Slow and Steady Wins the Race

This year’s trans-Pacific Maritime Conference (TPM) was a chance for shippers to gain insight and advice from business leaders on how they should handle some of the most pressing issues affecting the logistics industry that are causing a great deal of uncertainty.

Unsurprisingly, one of the main causes of uncertainty is tariffs and the whiplash effect they are having on shippers.

This effect played out in real time at TPM, as the Trump administration imposed 25% blanket tariffs on imports from Canada and Mexico and a 10% blanket tariff on imports from China during the conference, then postponed the tariffs on Canada and Mexico later in the week. Many industry leaders believe tariffs – and the constant back and forth between introducing duties one day and taking them away the next – could cause a great deal of harm to the supply chain because shippers are unsure how to plan their strategies.

“The prevailing advice is for shippers to import goods into the United States as quickly as possible and then store the cargo in warehouses to avoid duties, has proven to be not a great long-term strategy,” said Anthony Fullbrook, president of OEC Group’s North American Region.  “Instead, shippers should be looking at partnering with a seasoned logistics consultant who can help them review strategies with changing market conditions while balancing the carry-cost with other issues affecting the supply chain. This approach has always been the secret to remaining competitive.”

Tariffs are not the only issue shippers expressed concern about during the conference. Many shippers balked at the recent proposal to charge carriers $1.5 Million for each U.S. port call made by Chinese-made vessels. This potential policy has shippers and carrier presidents deeply concerned that costs to import goods into the U.S. will quickly get out of control.

Among those concerned was MSC CEO Soren Toft, who said at the conference that this penalty will make some long-standing routes unviable and will force carriers to completely skip secondary ports like Oakland, which could cause significant congestion problems at all of the other major U.S. ports.

“Right now, the Trump administration’s plans are still evolving, making it very hard for anyone in the industry to create a viable supply chain strategy,” said Peter Hsieh, Vice President of Sales for OEC Group. “Because it is difficult to predict what will happen next, the best thing to do is stay calm and keep your options open. Don’t get caught up in how to beat tariffs, develop a game plan with an experienced logistics consultant on the most effective way to minimize any negative impact that tariffs can have to your business.”