 301 tariffs took their place. For drayage carriers, the minor changes in rates isn’t the issue, what’s worth paying attention to is how the transition between tariffs is reshaping which ports get volume and how predictable that volume is week by week. Section 122 was the flat 10% tariff put in place after the Supreme Court struck down the previous round, and it came with a fixed window of 150 days. On the other hands, the current Section 301 tariffs work on a country-by-country basis, ranging from 10-12.5% in rates. For more on the Section 122 and Section 301 tariffs, check out our previous article that breaks down all the key differences.
The essential difference here is the timeline. While the Section 122 tariffs had a built-in end date, the Section 301 tariffs have been put in place indefinitely until they’re altered or challenged legally. For drayage carriers, this distinction matters more than the tariff rates themselves. Temporary tariffs, as disruptive as they may be, is something carriers can plan around by waiting it out, but a permanent tariff changes sourcing and routing decisions at the shipper level. Long-term, carriers end up having to build their networks around these changes. Another tariff action, court ruling, or other disputes around Canadian goods could all still move volume around again, probably with little to no advance notice. Looking at the West Coast versus the East Coast, the two regions may feel these disruptions play out a little differently. Here’s a breakdown:
The West Coast
The ports of Los Angeles and Long Beach have seen an increase in monthly TEUs in recent months due to the influx of imports trying to get ahead of the new Section 301 tariffs in July. Even despite the rising tariffs on Chinese goods, much of which routes through West Coast ports, switching to sourcing from Vietnam, India, and Thailand has meant that overall volume hasn’t dropped. But with the current unpredictability of the tariff changes and upcoming shopping seasons, the flow has been more sporadic, coming in bursts rather than at a steady pace.
For carriers serving major West Coast ports such as LA and Long Beach, expect tight and sometimes unpredictability when it comes to schedules and capacity. When chassis pools and driver scheduling are designed around an average volume, it can lead to issues when surges hit as they have been more and more frequently. Looking ahead, carriers should be on the watch for legal battles surrounding the new Section 301 tariffs and potential additions to them, as any new announcements could set off another round of front-loading and unpredictability.
The East Coast
In comparison, major ports along the East Coast such as Savannah, Charleston, and New York/New Jersey have been picking up some excess volume that would typically go through the West Coast. This isn’t necessarily a new trend, but the uncertainty surrounding tariffs and constant unpredictability brought on by the recent changes has only amplified this change. The Section 301 tariffs have given shippers more of a reason to source away from China with increased tariffs, and more towards Vietnam and India, which route naturally through East Coast and Gulf gateways. What’s unique about the new tariffs here is the fact that unlike the Section 122 tariffs, they’re not temporary, which means that shippers have no real reason to make the diversifying of their routes temporary either.
For East Coast carriers, these changes in routes between the coasts that have only been amplified by the recent tariff change, meaning inland freight will be originating in different places than before. The cargo that used to move out of LA and towards Phoenix might now be coming out of Savannah and towards Atlanta, which could be a real struggle for carriers that have networks revolving around the West Coast. Newark and Savannah have even added congestion surcharges during busier periods as their gate capacity struggles to keep up with this increase in volume.
Stay tuned for our next article covering the impact of the new tariffs on drayage carriers, where we'll discuss the upcoming back-to-school and holiday shopping seasons.
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