Tariffs are the hot topic today, but there are a few other conditions causing challenges for today’s global supply chain professionals. Recently, I had the chance to talk with Eric Kleinsorge, publisher of Global Trade Magazine for a GT Podcast titled Global Logistics & Current Market Trends. The highlights of our conversation appear below. (Special note: The podcast was recorded before the List 4 tariff announcement in August.)
Tariffs are a hot topic
Section 301, Lists 1, 2, and 3 tariffs are still in effect on Chinese goods. If you recall, List 3 was increased from 10 to 25% in June. It’s important to note there’s also an exclusion process opened by the United States Trade Representative (USTR) for companies impacted by List 3 tariffs.
The U.S. administration recently announced a 10% tariff on $300 billion USD imports from China effective September 1, 2019. Section 301 List 4 tariff is in addition to the existing 25% tariff on $250 billion USD of imports from China. With all four tariffs implemented, they cover over 96% of all U.S. imports from China.
It’s difficult to predict how or if trade talks will continue. As we’ve just seen, this administration can move at a quick pace. That’s why it’s essential for shippers to work with a company like C.H. Robinson, who can provide expert advice on keeping international supply chains compliant.
Challenges in the transpacific lane
Capacity may become scarce in the transpacific lane in mid to late September. Air freight typically starts to get a little tighter towards the end of September going into October due to Chinese New Year. On the ocean side, since June, carriers have been fairly disciplined in planned capacity withdrawals on the transpacific trade lane in particular. Some of the drivers behind this are carrier consolidation, financial performance by carriers, and uncertainty of the tariffs.
There are also some challenges with the U.S. domestic logistics infrastructure. Detention and demurrage have emerged as a significant area of concern for many shippers. When they look back at their budgets, this has caused a lot of additional costs to their supply chain over the past few years. Drayage, the electronic logging device (ELD) mandate, driver pay, and shortages continue to be a challenge, especially when drayage is not as efficient as it could be, due to congestion in the ports and the container yards. We continue to have problems with equipment shortages, and in some markets, there’s an ongoing evolution of how chassis are managed. And as new players enter the market, we’ll continue to see areas of concern.
Strategizing in this unpredictable market
Everyone’s supply chains and goals are different. That’s why it’s important to have a dedicated account manager and skilled professional to work with you to evaluate your supply chain and offer creative solutions to maximize process flow and enhance inventory control.
Connect with a Trusted Advisor® expert at C.H. Robinson.