The 2:00 Minute Warning

With all the uncertainty regarding tariffs, make plans to join us for an important webcast on Understanding and Managing the Tariff Issue on April 3 at 2:00pm EDT/ 1:00pm CDT, hosted by TranzAct, CSCMP, the National Industrial Transportation League (NITL) and the Global Shippers Forum.

Last week I attended the Journal of Commerce’s TPM25 conference. This is a great event that brings together many senior executives from some of the largest global transportation companies and they discuss critical factors that are affecting logistics and supply chain operations around the world.

As luck would have it, last Monday morning (which was the first day of the conference) news broke that President Trump was reimposing his tariffs with Canada and Mexico.

A lot of carriers and shippers at the conference thought this was disastrous news. For me, it was fortuitous since Bill Cassidy, Senior Editor at the Journal of Commerce by S&P Global had invited me to be on a panel the next day to discuss how to avoid supply chain disasters. Along with Holly Pearce, Director of Logistics and Warehousing at the Otis Elevator Company, we discussed the fact that at times you have “think the unthinkable” in order to prepare for and avoid supply chain disasters.

Here are a few important “takeaways” from the panel discussion that were very well received.

First, it pays to have a written supply chain plan that addresses the issue of contingencies – these are events or “hiccups” that could disrupt your supply chain operations. Unfortunately, our survey of the audience confirmed that very few shippers actually have any written supply chain plan - but that's a story for a different day.

Second, companies can mitigate the impact of supply chain disasters if they consider in advance what events, incidents or geo-political issues could potentially affect them. For example, the tariff issue has been on the table for several months. The time to have planned for managing the impact of tariffs was months ago.

Third, it is important to use scenario or contingency planning methods to assess how the events, incidents or issues could impact your company. For example, when the news of the reimposition of the tariffs broke, I predicted that they would once again be rolled back – and they were rolled back two days later.

I didn’t have a crystal ball. But TranzAct does have a great network, so months ago we reached out to experts we knew and learned something important: The United States does not have the infrastructure in place to be able to impose and collect a tariff on millions of freight transactions on a timely basis. Absent the infrastructure necessary to manage the volume of freight subject to the tariffs, Trump would not actually impose the tariffs and risk causing massive congestion and backups in global supply chains.

So viewed logically, we were not surprised by the decision to once again suspend the tariffs until April 4. On our April 3 webcast, we will include an in-depth discussion about the tariff issue and tackle the “What’s next?” question.

Before then, here are some things your company needs to do in order to create a strategy that addresses how to deal with the imposition of tariffs. 

• Prepare for prices to rise and discuss how your company will respond. As tariffs take effect, your company’s COGS will increase. What pricing     adjustments will have to be made to reflect these higher costs?
  
  
• Stress test your supply chain, identify the threats and risks associated with the tariffs, and consider risk mitigation strategies. If tariffs are actually imposed and imported shipments are delayed, how will this impact your company? What are viable alternatives?
  
  
• Designate a "Tariff Team" to assess the impact of the tariff issue for your company. Since the tariff situation will remain “fluid” for the foreseeable future, it is important to have a team that can “call an audible” and if necessary, execute a “hard pivot” in case there are significant shifts in inventory deployment or manufacturing processes.

One final note. For those who are thinking: “Tariffs really don’t affect me because I don’t have a lot of imports” remember, supply chains are interconnected. Do you know if your critical suppliers will be impacted? Or their suppliers?

If you’re looking for help with navigating tariffs or other supply chain issues, simply give us a call, send me an email, or schedule a time to meet. 

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

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