08/22/2019

Navigating the Rocky Waters of Today’s Global Trade Economy

Shipping Freight

With heightened geopolitical tensions, today’s global trade economy proves itself to be a volatile and dynamic landscape. Challenges such as Chinese tariffs idling on the horizon prove that it is more important than ever for businesses to align with a logistics provider to help navigate today’s rocky waters.

Chinese Tariff’s Effect on the Global Trade War

Over the past year, the uncertainty of tariffs on various goods manufactured in China such as clothing, shoes, and other consumer products,1 has made shippers more cautious, with many U.S. companies opting to alter their supply chains in order to source their goods domestically or from other countries unaffected by the threat of additional tariffs. As a result, the U.S. has received a greater amount of indirect exports from countries like Vietnam, Sri Lanka, India, and Cambodia while Chinese exports have decreased by $15/2 billion, or 12 percent, as of March 2019.2

Suspension of the Mediterranean Shipping Company Due to Incident at Port of Philadelphia

The Customs-Trade Partnership Against Terrorism (C-TPAT) is a voluntary U.S. customs service program that thousands of carriers and shippers join in order to move shipments more quickly for customers.3 With specific security measures in place, a company that is a C-TPAT partner is able to get through security faster, resulting in quicker product shipments when coming into the U.S.4 The Mediterranean Shipping Company (MSC) was temporarily suspended from the C-TPAT due to entering the Port of Philadelphia with 16 tons of cocaine in August 2019. Within C-TPAT guidelines, MSC can no longer identify as a “trusted trader” due to the recent trafficking charge. The suspension is said to be in effect for 90 days and everyone is on the lookout to see how shippers will be affected.5

In response, legislation has been introduced in Congress that would force U.S. Customs and Border Protection to show quantifiable benefits to parties involved in a program promising reduced cargo screenings and provide protection to mitigate economic hardships if a company is suspended or kicked out.6 Because the MSC suspension is unprecedented, a sense of uncertainty fell on the ocean global trade market, especially amongst shippers and businesses. The immediate suspension of MSC is just one example of the ever-changing global trade market that creating uneasiness and confusion among shippers.

Safeguarding Your Supply Chain with a 3PL Partner

Due to how rapidly events can take place that affect the global trade landscape, it is crucial that companies are kept updated about the current state of the industry. Partnering with an end-to-end third-party logistics provider is a key advantage for companies to remain informed and ensure business is unaffected in the event of a new tariff or suspension of a major overseas shipping company. With solutions spanning road, rail, ocean, and air, an end-to-end supply chain solutions provider can offer the flexibility, relationships, and experience needed to ensure business remains as usual.

“A logistics provider can help companies to adapt to a swiftly-changing market to help ensure their supply chain remains uninterrupted despite the rocky waters of today’s global trading economy,” said Mike Greco, SVP of Global Logistics at NFI.

 

 

Sources

  1. https://www.npr.org/2019/08/02/747713371/get-ready-for-higher-prices-if-new-tariffs-hit-goods-from-china-retailers-warn
  2. https://asia.nikkei.com/Spotlight/Datawatch/Chinese-goods-navigate-alternate-trade-routes-to-US-shores
  3. https://www.cbp.gov/border-security/ports-entry/cargo-security/ctpat
  4. https://www.joc.com/maritime-news/container-lines/mediterranean-shipping-co/msc-temporarily-suspended-ctpat-after-drug-bust_20190620.html
  5. https://www.joc.com/maritime-news/container-lines/mediterranean-shipping-co/msc-temporarily-suspended-ctpat-after-drug-bust_20190620.html
  6. https://www.joc.com/regulation-policy/import-and-export-regulations/bill-would-guarantee-c-tpat-benefits-suspension-relief_20190715.html