*

Chinese exporters prepare to resume shipping amid hopes

for

tariff reduction

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Shipping agents buy container space for US-bound goods

from

mid-May

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U.S. retailers face risk of empty shelves without Chinese

goods

By Casey Hall

SHANGHAI, May 9 (Reuters) - China-based shipping agents

have resumed buying container space for goods headed for the

United States after a series of U.S. tariff-induced

cancellations, as Beijing and Washington head for trade talks in

Switzerland.

Trade between the world's two largest economies has slumped

since U.S. President Donald Trump imposed 145% tariffs on

China-made goods on April 10, a move which prompted China to

impose levies of 125% on U.S.-made products.

The U.S. tariffs, which affect an estimated 80% of goods

shipped from China to the U.S., prompted sailings from China to

the U.S. to drop 60% in April, according to Flexport, a

logistics and freight forwarding broker. Customers from

logistics operator Hapag-Lloyd ( HLAGF ) cancelled 30% of

shipments from China last month.

Since late April, however, traders have stepped up buying of

shipping capacity, locking in space from mid-May, according to

two China-based executives with freight forwarding firms who

declined to be named as they weren't authorised to speak to the

media.

Four China-based exporters, some serving large U.S.

retailers such as Walmart ( WMT ), also told Reuters they were

preparing to restart shipping goods to the U.S. in the coming

weeks, a previously unreported development.

With the U.S. and China adopting more conciliatory language

on trade since late April, and officials due to begin trade

talks in Geneva on Saturday, exporters are hopeful that the two

countries will soon move to lower tariffs.

In the latest sign that rates might be eased, Trump said on

Thursday that a reduction from the 145% rate was likely.

"We are obviously all looking forward to a relaxation of the

(tariff) situation this month. I believe it will happen," said

Liu, a second-generation toy manufacturer from the southern

export hub of Dongguan who declined to give her full name for

privacy reasons.

Until recently, half her orders came from U.S. customers

including Walmart ( WMT ), she added.

EMPTY SHELVES?

But it's not just optimism that tariffs might fall that's

fuelling the shipments.

Goods such as toys, home furnishings and Bluetooth speakers

that U.S. retailers cannot quickly or easily source from places

other than China have been stuck in China while the stores try

to wait out the tit-for-tat tariff escalation.

If those products are not shipped by June, shelves in the

U.S. will begin to empty, Chinese exporters told Reuters.

"Companies are running out of inventory and Trump has toned

down his China talk," said Jonathan Chitayat, the Asia boss of

Genimex Group, a contract manufacturer whose firm works with

clients to design and engineer custom mechanical, electronic and

consumer goods from bluetooth speakers to rubbish bins.

The risk of "empty shelves in stores in the next 30 to 60

days" was a powerful motivating factor for U.S. clients, he

added, who will need to ship some goods from China soon whether

or not there is any movement on tariffs.

Liu, the toy manufacturer, said that after almost a month's

pause in any orders being sent to the U.S., shipping will resume

this month, "though the amount is not as much as before",

because her American clients need to restock their inventories.

According to Liu, if her products arrive in the U.S. without

a reduction in tariff rates, it will be "American consumers who

bear the entire burden" of the additional tariff costs.

Judah Levine, head of research at Freightos ( CRGO ), a

freight-booking and payments platform, said some level of

recovery in shipping movements was inevitable.

"One way or the other, these economies are intertwined and

both sides are starting to feel pain," he said, adding that the

recent "massive declines" in shipping volume followed months of

frontloaded orders in anticipation of the Trump tariffs.

"At a certain point that runs down and ... there is the

expectation that the tariff situation will change for the

better," Levine said.

Walmart ( WMT ) said it had not paused purchases from a specific

country of origin or across full categories.

"We have thousands of products, and we are working every

day with our suppliers, item by item and category by category,

to navigate this fluid situation for our customers and members,"

a Walmart ( WMT ) spokesperson said.

Hapag-Lloyd ( HLAGF ) declined to comment on current U.S.-China

freight bookings, saying the situation was fluid.

Dominic Desmarais, chief solutions officer at Liya

Solutions, which connects small and medium-sized companies with

suppliers in China making everything from furniture to titanium

products, said he has been told by freight forwarders that

prices could go up by $500 per container after May 15 as

shipping activity recovers. According to Freightos ( CRGO ) estimates, a

40-foot container shipped between Shanghai and the port of Los

Angeles in early May would cost between $2,640 and $3,781.

Betting on a swift end to the trade war, however, looks like

wishful thinking, according to Desmarais.

"In 2018 when Trump put 25% tariffs on 80% of the

commodities out of China, it took two years for the U.S. and

China to reach a deal," he said. "I don't think discussions in

Switzerland will do it."