Trade uncertainty reshapes supply chains as businesses seek stability

Business leaders and logistics executives said global supply chains are adapting to a more complex trade environment shaped by geopolitical tensions, evolving tariff policies and shifting trade patterns, while emphasizing the continued importance of long-term planning and international commerce.

Speaking at a media briefing hosted by the Port of Los Angeles, Gene Seroka, executive director of the port, and Dan Letter, chief executive officer of Prologis, discussed how companies are navigating uncertainty while maintaining investments in logistics infrastructure, warehousing and trade-related operations.

The discussion came as businesses continue to assess the implications of recent developments in global trade and geopolitics, including negotiations involving Iran, ongoing conflicts in the Middle East and Europe, and evolving US-China trade relations.

Seroka said a proposed reopening of the Strait of Hormuz could help ease pressure on energy markets and improve business confidence, although he cautioned that a recently reported memorandum of understanding involving the United States and Iran remains only a framework for further negotiations.

"Twenty percent of the world's energy products flow through that strait," Seroka said. "We could see oil prices continue their decline, inflation possibly easing over the weeks and months ahead, and shipping confidence could begin to return."

He noted that the waterway normally accommodates more than 100 vessel crossings daily, but warned that shipping companies are unlikely to resume normal operations immediately.

"Crew safety remains the priority," Seroka said. "Even with a possible reopening, it will take months to normalize schedules, get supply chains back to some semblance of normalcy and clear backlogs."

Despite recent disruptions, Seroka said conversations with port operators and industry partners in Asia suggest that cargo flows remain resilient. He added that easing bunker fuel prices and improving confidence could provide additional support for trade volumes in the months ahead.

Turning to US-China trade relations, Seroka said recent discussions between the world's two largest economies were a positive signal, although businesses are still waiting for greater policy clarity.

"It's certainly positive when the leaders of the world's two largest economies sit down to negotiate," Seroka said, adding that while businesses are encouraged by the continued engagement, many companies are still seeking greater policy clarity as they make long-term decisions related to trade, investment and supply chains.

China remains one of the Port of Los Angeles' largest trading partners. According to port data, China-related cargo has historically accounted for a significant share of container volumes moving through the Southern California gateway, making developments in bilateral trade relations closely watched by logistics providers, retailers and manufacturers.

Seroka said uncertainty surrounding tariffs continues to influence business decisions. While discussions have included potential opportunities for increased US agricultural exports, including beef and soybeans, he noted that market conditions remain challenging.

He pointed out that Brazil and Argentina have expanded their presence in China's soybean market in recent years, making it more difficult for US exporters to quickly regain market share.

"Once overseas buyers establish new sourcing relationships, it can take a lot of time to win that business back," he said.

Companies are also monitoring upcoming tariff deadlines and potential new trade measures, prompting many businesses to shorten planning horizons and adjust inventory strategies.

"This is the new reality of doing business in today's trade environment," Seroka said.

Letter said supply chains have become more resilient after navigating years of disruptions, including rising interest rates, geopolitical tensions and global conflicts.

"Our customers have been digesting all of these issues, and we're seeing them again make decisions," Letter said. "They're making these five-plus-year decisions with us."

He said forecasts of a concentrated shipping season during June and July have not raised significant concerns among logistics providers.

According to Letter, warehouse operators and supply-chain managers have gained valuable experience responding to disruptions and are better positioned to handle fluctuations in cargo volumes.

Prologis, the world's largest logistics real estate company, has seen continued demand for warehouse space driven by e-commerce growth and changing distribution networks.

Letter said regulatory approvals and energy availability have become increasingly important factors for logistics development projects.

"Whether it be the industry or the supply chain, it really comes down to permitting," he said. "Regulation continues to get more and more challenging for us."

He added that access to electricity has become a growing concern for customers as logistics facilities increasingly rely on advanced technologies and automation.

"Power is one of the biggest drivers for our customers right now," Letter said. "We just need to ensure that we have a path for that power."

Addressing recent tariff developments, Seroka said businesses are closely watching the implementation of tariff refund programs following court rulings affecting certain US tariff measures.

He said some retailers have discussed using discounts, coupons and promotional campaigns to encourage consumer spending if refunds begin flowing back into the economy.

"I don't know if we'll ever see those tariff dollars actually float all the way down to the family level, to the buyer, the consumer, the store patron," Seroka said. "But maybe we could offer a gift card, we could offer a discount package, get more foot traffic in the store, or more clicks online."

According to Seroka, retailers hope that any eventual refunds could help support consumer demand at a time when many households continue to face elevated costs.

"This is going to be a big deal," he said.