The Trade War: What Supply Chain Professionals Should Consider


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With the May 10 increase in duty rates on certain Chinese- made imports—and China’s subsequent retaliation on U.S.- made goods—I think we can all safely agree the United States and China are in a fully-fledged trade war. So, in an atmosphere of uncertainty, what are the key elements supply chain professionals should consider staying ahead?


Impacts to cash flow


Over the last six months, increasing duty rates from both countries have impacted cash flows in several ways. For U.S. exporters (especially


in agricultural products), China sales are down, resulting in cash flow constraints on the income side. For U.S. importers, duty payments have increased substantially on certain products, leading to much higher cash flow consumption on the cost side. The old adage that two things


move in transportation, goods and money, has never been


By Jason Craig, director of government affairs, C.H. Robinson In late 2018, many U.S.


truer than in today’s climate. As I’ve been discussing the latest tariff changes with importers, a few recurring questions seem to be on most companies’ minds: Will our supply chain be more impacted by the policy changes affecting China-to-U.S. freight or U.S.-to-China freight? What ripple effects will those impacts have on other areas of our business? Will we need to increase our U.S. customs bond? At C.H. Robinson, we’re


constantly monitoring the situation and communicating with our customers on potential consequences for their businesses. Because we’re a comprehensive third- party logistics (3PL) provider— offering customs brokerage and trade compliance services as well as global ocean and air freight


logistics—we use our


unique market perspective to see end-to-end impacts and help manage our customers’ complete


supply chains


unpredictable times. Will there be a surge of imports trying to beat List 4?


importers pulled forward inventory in anticipation of potential tariff increases threatened for January 1, 2019. That threat was ultimately delayed until May 10 but talk of a next round of tariffs has already begun. This new list of tariffs would


be known as List 4 and would affect almost all currently unimpacted Chinese-made goods. That list still must make its way through a formal review process, but the new tariffs could be implemented as soon as late July or early August. Whether we will see importers again pull


forward


their inventory to try and beat potential duty increases remains to be seen.


Changing U.S. domestic freight flows


in


One of the repercussions of the U.S.-China trade war that has not received as much attention is the impact of the dispute on domestic freight


Jason Craig, C.H. Robinson


patterns. Indeed, the trade war has


disrupted some U.S. trucking lanes, including an out-of- cycle surge in demand in Southern California related to the pull-forward of inventory in


frozen


late 2018. Additionally, pork


and chicken,


typically exported to China, has been routed to domestic cold storage instead, straining domestic refrigerated trucking capacity. Now that the cost to import


from China has increased, companies may find it cheaper to fulfill product with pre-tariff inventory


from a


warehouse 1,000 miles away (instead of new inventory


assessed a 25% duty). As a result, several questions are beginning to emerge: Will companies in fact try to draw inventory from far- away domestic warehouses with


lower landed establishment of costs?


Will new suppliers require the


new


lanes? How would these shifts impact carrier networks that gain or lose freight? Only time will tell.


When will this trade war end?


Whether your company has been positively or negatively impacted by the trade war, uncertainty abounds; current


manner. This was precisely the scenario the team was trying to avoid and able to do so successfully.” The team acted as a liaison


Deutsche Post DHL’s Disaster Response Team moved nearly 800 tonnes of aid to south- east Africa after it was struck by cyclone Idai. The 12-strong team was deployed at Beira Airport between 24 March and 12 April at the request of the United Nations, handling incoming


relief goods and


coordinating aid for the United Nations and international relief organisations. Director for humanitarian


affairs at Deutsche Post DHL Group, Chris Weeks, said: “This particular deployment was ground-breaking for us in that it was our first mission to Africa. The challenges however were familiar and within the first few days of arriving the DRT firmly established its coordination


expertise in the supply chain of incoming humanitarian


aid. All too often, the sudden influx of relief aid to an airport


creates bottlenecks and aid is unable to get out in a timely


between the Beira Airport Authorities and the large humanitarian community who occupied a vast area at the airport. Antonov Airlines has


meanwhile flown aid and personnel from Chalons Vatry Airport in France to Beira in the aftermath of Cyclone Idai.


policies and rules (in addition to new ones) may or may not be in effect six months, one year, or five years from now.


Therefore, for many


businesses, scenario planning increasingly appears


to be


essential: What will your company do if current tariff levels are maintained for one month? Three months?


Six


months? Longer? What will your company do if tariffs increase? Are you making any process adjustments now to prepare for such a possibility? How would your company react to an announcement of a deal ending the trade war? As you plan, make sure to


bring your transportation provider and customs broker into the conversation to assess the transportation costs of new lanes, new suppliers, and shifting regulatory and compliance concerns. With close collaboration, deep business intelligence, and proactive planning, providers and businesses can make the most of these unpredictable times by mitigating risk and finding opportunity.


In addition to a 65-tonne


payload of relief supplies, the AN-124-100 aircraft also carried logistics staff from aid organisations to support disaster relief initiatives in the region. The cargo included malaria


treatments, five water purification stations, and over a thousand tents and shelters. Forwarder Bolloré Logistics’


Beira office provided staff to help unload the cargo and provide final delivery.”


Boom time for heavyliſt line


Specialist shipping line SAL Heavy Lift is offering a highly configurable crane boom extension offering unrivalled lifting height and applicability. The Fly Jib has been designed for the cranes of SAL’s Type 183 vessels (MV Lone & MV Svenja) and can be installed


on each of their main cranes’ booms. With the much greater lifting height and further outreach, it can meet clients demands as cargoes become ever bigger and for the growing need to lift long components vertically as with offshore wind equipment.


Issue 5 2019 - FBJNA


///NEWS


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