3PL providers can add value by proactively helping shippers address “negative tariff impacts”

As we noted in previous blog posts, the focus again was on coping with supply chain volatility, when the consultancy, Armstrong & Associates staged its 7th annual 3PL Value Creation North America Summit in Chicago last month.In subsequent “take-aways,” Armstrong shared these observations on the state of the industry.
“The start of 2019 was soft for International Transportation Management (ITM),” says the consultancy’s president, Evan Armstrong. “Both air and ocean forwarding from China to the U.S. has decreased due to increased political tensions. It has also negatively impacted intermodal rail.”

He adds that within all ITM, “conservative shipper behavior” has led to an increase in air freight forwarding.
“Companies are waiting until the last minute possible before importing goods,” says Armstrong.
*Tariffs have led to some supply chain shifts to Southeast Asia (Vietnam, Taiwan, and India) and western Europe.
*Large companies like Samsung or Yeti can quickly pivot their supply chains from China to Vietnam. But heavily integrated supply chains in China, or smaller competitors are at a disadvantage. It’s harder for them to identify a new supplier and then design and test the potential supply chain.
*Inter-Asia is experiencing growth from China to Southeast Asia. Multimodal capabilities have become critical.
*While Southeast Asia is a growth opportunity, Mexico and Canada could become long term beneficiaries in the tariff disputes. Shippers are looking for facilities in Vancouver and Toronto, Canada to side-step issues between China and the United States.

Meanwhile, 3PL providers can add value by proactively helping shippers address the negative tariff impacts.