Supply chain leaders are anticipating increased tariffs on imports to the United States, including a 60% tariff on goods from China and a 25% tariff on goods from Canada and Mexico. As discussed in our latest blog, this development has caused many organizations to consider how tariffs on imports would impact their international and domestic supply chains. Last time, we discussed how supply chain leaders can prepare their network strategies for incoming Tariffs. In this blog, we will discuss transportation strategies for maintaining resilience against tariffs.

What to Expect

Organizations most affected by import tariffs are those heavily reliant on imports from China, Mexico and/or Canada, companies with unoptimized or fragile supply chains and companies that leverage just-in-time inventory management.

There are a few scenarios we may see as supply chain leaders begin planning for the new tariffs:

• In the short term, we may see a surge in imports as companies seek to stockpile goods before the increased tariffs take effect.
• This rush for imports will likely increase domestic warehousing activity to make space for the influx of inventory.
• Once tariffs are implemented, many companies will switch from international to domestic sourcing to avoid paying higher costs for imported goods.

Adjusting Your Transportation Strategies

The scenarios outlined above will necessitate adjustments to inbound transportation strategies, particularly in mode selection and truck capacity strategy. Additionally, as demand for domestic transportation rises, transportation costs are likely to increase across the board. Outlined below are strategic initiatives designed to strengthen a transportation network during periods of economic change:

• Freight Term Optimization: Effectively managing inbound freight is critical in transportation management, especially as companies increasingly rely on domestic suppliers. By establishing the right service-level agreements, partnering with the right partners and implementing ‘collect’ freight terms, companies can convert their inbound freight strategies into a source of revenue. This approach can provide a valuable financial boost during times of economic uncertainty.

• Strategic Sourcing: Optimizing the way capacity is sourced and contracted is another key area to consider. With transportation providers capitalizing on the increase in domestic capacity demand, now might be the right time to take a strategic approach to establishing carrier rates. Running a transportation RFP can be particularly beneficial, especially if your rates are unfavorable. By reworking your carrier agreements, accurately modeling freight lanes and tactically negotiating with carriers, a well-executed RFP strategy can secure more competitive rates going into 2025.

• Transportation Management System (TMS): Companies with unoptimized freight routing strategies are especially vulnerable to rising transportation costs. Implementing a TMS with freight consolidation and optimization functionality can significantly strengthen a transportation network. Beyond cost control, a TMS delivers efficiency gains and unlocks new capabilities across a transportation practice. While selecting a TMS may seem daunting, the long-term benefits are well worth it.

With the expectation of tariffs being levied come the new year, now is the time for company leaders to begin developing strong, resilient and flexible supply chains. These investments are crucial to navigating and overcoming the unpredictability of the supply chain industry.

enVista Can Help

Let enVista’s team of transportation experts help you build a resilient supply chain. We have experience in negotiating carrier rate increases, fostering strategic partnerships, developing profitable inbound transportation strategies and selecting and implementing innovative system solutions for our customers. Our team is well-equipped to guide you through the challenges of supply chain disruptions – ensuring your business emerges stronger and unscathed. Let’s have a conversation.®