With the trade war between the U.S. and China suddenly erupting earlier this month after a 5-month ceasefire, we have diligently documented the sharp decline of global trade volumes. This has caused significant stress on China to U.S. or U.S. to China shipping lanes, where 40' container rates have plunged.
Now a new report from Forbes shows the latest victim of the trade war is the Port of Los Angeles, no longer the nation's top port on an MoM basis, amid fears the full implementation of tariffs on all U.S. imports from China could spark a global trade recession.
The latest U.S. Census Bureau data available (March 2019) shows the Laredo World Trade Port of Entry, located at the World Trade International Bridge in Laredo, Texas, has surpassed the Port of Los Angeles, to become America's leading port in March. Port Laredo's trade was $20.09 billion while trade passing through Los Angeles was $19.66 billion. Laredo's trade jumped 9.52% MoM in March while the Port of Los Angeles' trade plunged 10.01%.
Forbes noted on a YoY basis - the Port of Los Angeles continues to hold the top spot among 450 airports, seaports and border crossings across the U.S., however, the MoM data shows how President Trump's trade war is disrupting complex global supply chains and has indeed accelerated the synchronized global slowdown.
The best way to visualize just how dangerous the trade war has disrupted the global economy is the chart below: YoY changes in global trade as measured by the IMF's Direction of Trade Statistics, courtesy of BMO's Ian Lyngern. It shows the collapse in global exports as broken down into three categories:
- Exports to the world (weakest since 2009),
- Exports to advances economies (also lowest since 2009), and
- Exports to the European Union (challenging 2009 lows).
Commenting on the chart above, Lyngen writes that "as estimates of the fallout from the renewed Trade War begin to reflect the growing apprehension in a variety of markets, we're struck by the extent of the drop in exports."
With the global economy in tatters, world trade volume plunging, and an out of control trade war, one would expect more stress on U.S. West Coast ports as multinationals rework their supply chains out of China to South East Asia.