The ongoing trade war between the U.S. and China has put the damper on freight activity – not just for Washington state but across the U.S. While a recent report by the state Economic and Revenue Forecast council (ERFC) noted a significant drop in state exports, a Sept. 16 meeting of the Tri-State Transportation Commission revealed a nationwide decrease in inbound freight volume for certain products.
Eric Jessup is the associate director of the Freight Policy Transportation Institute at Washington State University. During a presentation to the commission, he said “if you want to know how well the economy is performing typically, just see how well the freight system is functioning, what we’re moving, how we’re moving it. Economists often use this as an indicator of what’s going to happen next.”
Data collected on freight volumes for the second quarter of the 2019 fiscal year shows a drop compared to the same time last year; trucking volumes have also decreased.
John Stuhlmiller is the chief executive officer for the Washington Farm Bureau. He told Lens that state-based hayshippers have seen a large reduction in container shipments, while nonperishable produce such as wheat are being stored rather than sold.
“If the market’s really bad, you can weather a storm by holding it in a grain elevator,” he said.
Jessup attributes the decreased exports and freight volume activity to the trade dispute between the U.S. and China that has led to numerous new tariffs imposed by both countries on trade-dependent commodities. “If things become more expensive for domestic consumers…then they’re going to buy fewer of them. Most of that container intermodal volume (decrease) is a product of that. For farmers trying to access markets…they’re just not moving quite as much volume.”
He told Lens that ocean freight shipping rates have jumped as a result because “they can’t adjust quickly.”
“We have companies trying to move freight (in a) very quick timeframe in advance of when the tariffs are going to take place,” he said at the Sept. 16 meeting. “Whenever you try to move things very quickly, it causes rates to jump.”
Further corroborating these conclusions is freight data from Burling Northern Santa Fe (BNSF), which owns 1,335 miles of rail lines and handles 1.9 million car loadings within Washington state. During the second quarter of the fiscal year, the rail freight company experienced a five percent decrease in volume. Consumer and agricultural product volume dropped by six percent during the first half of the year, while coal volume decreased by five percent and industrial product volume remained unchanged.
Lori Otto Punke is the president of the Washington Council on International Trade (WCIT). Last month after the new tariffs were announced, she told Lens that “all this disruption happening so quickly really puts exporters and others who operate globally in an incredibly tough spot. It’s an incredibly tough time to absorb the impact of tariffs and tariff retaliation. It feels there’s no end in sight for tariff relief, let alone a comprehensive trade deal that is meaningful and will straighten out the access issues that have really been troubling Washington state companies.”
Whether freight activity continues to fall or go back up may depend on what happens next in trade talks, Jessup said. “If you could predict what trade policy was going to be into the future, I could give you a better idea of what I would expect the freight movement to be.”