Trade Shifting East

U.S. Imports Shifting East and the Need for Global Trade Compliance

As the dynamics of global trade compliance continue to evolve, U.S. imports from Asia are undergoing a significant transformation, presenting new challenges and opportunities for the supply chain. In a recent study conducted by Oliver Wyman, it was found that a noticeable shift in imports from the West Coast to the East Coast is taking place, driven by a range of factors including supply chain disruptions, changing product sources, and expanded shipping and port choices. This article delves into the implications of this shift and emphasizes the critical role of trade compliance in navigating this changing landscape.

Changing Import Patterns:
Traditionally, China has been the largest source of U.S. imports, with the majority of containerized goods flowing through West Coast ports. However, the dominance of China as a source for U.S. goods has been diminishing in recent years. The U.S.-China trade war and disruptions caused by the COVID-19 pandemic have prompted shippers to seek alternative sourcing options and diversify their supply chains. This has led to a narrowing gap between China and other Asian countries as sources for U.S. imports (Exhibit 2).

Growing Importance of the East Coast:
The trend of diversification and the quest for more resilient supply chains has resulted in the growth of imports from other Asian countries. Importantly, a significant shift is being observed towards the U.S. East Coast. In fact, by 2023, an estimated 70% of imports from India are anticipated to pass through East Coast ports (Exhibit 3). Proximity to population centers, port capacity expansions, and improved shipping routes are key drivers behind the attractiveness of the East Coast. With more than half of the U.S. population residing east of the Mississippi River, shipping goods to the East Coast simplifies supply chains and reduces overland transportation requirements.

Challenges Faced by East Coast Ports:
To accommodate the surge in inbound container flows, substantial investments have been made by East Coast ports. However, ongoing investment is crucial to sustain their competitive advantage and prevent service issues. Inland transportation options, such as rail and trucking, must also keep up with growing container volumes. While trucking remains a preferred mode of transportation for shorter distances, rail offers significant potential for growth in the form of short-haul intermodal. This presents numerous benefits, including increased capacity, reduced emissions, and decreased congestion on highways.

The Role of Trade Compliance:
As trade patterns shift and supply chains become more complex, maintaining trade compliance becomes even more critical. Importers and exporters must navigate changing regulations, ensure adherence to customs requirements, and protect against potential risks, such as cybersecurity threats. With the growing prominence of the East Coast as a gateway for imports, trade compliance becomes a key component of successful operations. Trade compliance solutions, including robust risk assessment, customs compliance software, and supply chain security measures, are essential tools in managing the complex trade environment and maintaining compliance.

Maximizing Rail’s Potential:
Despite the increasing volumes of container imports on the East Coast, rail’s market share has not kept pace. However, railroads are recognizing the significant opportunity to capture more East Coast container traffic. Collaboration between railroads and ports to develop inland port terminals has facilitated smoother container movements and enhanced proximity to inland customers. To attract and retain shippers, railroads must focus on improving on-dock rail capabilities, ensuring reliability and on-time performance, and strengthening coordination for first and last-mile logistics.

As U.S. container imports shift from the West Coast to the East Coast, the supply chain faces both challenges and opportunities. Trade compliance plays a crucial role in navigating this evolving landscape, ensuring adherence to regulations and mitigating potential risks. East Coast ports must continue to invest in infrastructure, while railroads must adapt and seize the opportunity to capture more East Coast container traffic. By prioritizing trade compliance and leveraging available tools and solutions, businesses can navigate this shifting paradigm and thrive in the dynamic world of global trade.

See Source: https://www.railwayage.com/intermodal/u-s-imports-shifting-east-can-the-supply-chain-keep-up/

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