A Great Wall and China – Trump Trade Plans Impact Food, Retail Shippers

Wherever you stand on the results of the recent Presidential election, one thing is absolutely clear – there are likely to be many changes holding great potential to affect your transportation management strategies in unpredictable ways.  Are you confident your current program’s processes and practices are flexible and dynamic enough to handle whatever may come?  Here are a few likely scenarios that should give you pause to consider the overall state of your existing logistics practices.

One of the most noted promises put forth by the incoming President is the construction of an enormous wall across the entire southern border between the US and Mexico.  While the details of this ambitious project have yet to be revealed, if it is indeed accomplished it will surely result in radical changes to how and where freight will enter and exit the United States.  These changes will impact calculations of such critical transportation and logistics metrics as lead times, delivery schedules, routes, mileage and a host of others.  And, since a project of such magnitude surely won’t be completed all at once – instead being built in phases – the entry/exit points are sure to move over time.

Without the ability to easily update lanes in the routing guide, on-board new carriers in different lanes, adjust transit time calculations etc., a shipper’s efficiency in terms of cost and timeliness is sure to suffer.

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Now is the time – before the coming onslaught of new policies – to assess whether your incumbent solution is up to the task of addressing rapid, radical change and to upgrade your transportation logistics plans.

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Similarly, US withdrawal from the North American Free Trade Agreement (NAFTA) would be, “much more disruptive than withdrawing from TPP” according to Jon Lieber, U.S. director at the Eurasia Group, a geopolitical risk consultancy company.  Lieber notes, “Supply chains for a number of U.S.-based manufacturers are fully integrated across the U.S.-Mexico border”.   Again, while the impact of such a radical change is hard to forecast, it is certain to create headaches for organizations involved in cross-border transportation and logistics.  For food shippers, the calculus is equally daunting as an exit from NAFTA is likely to spur increases in the prices of certain produce and other agricultural products currently imported from Mexico into the US.

Another grand policy plan emanating from the incoming administration involves backing out of emerging international trade agreements.  The potential geopolitical and economic ramifications aside, the immediate impact of a unilateral exit from these existing agreements will be momentous.  While the results of such actions are impossible to predict, the withdrawal of the US from the TPP (Trans Pacific Partnership) which is likely to occur, will certainly have a chilling effect on trade with China.  This will have an undeniable if yet unknown effect on retailers who ship the majority of goods sold in the US from manufacturing plants in China and other Asian countries.  US-based retailers are facing a serious shake up in their supply chains should trade wars break out.  The sourcing of goods may shift quickly away from Pacific Rim manufacturers.  Whether domestic manufacturing returns or sourcing from other low-cost manufacturing countries fills the gap, inbound logistics processes are bound to feel the change “bigly”.

Now is the time – before the coming onslaught of new policies – to assess whether your incumbent solution is up to the task of addressing rapid, radical change and to upgrade your transportation logistics plans.

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