The chief executive of Maersk, the world’s second largest shipping firm, has said that traders’ attempt to avoid trade disruption by ordering Christmas stock early threatens to intensify global supply chain problems.
Vincent Clerc told the FT that several factors were worrying traders and prompting early orders, from a potential US-instigated tariff war to ongoing Red Sea disruption.
“There’s clearly, not only for the US but in general, customers bringing orders forward,” Clerc said.
“Because of disruption, because of the potential for a trade war, people would rather have Christmas goods already in the warehouse.”
Crunch points
The shipping boss also noted that greater than expected global trade growth in the first half of the year had played a role in upping congestion.
The number of vessels transporting goods has risen sharply in recent months, especially around China, which continues to pursue an export-led growth policy to compensate for weak domestic demand.
This increased volume, in combination with Red Sea disruption-related rerouting, has created choke points at key shipping hubs, such as Singapore port.
Amid these supply chain challenges, Clerc warned that a spate of summer orders could exacerbate the problem and cause further delays.
Summer rush
The BBC reported that some European retailers were rushing to place orders as early as June over ongoing fears about the Red Sea.
This follows an uptick in Houthi rebel attacks on Western-flagged cargo ships in the Red Sea, as Israel’s war in Gaza threatened to escalate into a regional conflict. Since late last year, when these attacks began, firms have rerouted ships via the Horn of Africa, a time- and cost-intensive alternative.
One boss of several online retailers told the BBC that the price for immediate goods’ delivery rose from $4,500 to $7,500 in the space of a few weeks, leading his firms to book shipments in advance:
“It impacts cash and warehouse space as suddenly you have to store the goods for longer. You can't risk ordering later.”
Trade war fears
As noted by Clerc, the prospect of a second Trump presidency, has also led some traders to place orders before any potential import price hikes.
Trump has already promised to apply a 10% tariff to all imports, with a further 60% on Chinese imports specifically, while his pick for vice president JD Vance has called China the “biggest threat” facing the US.
Politico reported that the recently announced Kamala Harris-Tim Walz ticket offers a much more lenient approach, while still retaining some protectionist policies to support the US job market.
On China, Walz has said:
“There’s just no substitute for 1.6bn consumers who are hungry to get our China trade negotiations normalised.
“There is not enough market in the rest of the world to absorb our capacity.”
