What The Shipping Container Shortage Reveals About US-China Trade

freight containers

Despite the record unemployment rate, widespread hardship to businesses, strains on the healthcare system, political turmoil, and general disruption to daily life in 2020, US consumers have managed to ramp up their habit of buying things. Demand for physical goods replaced some of the previous demand for in-person service-related experiences and much of that demand was met with a surge of imports from China as domestic production slowed down due to lockdown measures. Up until recently, global supply chains managed to find their footing and could meet demand, but news has emerged that reveals stresses on the world’s shipping infrastructure and uncovers clues about the economic outlook.

Container Shortage and Chinese Exports

Global logistical networks recently began to suffer from a shortage of shipping containers as demand has suddenly risen. Freight rates from China to the US have jumped by 300%. The container situation has become so extreme that hundreds of thousands of containers have been sent off empty from US ports, mostly to China as exporters demand empty containers with increasing urgency. An estimated 177,938 containers, were rejected from loading US export items at the ports of Los Angeles and New York/New Jersey alone and then sent across the Pacific.

The recent imbalance of shipping containers illustrates the latest state of affairs surrounding the US and Chinese economies. As exports of consumer goods from Asia eclipse exports of mostly commodity and raw materials from the US—in this case, even blocking US agricultural exports from having shipping containers to reach foreign markets—the trade deficit between the two countries may become more important to these highly competitive economies.

When Trade Deficits Matter

The Austrian perspective on the US trade deficit has long been that given the continued relative productivity of the US economy, foreign desires to invest in the US, and demand for the dollar abroad, the trade deficit is a ‘pseudo-problem.’ The US competitive advantage vis-à-vis other countries in recent decades has made running a trade deficit highly probable and even favorable for Americans as they enjoy the consumption of cheaper imports.

1 2 3
View single page >> |

Mises Institute is a tax-exempt 501(c)(3) nonprofit organization. Contributions are tax-deductible to the full extent the law allows. Tax ID# 52-1263436

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.